Money, Banks and Finance in Economic Thought

Progressive income tax and social questions: the propositions of the economist engineer Clément Colson

De Paoli Joachim, Laboratoire Triangle

From the 1890’s, numerous debates took place in France regarding the implementation of a progressive income tax. It is presented by its supporters as a mean to diminish social inequalities. After the rejection of numerous projects, a progressive income tax is finally adopted in 1914. Obviously, debates didn’t take place just in Parliament. They took place also in intellectual circles, especially between liberal economists. The aim of this communication is to analyse debates that took place between French liberal economists regarding this progressive income tax. For this, we will particularly focus on one author, the economist engineer Clément Colson. We will also study the debates in the very liberal Société d’économie politique of Paris and the writings of more active authors in these debates: the liberal moderate Paul Leroy-Beaulieu and the ultraliberals Yves Guyot and Frédéric Passy. Our work will allow highlighting some points. First of all, we will see that liberal economists in their whole are opposed to the progressive income tax. In order to criticize it, in the first hand they use the classic economists Smith, Say and Mill. However, we will demonstrate that the interpretation of their points of view by the French liberals has to be nuanced. On the other hand, we will highlight the main argument developed by the French liberal economists against the progressive income tax, the arbitrary side of the rate setting. Their critics allow seeing they defend a tax conception called “tax-benefit” and the real tax. Then, we will demonstrate that Colson is opposed to the majority of liberal economists by sustaining the progressive income tax, although he shares a part of their critics. He explains this tax allows taking into account social inequalities because the ability to pay increases faster than the wage. Moreover, it allows encouraging families to have more children. Thus, he argues for the “ability to pay” system. In the same way, while he prefers real tax, he accepts a personal tax by defending the progressive income tax. This distinguishes him from the others French liberal economists of the beginning of the 20th century. Finally, we will show too that the Colson’s analysis is based on practice and takes into account the context of the time, both political context with the socialism beginning to represent a political force, and intellectual context with the development of marginalism.

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Keywords: Colson; economist engineers; French Liberal School; Social questions; Progressive income tax; transition from liberalism to marginalism.

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