It’s time to rethink what taxes are for

When people hear the word “tax,” the immediate reaction is often negative—linked to burdens, bureaucracy, or partisan disputes over who pays more. Yet taxation is not simply a fiscal tool. It is a reflection of our values, a public choice mechanism as vital as voting. And right now, that mechanism is broken.

For decades, governments have optimised tax systems for economic growth and administrative efficiency. But what if the goal of tax policy wasn’t just to fund the state—but to enhance people’s lives in tangible, measurable ways?

From rising inequality to climate anxiety and mental health epidemics, societies today face complex, interconnected challenges. These problems can’t be solved with revenue targets or GDP growth alone. They require reimagining the tax system as an engine for social resilience and human dignity. In short: taxes should prioritise people’s well-being.

To change how we tax, we must first change how we think about the purpose of tax. Right now, tax debates revolve around how much we collect and from whom. But few discussions focus on what those funds are meant to do in the lives of citizens beyond balancing budgets. This narrow view ignores a more ambitious—and realistic—possibility: that we can use tax policy to create better lives.

Imagine a tax system that rewards behaviors contributing to community health or caregiving work. One that discourages harmful speculation but supports long-term investment in education, family life, and green living. These are not utopian ideas—they are already being explored.

New Zealand’s “Wellbeing Budget” integrates non-economic outcomes like mental health, child welfare, and indigenous equity into its fiscal planning. Scotland’s National Performance Framework ties policy spending to citizen quality-of-life metrics. The OECD now publishes an annual How’s Life? report measuring progress in life satisfaction, access to services, and community trust.

What’s missing is a broader move from measurement to alignment—from collecting well-being data to designing tax systems that support it.

Well-being tax design starts by recognising that what gets taxed—or left untaxed—shapes behavior. Current tax systems often reinforce inequality and short-term thinking. Labor is taxed more than capital, making wage earners shoulder a disproportionate burden while speculative gains remain lightly taxed. Healthier food can be more expensive than junk food. Unpaid caregiving, a backbone of aging societies, receives little formal recognition. And fossil fuels still benefit from tax subsidies in many countries.

In a well-being-oriented framework, the logic flips.

• Tax burdens shift from earned income to negative externalities such as pollution, carbon emissions, or real estate hoarding.
• Targeted tax credits support actions that generate public value—like raising children, elder care, education, or preventative health.
• Corporate tax policy rewards long-term investment in workforce well-being and community sustainability rather than shareholder dividends alone.

Countries like Finland have already experimented with “sin subsidies”—public funds supporting healthier choices, such as cycling infrastructure and school meals. Singapore has moved toward sugar taxes and energy-efficient incentives. The tools exist. What’s needed is a strategy that unites them under a well-being agenda.

If this approach is so promising, why isn’t it more widespread?

First, there's political inertia. Tax systems are inherently conservative; they reward status quo interests. Proposals for radical rethinking—especially those involving redistribution—trigger fierce resistance from entrenched lobbies.

Second, many countries lack the data infrastructure to assess and monitor well-being at scale. While surveys and frameworks are improving, few tax authorities integrate life satisfaction metrics into planning. As one New Zealand official put it, “You can't budget for what you can't measure consistently.”

Finally, there is a mindset barrier. In neoliberal policy culture, taxation is often treated as a necessary evil—something to be minimised or justified only in terms of economic return. This framing undermines any attempt to see taxes as positive investments in people and society.

Public discourse also plays a role. Media narratives often frame tax changes as zero-sum—someone wins, someone loses. This prevents a more mature conversation about shared goals, collective returns, and the long-term payoff of healthier, fairer communities. Overcoming these obstacles will require not just new tools, but new language—and the political courage to use it.

Some may worry that prioritising well-being over economic growth would be bad for business. But the opposite is likely true—especially in the long run. Healthy, well-educated, financially secure populations are more productive, innovative, and resilient. Economies with strong social safety nets recover faster from shocks and exhibit higher consumer confidence. And forward-thinking companies increasingly recognise that their success depends on employee wellness, environmental stability, and public trust.

By designing tax systems that reflect these realities, governments can create a more level playing field. They can also signal to markets that sustainability and equity are not just moral goods—but strategic imperatives.

A tax system aligned with well-being doesn’t punish enterprise. It challenges extractive business models and rewards those investing in long-term value creation. And that’s a future even the private sector should want to build.

Moreover, businesses themselves stand to benefit from clearer alignment between tax policy and societal needs. When taxes fund childcare, eldercare, or mental health infrastructure, it reduces the indirect burden on employers to fill those gaps. When environmental taxes discourage harmful practices, they make space for innovation in cleaner technologies. In this way, well-being-oriented taxation becomes a form of shared risk management—one that supports stable growth, customer loyalty, and a more resilient business ecosystem.

Taxation is not just about paying the bills of the state—it’s about defining what kind of society we want to live in. In an age of rising instability and fraying social trust, narrowly economistic tax policy is no longer fit for purpose. The evidence is growing: tax systems that prioritise measurable well-being can deliver better outcomes, stronger communities, and more resilient economies.

This isn’t about ideological left or right. It’s about recognising that we already use tax to shape behavior—we just don’t always do so consciously or equitably. It’s time to use those tools deliberately and in service of human dignity. A well-being approach to tax design doesn’t mean utopia. It means realism with empathy, data with direction, policy with purpose. And in the long run, that’s not just good government—it’s smart strategy.

If fiscal systems remain divorced from the daily realities of people’s lives, public trust will continue to erode. But when taxation is transparently tied to outcomes people care about—health, safety, education, fairness—it becomes not just tolerable, but defensible. That’s how you rebuild the social contract. And that’s what smart governance now requires.