From: auvenj@mailcity.com ("auvenj")
To: lpaz-discuss@yahoogroups.com
Subject: [lpaz-discuss] Is Taxation Theft?
Date: Fri, 15 Nov 2002 16:12:43 -0000


The topic of whether or not taxation is theft has come up on one of 
the non-libertarian lists I'm subscribed to.  I seem to remember 
reading the arguments below and a well-worded refutation of them 
somewhere...but I can't remember where.  Of course, the collectivist 
who posted this only posted one side...probably because they're 
counting on me to post the other side. :-)

If someone can remember where the refutation is and kindly provide a 
link, it will save me a lot of time coming up with it myself from 
memory.


Myth: Taxes are theft.

Fact: Taxes are payments for the public goods and services you 
consume. 

Summary 

Taxes are part of an agreement that voters make with government, a 
contract in which citizens agree to exchange their money for the 
government's goods and services. To consume these goods and services 
without paying for them is itself theft, and is rightly punished as 
breach of contract. Some may object that they have not agreed to the 
contract, but if so, then they must not consume the government's 
goods and services. Furthermore, contract by majority rule is better 
than by minority rule, one-person rule or anarchy (which results in 
kill-or-be-killed). Opponents of taxation under democracy are 
therefore challenged to find an improvement on democracy. 



Argument 

Many conservatives and libertarians make the following populist 
argument: 

"If you don't pay your taxes, men with guns will come to your house, 
arrest you, and seize your property." 

The implication here is that you are being extorted to pay taxes, and 
this theft amounts to a violation of your rights. Although the events 
described are technically correct -- you should expect such a 
response from any crime you commit -- the implication that the 
government is aggressing against you is false, and not a little 
demagogic. 

Taxes are part of a social contract, an agreement between voters and 
government to exchange money for the government's goods and services. 
Even libertarians agree that breach of contract legitimates a police 
response. So the real question is not whether a crime should be met 
with "men with guns," but whether or not the social contract is 
valid, especially to those who don't agree with it or devote their 
allegiance to it. 

Liberals have two lines of argument against those who reject the idea 
of the social contract. The first is that if they reject it, they 
should not consume the government's goods and services. How they can 
avoid this when the very dollar bills that the economy runs on are 
printed by the government is a good question. Try to imagine 
participating in the economy without using public roads, publicly 
funded communication infrastructure, publicly educated employees, 
publicly funded electricity, water, gas, and other utilities, 
publicly funded information, technology, research and development -- 
it's absolutely impossible. The only way to avoid public goods and 
services is to move out of the country entirely, or at least become 
such a hermit, living off the fruits of your own labor, that you 
reduce your consumption of public goods and services to as little as 
possible. Although these alternatives may seem unpalatable, they are 
the only consistent ones in a person who truly wishes to reject the 
social contract. Any consumption of public goods, no matter how 
begrudgingly, is implicit agreement of the social contract, just as 
any consumption of food in a restaurant is implicit agreement to pay 
the bill. 

Many conservatives and libertarians concede the logic of this 
argument, but point out that taxes do not go exclusively to public 
goods and services. They also go for welfare payments to the poor who 
are allegedly doing nothing and getting a free ride from the system. 
That, they claim, is theft.

But this argument fails too. Welfare is a form of social insurance. 
In the private sector we freely accept the validity of life and 
property insurance. Obviously, the same validity goes for social 
insurance like unemployment and welfare. The tax money that goes to 
social insurance buys each one of us a private good: namely, the 
comfort of being protected in times of adversity. And it buys us a 
public good as well (although tax critics are loathe to admit this). 
If workers were allowed to unnecessarily starve or die in otherwise 
temporary setbacks, then our economy would be frequently disrupted. 
Social insurance allows workers to tide over the rough times, and 
this establishes a smooth-running economy that benefits us all.

We should also note that the program most popularly known 
as "welfare" -- Aid to Families with Dependent Children -- takes up 
less than 1 percent of the combined federal and state budgets. (1) 
That tax critics would raise such a big stink over such a paltry sum 
begs an explanation. Their typical response to this is to expand the 
definition of welfare. But suppose we include all programs that 
involve one-way transfers of wealth with no expectation of immediate 
repayment or return services. According to the Library of Congress, 
in 1992 such expenditures at the federal, state and local level came 
to $289.9 billion, or 12 percent of their combined budgets of $2,487 
billion. (2) It still seems incredible that such fiery anti-tax 
rhetoric is reserved for 12 percent of a person's taxes. But keep in 
mind that this 12 percent includes such popular middle class programs 
as Medicaid, student grants, school lunches, pensions for needy 
veterans, etc. Voters have ultimately agreed that these programs 
provide not just social insurance, but social investment. Certainly 
our society benefits by enabling more young people to attend college. 
Some may dispute the need for such social insurance and investment, 
but the majority of voters have (ultimately) agreed to put it in our 
social contract.

And this brings us to the second line of liberal argument: the best 
form of social contract is majority rule. It's not perfect, but its 
better than minority rule and still better than one-person rule. 
Government by unanimous consent is impractical, since it almost never 
happens, and society by anarchy results in "kill or be killed." So 
what do libertarians and conservatives propose in democracy's stead? 

Of course, nearly all democracies have constraints on majority rule, 
designed to protect the rights of individuals and minorities. In the 
U.S., these are embodied in our constitution. But to be legitimate, a 
constitution must be a document of the people; hence it must be 
approved by the majority. (In the U.S., a supermajority.) And the 
constitution of the United States clearly allows taxation. Article I, 
Section 8, states: 
"The Congress shall have power to lay and collect taxes, duties, 
imposts and excises, to pay the debts and provide for the common 
defense and general welfare of the United States." 
And the 16th Amendment states: 
"The Congress shall have power to lay and collect taxes on incomes, 
from whatever source derived, without apportionment among the several 
States, and without regard to any census or enumeration." 
But should the constitution allow taxation? If conservatives and 
libertarians feel that it should not, then it is up to them to 
describe a constitutional or political system that would work better 
than majority rule. Do they prefer minority rule? Or dictator rule? 
The only alternative to these historical atrocities is self-rule -- 
but again, that's anarchy, kill-or-be-killed. 

Of course, some may wish to keep the current political structure, and 
simply convince the majority of voters to pass an anti-tax amendment. 
But if they do, then they are legitimizing the social contract which 
hardly puts them in a position to call taxation "theft." 

Understanding the above points allows you to see through common anti-
tax arguments. Here is a real example taken from the Internet: 




The "How Many Men?" Argument (1) 

Suppose that one man takes your car from you at gunpoint. Is this 
right or wrong? Most people would say that the man who does this is a 
thief who is violating your property rights. 

Okay, now let's suppose that it's a gang of FIVE men that forcibly 
takes your car from you. Still wrong? Still stealing? Yup. 

Now suppose that it's ten men that stop you at gunpoint, and before 
anything else they take a vote. You vote against them taking your 
car, but the ten of them vote for it and you are outvoted, ten to 
one. They take the car. Still stealing?

Let's add specialization of labor. Suppose it's twenty men and one 
acts as negotiator for the group, one takes the vote, one oversees 
the vote, two hold the guns, one drives. Does that make it okay? Is 
it still stealing?

Suppose it's one hundred men and after forcibly taking your car they 
give you back a bicycle. That is, they do something nice for you. Is 
it still stealing?

Suppose the gang is two hundred strong and they not only give you 
back a bicycle but they buy a bicycle for a poor person as well. Is 
it still wrong? Is it still stealing?

How about if the gang has a thousand people? ten thousand? A million?

How big does this gang have to be before it becomes okay for them to 
vote to forcibly take your property away without your consent? When, 
exactly, does the immorality of theft become the alleged morality of 
taxation?




This argument is based on a faulty premise of ownership. Suppose the 
gang of ten men had helped you buy the car, pitching in with a loan 
that covered 29 percent of the sticker price (which is about the 
percentage of the GDP devoted in the United States to taxes). And 
suppose they simply wanted return payment. By not returning the 
favor, it is you who become the thief. If you want a car that is 100 
percent yours, simply pay the full price of one. Of course, by 
accepting the loan from the gang of ten men, you were able to buy a 
better car than you could afford in the first place 

Arguments like "taxation is theft" are extremely egoistic. It's the 
equivalent of saying "Everything I make is by my own effort" -- a 
patently false statement in an interdependent, specialized economy 
where the free market is supported by public goods and services. 
People who make arguments like this are big on taking these goods but 
short on seeing why they need to pay for them. It doesn't matter that 
they believe these public services should be privatized -- the point 
is that the government is nonetheless producing them, and they need 
to be paid for. It doesn't matter that any given individual doesn't 
agree with how the government is spending their money -- many people 
don't agree with how corporations pollute the environment, but they 
still pay for their merchandise. It doesn't matter that any given 
individual thinks some government programs are wasteful and 
inefficient -- so are many private bureaucracies, but their goods 
still demand payment. If tax opponents argue that a person doesn't 
have to patronize a company he disagrees with, then liberals can 
argue that a person doesn't have to vote for a public official he 
disagrees with. 

Ultimately, any argument against paying taxes should be compared to 
its private sector equivalent, and the fallacy will become evident. 




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