Tax Day Reflections


Every year when tax day comes along, people start talking
about "tax fairness." Yet strangely, I hear very few people
discuss the fairness of taxation itself. What right does
the government have to force people to pay for services
that they may not even want? In particular, what right does
the government have to take money from people who never
consented to pay? Almost everyone sees that consent is the
proper moral foundation for other relationships. To take
one eloquent slogan: If a woman says no, it's rape. Unless
we can show that we really consent to pay taxes, we cannot
avoid the parallel maxim: If a taxpayer says no, it's
theft. Many people think that we consented to pay taxes in
the Constitution. The cherished myth behind our own
Constitution as well as those of many other countries is
that at one pristine time, the people consented to all of
the seemingly involuntary practices we endure today.
However, no one alive today ever signed the Constitution,
so how could it bind them? Parents could only bind
themselves, not their children, much less all their
descendents throughout history. Moreover, the consent that
ratified the Constitution was merely the consent of various
voting majorities, who "consented" not merely for
themselves but for those who expressly denied the
Constitution their consent. The minority voters might well
protest that no one else has the power to offer their
consent for them; a person can only offer consent for
himself or herself, not for another. Other people think
that we consent to pay taxes merely by living in the
country; but this just begs the central question: Why can't
I both remain in this country and refuse to pay taxes? If a
kindergarten bully told his classmates that they "really"
consented to get beaten up since they could go to another
school instead, we could only laugh at his effrontery: for
the bully has no right to present this unfair choice in the
first place. Similarly, only after it can be shown that I
am breaking a voluntary agreement by refusing to pay taxes
could my consent be inferred from my decision to remain
within the boundaries of the United States. I can only
conclude that for all its claim to virtue, government
fundamentally rests on injustice, the injustice of taking
money from people without their consent. Everyone who
complains that current taxes are unfair is perfectly
correct; but the problem with taxation is not its
distribution, but its very existence. It was precisely this
conclusion that led Thoreau, the most famous critic of the
morality of taxation, to this startling position: "I
hearily accept the motto, - 'That government is best which
governs least;' and I should like to see it acted up to
more rapidly and systematically. Carried out, it finally
amounts to this, which I also believe, - 'That government
is best which governs not at all;' and when men are
prepared for it, that will be the kind of government which
they will have." To most people, this conclusion sounds so
impractical that they can only reply: We will never be
prepared for that kind of government! But I prefer to at
least consider the alternatives to taxation before I
resignedly endorse so great an injustice. And the
voluntary, consensual alternatives to taxation are many.
Most obviously, there is the free market. If people need
something, they can pay others to produce it for them. Many
of the largest functions of modern governments could easily
be supplied privately: education, old-age pensions, medical
insurance. While economists frequently defend the power of
the market to deliver the goods, they easily give up in
despair when profit-making business seems to be an
unworkable solution. But where traditional business fails,
perhaps the solution is not tax-funded services but a
different sort of voluntary and mutually beneficial
arrangement. Markets are not the only sort of voluntary
organization: extended family, clubs, homeowners'
associations, merchants' associations, and self-help groups
could supply everything from a safety net to streets, fire,
and police protection. Finally, there is private charity:
over $120 billion dollars strong in 1990. With the
abolition of taxation, we could expect this figure to rise
since people would have more money to give. True, there
would no longer be a tax break for charity, but all of us
would have so much more disposable income to give, along
with the knowledge that we personally, rather than the
government, are responsible for giving the riches needed to
right the wrongs that we perceive in the world. Even if
charity remained unchange, I submit that $120 billion by
itself is plenty to care for the truly needy - mainly
children and the severely handicapped - who can't help
themselves. As an economist, I am sure that many people
will say that government is absolutely necessary to supply
"public goods" - goods that benefit everyone, even though
it is impossible to charge for them. National defense is
the best example - the military protects us all, even those
who don't pay. What is puzzling is that the same people who
normally find economists' reasoning narrow and unrealistic
find this argument so convincing. The argument assumes that
people utterly lack any moral sense, any willingness to do
their fair share voluntarily, just because they think that
that is the proper way to behave. Flesh-and-blood human
beings are not "economic men," interested solely in
maximizing their personal wealth; they have a moral sense.
It may not be wise not to rely on someone's moral sense too
heavily; but all that we need to enjoy the voluntary
provision of public goods is for some reasonable percentage
of people to willingly donate some reasonable fraction of
their time or income. But suppose we take an extremely
pessimistic view of our fellow human beings. Even then,
there is an inner contradiction in public goods theory.
Why? Because if you create a government to solve the public
goods problem, you create a new public goods problem: the
public good of controlling the government. Everyone
benefits if the government stays within its appointed
bounds, even those who don't take any effort to keep their
government in line. And if you take such a dim view of
human nature, can you expect politicians to be any better?
This is hardly an academic in the twentieth century tens of
millions of people have been murdered by their own
out-of-control governments. In sum, government isn't any
solution to the public goods problem, because it is the
primary instance of the problem. The only real solution is
to convince people to voluntarily do the right thing. If
you can convince them, government isn't necessary; if you
can't, government will just magnify the problem. Or to
express the problem slightly differently: you must
determine who you trust more to voluntarily do the right
thing: politicians, or the public at large. Our century's
grim history of political barbarity makes one hesitate to
choose the former. Morally, taxation is unjust;
practically, it is unnecessary. Yet taxation is unlikely to
disappear in the near future; so what is the right thing to
do in the meanwhile? Thoreau's advice is again sound: "It
is not a man's duty's to devote himself to the eradication
of any, even the most enormous wrong; but it is his duty,
at least, to wash his hands of it, and if he gives it no
thought longer, not to give it practically his support."
Which means: Don't work for the IRS, never support higher
taxes on anything, and never let anyone pretend that you
pay taxes of your own free will. Taxation is always theft,
and the more people hear this insight repeated, the sooner
they'll see taxation for what it is. 


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