Sunday, July 01, 2007

Let’s Revisit Taxation

Tibor R. Machan

Nice thing about having one’s writing published is one receives criticism—which is also the bad thing about it. Some criticisms are thoughtful and report one’s position accurately, others are thoughtless rants and usually distort what one has written.

Around April 15th I usually write something about the nature of taxation. I remind readers that the institution had its home in feudalism in which the monarch owned the realm and collected taxes as payments of rent from those living and working within his or her dominion. Once, however, monarchy is abolished, as it should be everywhere, taxation no longer has any legitimacy. This is just how serfdom vanished once the system that legitimized it was overthrown, as it clearly should have been in light of the fact of an individual’s unalienable right to his or her life, liberty and property.

OK, I laid out this in a recent column and someone addressed it in a blog as follows:

“I read once again in Tibor Machan's column … that taxes are theft because they depend on the police power of the state to collect.

”Hogwash. I'm a citizen of my town and county and state and country.~ The taxes are the bill for the undertaking of those entities of which I am a member.~ One of the principles for which I have high regard is the injunction to be responsible.~ One sign of responsibility is that very paying of the bills I have accumulated, including those accumulated in my name by organizations of which I am a member.

”Thus the state's bills are my responsibility.~ I've always felt a certain pride as I've finished my tax returns and realized what my contribution was going to be for the country this year. Yes, I read the fine print and use Schedule A and narrow my taxes to no more than they should be.~ But that's why the~ laws are as they are.”

First, I do not regard, nor do I call, taxation “theft.” Rather I consider it extortion: “You may live and work here, provided you pay!” That is the Mafia’s way of obtaining resources! And government’s.

Second, a bill must be paid, in a free society, when all parties agree to the terms of exchange but not when one party unilaterally sets the terms and the others must comply, never mind their consent. If, for example, I deliver some very nice stuff to your home, leave it on your front porch, I have no right to demand payment for it. You need to have reached agreeable terms of trade with me before that may happen. And this is clearly not what government does. Instead, government provides citizens with services and goods whether or not they contracted for them and then sets the prices for these unilaterally—or quasi-democratically—and collects them at the point of a gun or its clear-cut threat.

The state’s bills are not my responsibility unless I freely, voluntarily incurred them, which most of us do not.

Of course this does leave us with a challenge: How are we to fund those services and goods that we do freely accept from those who administer the legal order? Whatever the correct answer to this, extortion—taxation—is not it. Some way must be found to eliminate taxation just as serfdom has been eliminated. Neither can be part of a bona fide free country.

One idea that makes good sense, suggested once by Ayn Rand –and elaborated by me in a longish paper in my edited book, The Libertarian Reader (1983)—is to charge fees for all contracts. These instruments are ubiquitous in a free country, with its more or less complex economic system. Yet they can be avoided, too, if the parties have full trust in each other. Because few would make the mistake of resting their transactions with the umpteen strangers with whom they do business on such trust, the contract fees that would be charged—so that the contracts can be backed by a proper legal order—would pay for the few proper services of a strictly limited government.

Unfortunately, this option is rarely explored in the hundreds of public finance departments at colleges and universities. That’s because of the prominence of the obsolete and immoral institution of taxation. But its prominence does not entail its propriety by a long shot.

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