The Taxer (Extortionist) is Coming

Tibor R. Machan

For most people taxation is a burden that’s accepted in large part because they know the alternative is worse. As a friend pointed out, it is like dealing with someone who holds you up in a back alley: “Your money or your life!” To put up a fight can be fatal and up to a point almost everyone can tolerate the loss. But as the economist Arthur Laffer observed, everyone has a point at which no further taxation can be lived with. Kind of like pain--we can all put up with some of it and will not succumb until the level is just too high. But it is never a good thing.

Now there are sadly some prominent folks who claim that this is all as it should be. As Justice Felix Frankfurter reported about Justice Oliver Wendell Holmes, "He did not have a curmudgeon's feelings about his own taxes. A secretary who exclaimed, 'Don't you hate to pay taxes!' was rebuked with the hot response, 'No, young feller. I like to pay taxes. With them I buy civilization.'" (Felix Frankfurter, Mr. Justice Holmes and the Supreme Court [New York: Atheneum, 1965; originally published by Harvard University Press, 1938, 1961, page 71]) But this is not right at all, despite Holmes’ gravitas.

Taxation was the charge the ruler levied on his subjects for being privileged to live and work within the realm that belonged to him (or her). Yes, kings and czars and pharaohs were thought of as the owners of the countries they ruled. So they extorted funds from everyone at the point of the gun or bayonet. It wasn’t a free exchange, as between, say, a dentist and a patient. Or even a client and a body guard. No, the king ruled--indeed by some accounts owned--the subjects and confiscated what he chose from them in property and labor, leaving them just enough to survive.

This is what Robin Hood was protesting, by the way, not great wealth. His rebellion was to take back what the taxer took and return it to those who were the victims of taxation. The process of taxation is no peaceful interaction whereby citizens are offered services by their government and pay for it voluntarily, the picture Holmes painted of it. No. Rulers extorted the funds and didn’t obtain them in peaceful ways.

Taxation, then, was on par with slavery and serfdom, not with free trade. Once the American idea--learned from the English philosopher John Locke and some predecessors--of natural individual rights to one’s life caught on, both serfdom and slavery started to crumble. They lost their moral foundation. And once it was demonstrated that everyone has the right to private property as well, the notion that the monarch owns the country also took a major hit. Sadly, however, all this wasn’t taken far enough. It was all a bit too revolutionary, to make it clear that no one owns anyone else, only ones own life and property. Probably in part because that’s the only way political thinkers could see their way through to funding the legal services governments were providing--the civilization that Homes was talking about. But that is a bad way to have handled the situation.

As it was realized a bit later, one has no right or isn't entitled to another’s life even if one needs that life very much, as, for example, in fighting a war in defense of a country or for harvesting one’s crop. For a long time folks put up with conscription in the USA even though it violates the right to one’s life. So they also put up with taxation, even though it violates the right to one’s labor and property. But it need not be like that in either of those cases: one can pay people to fight or give them other benefits, and an army will arise quickly enough, especially provided the purpose is a just one, not imperialistic adventurism. And one can finance essential legal services without confiscating anyone’s private property, mainly by charging a fee for all economic transactions that need the protection of the law. Both these methods avoid coercion. One can avoid service in the military by paying others who are willing to take up arms for a just cause. And one can avoid paying the contract fee by simply relying on a handshake. But in the latter case, few would make that choice since they would be left very insecure in their commercial exchanges. It is best to enter into a binding contract and paying the fee to have it well protected in the law. Moreover, there is plain old human generosity which is far better than extortion any day!

Of course, the details would be very involved. Sadly no one is studying this since public finance is so intimately tied to the system of taxation. But just as the switch from conscription to a volunteer military wasn’t impossible, so is the switch from taxation to the contract fee system.

So taxation is by no means the best way to obtain funding for the legal system, quite the contrary, just as any other involuntary service isn’t the way to obtain the work of others. It is high time that this is realized and the extortionists sent on their way.