Is Taxation Really Theft?

~ Frederic Sautet ~

“Taxation is theft” is one of the most important claims of libertarian politics. Murray Rothbard famously stated in The Ethics of Liberty that taxation is theft and is therefore immoral. To those who believe in natural rights, no one, especially not the state, can infringe upon property rights. For jus naturalism, taxation can only be theft. Legal positivits, contractarians, and others who have a more positive view of the role of government, do not agree. In fact, to most people, taxation is a necessary evil, but they wouldn’t equate it to theft. Tax collectors may have been seen in the past as thieves, but that was because in most societies of the past the only way to make sure taxes were collected was to let tax collectors collect their  share (hence the bad name associated with tax collectors in the Gospels for instance - Matthew 9:10-12). In today's Western world, tax collectors only collect what parliament has decided. So are libertarians a bunch of lunatics who will never be understood by the majority of the population or are they right to say that the state, because it has the ultimate monopoly over the use of violence, is simply acting like a thief when it decides to expropriate a percentage of what we have earned?

One way to think about the issue is try to understand why many people don’t see taxation as theft. It may be because they don’t perceive taxation as an act of compulsion that violates the non-aggression principle the way someone whose car has been stolen would. In New Zealand where a good chunk of the population lives overseas (figures I have seen range around 10%), people do not see paying taxes as theft because most people will tell you that you are free to leave if you don’t like the taxes you have to pay there. And it is exactly what happened in the 1970s and 1980s when a growing number of the population left to go oversea. So the argument that many people will hold goes something like this: When Peter robs Paul at gunpoint, Paul has no alternative than self-defense; this is an act of theft and it’s morally wrong. But when the government taxes you, it is generally predictable and you have time to make an alternative choice if you don’t like it; therefore it is not theft and it’s morally acceptable, even if it is not pleasant. 

One major issue with this line of thinking is that there are costs associated with migrating. Not everyone can find a job in a different country, some professions face serious legal barriers to entry. While New Zealanders can freely migrate to Australia where everyone speaks the same language and follows similar laws, migrating is more difficult for people who come from a country whose language is less commonly spoken than English. Moreover, most countries do not have open migration policies. If you are poorly educated, legally settling in the US or in Canada may be quasi impossible. Moreover, some governments may make your exit difficult (and I am not talking about the former Eastern block here). The US for instance taxes its citizens on a worldwide basis, even if one does not reside in the country. And if you decide to leave the country forever and you own more than $500,000 in assets, you will owe taxes for a long period. These examples show that migrating costs are often non-trivial. While it may be true that in many cases people have a choice  of residence, the costs associated with that choice are positive, which is why only 2 to 3% of the world population (if my memory is correct) consist of expats. One can expect governments to tax the consumer surplus as much as they can and protect their tax bases by making expatriation difficult. Finally, this is precisely for all these reasons that governments cartelize together to suppress tax competition. As long as some small country in the world offers you a better deal, exit will be a credible threat.

While it is true that the right to exit seriously limits the expropriation power governments possess, it is not clear to me that it is a good argument against the idea that taxation is theft. Migration is costly for most people! Leaving your family and friends is not a choice that one makes unless the tradeoff is vastly positive. Yet most New Zealanders I have talked to believe that if you stay in New Zealand, it’s because you are willing and happy to pay your taxes. Others in the world may not feel the same way. This may be because the services the New Zealand government provides are arguably of better quality than what many other governments around the world supply. Public corruption is quasi absent and most people get a sense that their taxes are used for socially beneficial outcomes. Again, this may not be the case in other countries. 

The real issue is that all too often governments will behave like (roving) bandits. While the power to tax is the source of state power, it may be abused in ways that make governments and thieves equal. Libertarians may revolt against the power to tax, but most would surely admit that living in Hong Kong with a 15% marginal income tax rate is not the same as living in France with a 40% rate. So perhaps how one feels about the fundamental nature of taxation will depend on where one lives and how bad one’s government is. But then perhaps Étienne de La Boétie was right: most people enjoy voluntary servitude…

Comments

[Jim Vernon]

It seems to me that a few pragmatic questions might help with the philosophical logjam here.

If taxes are a necessary evil, does this not require that government is a necessary evil? This evil would apply not just to a particularly bad government, but also to the best possible government, would it not?

OK, maybe this idea has a lot of takers.

How many of those takers own property? I ask this second question, because I don't see how property interests can be protected without government of some kind. And I don't think governments can be funded by the kind of voluntary donations favored by many libertarians as the alternative for government funding of various programs.

I haven't read Locke's treatises on property since college, so I'm very rusty on some of the philosophical underpinnings here, but it seems that these arguments about the evil of taxes have a lot of premises I don't buy. One does not need to believe government is perfect to believe anarchy is worse. Shouldn't we accept that human imperfection requires that governments, too, will be imperfect but can be much better than the alternatives? (I'm too lazy to look this up, but didn't Jefferson say "that government is best which governs least?". Whoever said did not say "that government is best which does not govern". It seems implicit that some amount of government is necessary -- I'll stop short of saying a necessary evil, but that thought would seem to have a lot of support from this audience, too. Maybe this isn't the central idea behind our existence as a nation state, but it's not too far from the center of thought among the Founders, is it? (Again, I'm rusty on many of the particulars and far too lazy to look up quotes and re-read various histories. I'm not sure that would provide any finality, anyway.)

Isn't the conservative case for our Constitution founded at least partly on the premise that taxation -- with representation -- must be part of the structure? The colonists didn't rail against taxation; they railed against taxation without representation.

None of these questions attacks the conservative case for the most limited government, I think. That's a separate but related issue to me. However, once we admit that government serves good purposes -- including the protection of the property interests that seem to back so many of the "taxes are theft" arguments -- then were arguing about differences of degree and not kind, right?

Like most people, I have plenty of pet peeves about government spending, and I recognize both the arbitrariness of majority/republican decision making and the economic distortions. Maybe there's a theoretically ideal, Hayekian regime that would have led to even greater prosperity during the past few centuries, but our prosperity itself is a driving factor behind many of these expansions of government programs.

Maybe this debate would be better focused by thinking more like economists and looking for marginal improvements, instead of looking for wholesale regime changes.

But hey, it's also fun to put on white pants and criticize the gubment full time!

Cheers,
Jim

[Mattyoung]

The tax is a signal. When I go to nanny government to solve my problem, nanny government ultimately gives me a bill. When the prospective bill is too high, then I solve the problem in the private sector.

Absent taxes all the lazy rich will want government at their service. We need tax as a price signal.

[Nate Emmons]

The argument I use against the "If you don't like it, you can move" argument is that this presupposes the government's legitimate authority in the first place. It's circular reasoning.

[D.L. Mitchell]

"One major issue with this line of thinking is that there are costs associated with migrating."

This is a fruitless line of argument. Taxation isn't theft because it is difficult to avoid; it is theft because it is involuntary. That's what you need to argue.

It isn't easy to convince people of this. Typically people believe that because you can leave the country in principle, not leaving amounts to voluntary consent to taxation and laws. You have to argue that if you haven't already given your consent to be taxed and obey laws, then the government has no rightful standing to demand you do so or gtfo.

[Shane Pleasance]

The argument is, as D. L. Mitchell points out, one of compulsion & force. I ask only the option to choose which services I wish to pay for - and receive.

[Frederic Sautet]

Dan,

I do not disagree with you that the involuntary character of taxation is the problem. My point was to point out that most people don't care about this line of argument. As you say, it is not easy to convince people of this. The interesting question is why the compulsory aspect of taxation doesn't seem to be such a problem to most people (in the West), most of the time. Jus naturalist libertarians may be right in their own logic, but it obviously doesn't translate well with others. Perhaps there is more to the story than libertarians want to admit. Libertarian blogger Timothy Wirkman concluded that libertarians are misguided in saying that taxation is theft: http://wirkman.net/izens/index.php/izen/2006/12/19/taxation
Of course, it all boils down to the fundamental debate of legitimacy of violence and whether rights are human constructs or laws of reality.

Frederic

[James]

Those who excuse taxation by claiming that "you can leave" seem disingenuous. If a defendant on trial for theft offered the defense that he gave his victim the option of leaving the country, would anyone in the "you can leave" crowd take such a defense seriously? I doubt it.

[Charles N. Steele]

The reason many people do not see taxation is theft is that they see taxes as their payment for government services.

They are correct. Whether we think the government does a good job providing services or not (I don't), providing them is a major part of its activity. Government isn't simply a theft racket.

[bbb]

>> "contractarians, and others who have a more positive view of the role of government, do not agree"

Isn't it strange, that one of the founders of public choice, which certainly didn't have a very "positive" view of government, was also a contractarian (James Buchanan)?

I think you brush the contractarian argument (that taxes are membership fees for a "club" that provides services which can only collectively provided) much too quickly aside.

As Charles N. Steele points out, the government may not work very satisfactorily under its given institutional framework. There surely is room for improving the working properties of government to better serve the citizen's interests.

However, on the whole people probably do get a net surplus from their taxes paid. Not everyone profits from every collective project undertaken, but the whole tax-services package is probably still preferable to not having it at all.

Because people recognize this, they do not see taxes as "theft", but as "membership fees" they voluntarily pay as long as the other members of their political club also pay them and as long as they, on the whole, do get an appropriate service in return.

[Aidan]

Don't forget the 'fiscal illusion': People pay more than they think and receive less than they realise. Tax is less like a mugging and more like a fraud - the victim appears willing it is just that they do not see the full picture. Or perhaps a conspiracy to defraud - as a lot of people think, and are right in the short run, that they will do better out of the tax system. A giant ponzi scheme.

[scineram]

I would recommend Callahan's posts on this topic at Think Markets and Crash Landing.

[vt]

Suppose you want to leave to escape taxes. You would leave where?

I doubt that the "free to exit" argument is the reason why people fail to see taxation as theft. The reason, I think, is that they see taxes as payment for public services. The argument is "you make use of those services, therefore it is legitimate for the provider to ask you to pay - it is theft, on your part, *not* to pay taxes".

[D.L. Mitchell]

"The reason many people do not see taxation is theft is that they see taxes as their payment for government services. They are correct."

This is another mistaken line of argument that misses the point. The issue isn't whether a service is provided but whether you purchased it voluntarily. Just think of a protection racket. If you are coerced into purchasing a service, then you have been coerced. The "taxation is theft" argument objects to the coercion.

[Jerry O'Driscoll]

The issue is clearly about coercion. Social contract theorists have a story to tell, but I don't think it is a convincing one.

The solution is surely to minimize coercion by maximizing freedom. Liberalism was described as anarchy with a constable. Once we have attained that condition, we can debate whether we can eliminate the constable.

[Freedomfliesblackflag.wordpress.com]

The argument that "you can always leave" is akin to:

"Hey, if you don't like the Mob stealing your couch, you can always abandon your house"

The justification of theft based on the theory you can abandon your country is, of course, irrational.

Expropriation by force is the evil and is not dispelled by the time displacement between the demand and the use of the force.

[liberty]

"While it is true that the right to exit seriously limits the expropriation power governments possess, it is not clear to me that it is a good argument against the idea that taxation is theft. Migration is costly for most people! "

Costly is not enough. Verizon can introduce a fee, and then put up barriers to my exit--a $200 fee for canceling the contract along with "natural" costs like changing my phone number.

The way that we determine whether it is theft or not is not whether there were costs to exit, it is whether we signed into a contract that allowed the company to introduce a new fee (and put up barriers to exit - other fees). If we did then its perfectly legal and *not considered theft* - very often we do enter into such contracts, depending upon competition to keep the company in line.

Similarly, if we have entered - implicitly or explicitly - into such a contract with the state, then it would also not be theft. This is why it boils down to one's understanding of democracy and society.

[scineram]

It is not like the mob stealing your couch, because that is not necessary for social order. As Mises recognized the state is.

[scineram]

I also wonder how many natural law theorists during history were anarchists.

[Freedomfliesblackflag.wordpress.com]

"needed for social order"

The assumption, sir, is that government provides such social order.

But it does not. It destroys it.

Social order is created in civilization based on the premise that no individual holds the right to initiate violence on another. This premise creates the roots of social order.

Government holds for itself the monopoly and right to initiate violence upon individuals so to enforce its edicts. This action is contrary to social order.

Therefore, the couch/house abandonment remains an accurate analogy.

[scineram]

Those are just assertions. As was mine. Asserting them more vigorously will not settle who is right.

[Freedomfliesblackflag.wordpress.com]

Scineram,

Do you agree or not agree that violence disrupts the social order?

[scineram]

Not at all. Violence against murderers and common thieves is essential.

[Mark]

The "taxation as theft" argument strikes me as strange, essentially equivalent to the "property is theft" argument. Governments are simply large corporate landowners; if you want to live on their land, you have to agree to their terms. If you don't, you can leave; it's not your land, after all (subsidiary title granted by a sovereign doesn't count as real ownership; it's just a feudal subholding, really). You can find your own land that nobody else currently owns (in which case you don't have to pay anybody rent), but sadly none of the earth's surface is left, so you'll either have to convince one of them to sell (good luck with that!), or find a landowner to rent from.

I'm not sure how that could ever be fixed without some sort of rule against land consolidation. If all governments were abolished tomorrow and their land distributed, within a few generations the likely outcome would be increasing consolidation again into 200-300 large landowners, who would then de-facto form the new sovereign nations.

[Bill Stepp]

"Governments are simply large corporate landowners; if you want to live on their land, you have to agree to their terms. If you don't, you can leave; it's not your land, after all (subsidiary title granted by a sovereign doesn't count as real ownership; it's just a feudal subholding, really)."

Rubbish, to use a Keynesian term. A corporation gets it revenue by trading a good or service for money. A government gains its revenue by theft (taxation and inflation) and arrogates a legalized monopoly of force over an arbitrarily circumscirbed geographical territory. A corporation is a voluntary organization; a government is a criminal gang.

[Black Flag]

scineram,

You acting obtuse.

Before one acts against MURDER, there has to be A murder - an act of violence.

If there was no act of violence in the first place, there would be no need to respond to it.

Again, does violence increase or decrease social order?

[Black Flag]

Mark,

You confuse rent paid voluntarily with money extract by force to be the same thing.

The government HAS sold its right of property to someone - and you buy it when you buy that some one's else house. The government - long ago - sold that right and has no further claim to it.

You idea would be equal to Walmart selling you an apple, and then you re-selling that apple - but Walmart seizes your profit.

Further, taxation is not tied to property - it is tied to an individual's action.

Unless you are also claiming that government owns you ......

[Mark]

@Black Flag: But the government has *not* sold you sovereign title to the land, merely a feudal subholding under the U.S.'s overarching title.

[Black Flag]

Mark

They have sold me right of use for perpetuity.

And as I already explained, unless you believe the government owns you.....

[Mark]

@Black Flag: They've sold it with conditions attached, one of which is paying taxes, and another of which is following some regulations. The same happens from non-governments too. If you purchase a home in an area covered by a home-owner's association (HOA), it comes with deed restrictions that contractually bind you to pay an annual fee (essentially, a property tax), and to follow the HOA's restrictions on how you may use your land. Do you think HOA fees are theft, also?

[Black Flag]

Mark,

First of all, those were not the conditions at all. If you have some sort of document you can point to that shows "ownership" of the country by the government - please demonstrate.

However, the country is owned by the People - if you understand and believe in the Constitution.

Further, any conditions attached post hoc and unilaterally do not constitute validity. Any conditions created by agreement of two parties on behalf of uninvolved third are not valid.

Your analogy fails again - you confuse voluntary agreements (home owner associations) with coercion. The most significant premise is wholly different. Theft requires coercion - voluntary agreement does not satisfy that requirement.

I ask, did you sign your life away to the government? On what document?

Does the government own you, Mark? I await your answer.

[Peter]

The US for instance taxes its citizens on a worldwide basis, even if one does not reside in the country. And if you decide to leave the country forever and you own more than $500,000 in assets, you will owe taxes for a long period.

And worse: even if you leave and give up your citizenship (which is the only way to avoid US taxes), if the State Department thinks that your reason for giving up citizenship is primarily to avoid taxes (which, in your scenario, is what it is!), you'll be in deep deep sh*t! And they'll keep right on taxing you!

While it is true that the right to exit seriously limits the expropriation power governments possess, it is not clear to me that it is a good argument against the idea that taxation is theft

If anyone considers it a valid argument, then the same argument must apply to where you choose to live within the country: i.e., if you live in a bad neighborhood where houses are often broken into and robbed, that's not actually robbery, it's voluntary donation, because, after all, you could move to a better neighborhood! If you stay, it's because you're willing and happy to be robbed! What's the difference? Oh, well, except for the fact that you could, in fact, move to a more secure neighborhood and significantly reduce the chances of being robbed -- you can't really leave the country to avoid taxes (if you're not American, you can avoid taxes imposed by the government of the country you leave, but the country you move to will tax you...)

[Peter]

One does not need to believe government is perfect to believe anarchy is worse.

And vice versa!

[Peter]

[i]I'm too lazy to look this up, but didn't Jefferson say "that government is best which governs least?". Whoever said did not say "that government is best which does not govern".[/i]

It's often attributed to Jefferson, but he didn't say it. Henry David Thoreau said exactly what you disclaim, however: "I heartily 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 also I 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."

[Peter]

> They are correct. Whether we think the government does a good job providing services or not (I don't), providing them is a major part of its activity. Government isn't simply a theft racket.

But government doesn't provide services -- it provides DISservices. Some of them look like services because govt crowds out other suppliers, and they're things you more or less want, but that's hardly the point. Let's say you have a cold and I (a) prevent anyone else supplying you with medicine, and (b) drop off a package of Sudafed at your house. You didn't ask for it, and I don't give you a choice. Later, I send you a bill (for three or four times what it would have cost if you'd been able to buy it from someone else). Am I providing a service, or a disservice? This is "government service" -- and I don't want it!!

[Peter]

> The "taxation as theft" argument strikes me as strange, essentially equivalent to the "property is theft" argument. Governments are simply large corporate landowners; if you want to live on their land

Just one little problem: how did the government come to be the owner of the land in the first place? If it's not the legitimate owner, your argument goes out the window.

[scineram]

I reject you absolutist neo-lockean property theory, as do most people. The government is necessary to secure property rights, and you owe taxes for that.

[Black Flag]

Scineram,

The government is not necessary.

MEN secure their own rights.

Again, since initiation of violence destroys social order - and government initiates violence, government destroys social order, and does not create it.

Further, for you to assume to that I wish government to secure my rights is disingenuous. You have no right to force it on me.

[Peter]

If government were necessary to secure property rights, government could never have arisen in the first place -- the existence of government proves that government is NOT necessary to secure property rights. But, as Black Flag points out, even if, contrary to fact, government WERE necessary, your assertion that "you owe taxes for that" is a non sequitur.

[Morpheus]

check out my video where I ask the people in the audience at a city of Phoenix budget hearing where the people affirmed taxation is theft!
http://www.youtube.com/watch?v=jDQyycL9iNo