In last August’s post “Spread the Wealth“, I talked about the justifications for redistributive taxation. I felt that some of the issues raised in the comments deserved to be revisited – and since it’s tax time here in the U.S., it’s worth a reminder of why we pay them and what we get out of it.
The centerpiece of the libertarian rhetorical strategy is to refer to taxation as theft, robbery, slavery. I’ve heard these epithets and others like them many times. It’s easy to see what purpose this serves: to make your concerns seem more important, it helps to refer to them not as bloodless policy differences, but as raw issues of justice. “The government is stealing from innocent people!” is a lot punchier and packs more emotional heft than any proposal, no matter how passionately worded, to simplify unnecessary regulations and cut down on bureaucratic red tape.
But this overheated claim is being asked to bear far more weight than it can possibly support. Of all the libertarian policy proposals out there (many others of which I agree with), the equation of taxation with theft is the least defensible. The fallacies in this should be obvious to a moment’s thought, but some people seem unwilling to take that moment, so I’ll go over them again in this post.
Libertarians say that taxation is like theft because it takes property from the unwilling. What they ignore, time and time again, is the crucial role of democratic consent. Taxes are not arbitrary impositions decreed by a faceless government. Rather, taxes are the dues we pay in exchange for membership in a society and access to all the services it offers.
The situation can be compared to a private club that charges a membership fee in exchange for providing benefits and amenities to its members. Obviously, the club is within its rights to charge whatever price it believes fair in exchange for this. If you believe the price is too high, you’re free to renounce your membership and leave the club. What you’re not free to do is to refuse to pay, but demand that you still be allowed to sit in the club and use its facilities. Nor are you free, if the club doesn’t offer this option, to decide that you only use some of its services – only the swimming pool, say, but not the sauna or the tennis courts – and should therefore have the right to pay a prorated membership fee. But these options, clearly absurd in this thought experiment, are the same ones libertarians claim they have a right to exercise in the real world.
The analogy of the club can be transferred in a precise way to society as a whole. Society is the club, and taxes are the membership dues we pay in exchange for the services it provides. If you don’t want to pay, if you dislike its terms, you can leave that society and seek another one. But you are not free to unilaterally demand that society rewrite its terms to favor your particular preferences.
Going hand-in-hand with the fallacious equation of taxation to theft is another libertarian fallacy: the belief that a free market is the natural state of affairs and will spontaneously arise if only the economy is left to itself. This is wrong. A free market is a kind of infrastructure, and like all other infrastructure, it requires investment to create and effort to maintain.
As centuries of history show, the natural state of an unregulated economy is not free competition, but stifled and constrained competition. Large, established powers, if given the chance, will do everything they can to suppress competition – whether through means fair or foul. From medieval guilds to industrial robber barons, the tactics are always the same: seizing the distribution channels, the infrastructure, the intellectual property, or the sources of raw material. Governments want to control vital resources in the name of national security; industry groups may take a hand in designing regulations that make it all but impossible for new players to enter the field. Outright intimidation, fraud and violence are often used against those who refuse to play along. Even the staunchly libertarian Cato Institute admits this:
It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market.
To maintain the preferable state of a free market, we need structure and regulation from the government. Taxation provides, among other things, the resources that are necessary to keep the free market running.
In my experience, most libertarians concede that some regulation is needed, but argue that they should only be taxed for services that benefit them directly. This is like demanding that businesses sell their goods to you for exactly what it cost to make them and no more. Just like any business, the government is entitled to “turn a profit” on the services it provides. Just as with a business, these proceeds can be reinvested, resulting in greater productivity and efficiency that ultimately benefit all members of society.
Of course, elected governments can spend tax money unwisely, on pork or boondoggles, and we as citizens have every right to complain about this and to oust officeholders who abuse the public trust. But the solution is not to abolish taxation, just as the solution to corporate fraud and malfeasance is not to ban all corporations. Any power can be abused, but that is not a reason to get rid of all power, which is impossible in any case. If taxes are spent unwisely or wasted, the answer is to elect better politicians or put in place more stringent legislative safeguards.