Category Archives: Taxation

Is Taxation Really Theft ?

One of the more well-known slogans of hard-core libertarians is “Taxation is Theft.” It’s an easy slogan for those who believe in it, and it’s message is pretty clear — to a true believer, there is no moral distinction to be made between an IRS tax collector and a mugger who demands your wallet at gunpoint.

Libertarian theorist Timothy Virkkala argues, however, things that the slogan, and the message behind it, are a mistake:

Libertarians are too fond of slogans such as Taxation is Theft and Taxation is Robbery. They get quite a charge out of it. And they do manage to get a good idea across to some people, people who see that taxation is, indeed, a form of expropriation, and that it is analogous to forms of theft such as robbery, and that maybe we can do better.

Perhaps we can pay for public goods without engaging in extortion and expropriation.

But to people who really want those public goods, and who are capable of elementary distinctions in language, they are not convinced by these slogans. They are put off by them.

And they have good reason to be. Taxation is not theft. Not really.

The distinction that Virkkala makes, while I don’t think that it’s one that radical libertarians will accept, is important:

Taxation is the expropriation of private property according to an established rate, as put into law by an established state.

Robbery and other forms of theft are illegal kinds of expropriation, and piecemeal at that. Taxation is a legal kind of expropriation.

To many libertarians, this distinction is not much of a distinction at all. They have pretty much thrown out the distinctions between legal and illegal, and are in a continual revolutionary mode of thinking, ready at a moment’s notice to throw out whole chunks of the rule of law and state practice.

So of course they equate all kinds of expropriation.

Virkkala is right, I think, to make the distinction between legal and illegal forms of expropriation, especially in a society where taxation is determined not by the fiat of a dictator but by the decision of democratically elected representatives. In such a society, rhetoric that compares the lady who collects property taxes down at city hall to a mafia thug just isn’t going to fly with most people:

The main reason radical libertarians will not get anywhere is their complete lack of understanding of the normal mindset, which is not constantly in revolutionary mode. Radical libertarians who trot out slogans such as taxation is theft do not address the respect a non-revolutionary has for the rule of law.

Indeed, because of this revolutionary stance — and I’m not talking about physical, bloody revolution so much as a particular stance regarding ideas and consent — these libertarians cannot deal with normal folk.

They offend normal folk; libertarians often (and with good reason) strike normal citizens as lunatics, perhaps dangerous lunatics.

This, I think, is part of the reason that the Libertarian Party has never been able to succeed in any meaningful sense. With the exception of Ron Paul, most of the candidates that it has put forward for prominent public positions have tended to preach the rhetoric of radical libetarianism. More importantly, they have done nothing to address the question of “If not taxes, then what ?”

As Virkkala points out, one of the major issues in the American Revolution was taxation. But the Founders weren’t disputing the fact that a government had the power to levy taxes to fund its proper functions, they were fighting for the right of the colonies to tax themselves rather than pay taxes to a far-away King.

Those who believe in liberty today and who would like to see freedom advance in their lifetime would do well to heed Virkkala’s advice.

I believe we have to approach greater liberty with complete honesty. No rhetorical trickery.

And I regard slogans such as taxation is theft as something close to rhetorical trickery.

It may be that we will someday be able to support all worthy public projects without any taxation.

But however we manage to do this (and I’ve lots of ideas, not limited to simple slogans like the market will take care of it), it will have to be done within the framework of the rule of law.

And people in such a future society will have to regard the means used at that time in something other than constant revolutionary mode. Even if they can think of better ways, they will have to show some respect for the rule of law of the day.

Well said.

H/T: Hit & Run

The Taxman Wants Your Gift Cards

Not content with all of the available avenues of taxation one Wisconsin legislator has his eye on that Best Buy Gift Card you got for Christmas:

Madison – Rep. Fred Kessler (D-Milwaukee) said today that the value of unused gift cards should go to the state treasury – not to the merchant – and that change will be part of a bill he’ll introduce in the legislative session starting in January.

Kessler said millions of dollars a year go unused by gift card recipients, and retailers are allowed to book the unused values after the cards expire. He cited figures from Consumer Reports showing that 19% of all gift cards are not used because they are lost or expired.

Kessler called that a “windfall,” which he said could be used to support schools, health care or roads. Under his bill, after a one-year expiration date on all cards, 80% of the value of unused cards would go to the state treasury. Merchants could keep 20% of the value of an unused card to pay for processing, Kessler said.

“I’d rather have people spend the money and use the gift card, but if they aren’t, I’d rather the state get the money,” Kessler said.

Of course you would. This is the government mindset at work. That money in your pocket, no matter what form it may be in, doesn’t belong to you, it belongs to them, and they are far better at figuring out how to spend it.

H/T: Hit & Run

Against Poverty? Then It’s Time To Cut Taxes

In the Christian Science Monitor, Matthew Ladner writes that the key to lower levels of poverty is lower taxes:

A study published last month by the Goldwater Institute, “How to Win the War on Poverty: An Analysis of State Poverty Trends,” tests these different theories by examining state poverty rates from 1990 to 2000.

Nationwide, states took great strides in reducing both general and childhood poverty. Poverty fell by 5.3 percent and childhood poverty by 9.4 percent. Some states, however, reduced poverty much more than others, while some states suffered large increases.

Take Colorado. It reduced its childhood poverty rate by almost 27 percent. Meanwhile, Rhode Island’s childhood poverty rate increased by almost the same amount. What accounts for those differences?

Using data from the Census Bureau, the report found that states with the lowest tax rates enjoyed sizable decreases in poverty. For example, the 10 states with the lowest total state and local tax burdens saw an average poverty reduction of 13 percent – two times better than the national average. The 10 highest-tax states, meanwhile, suffered an average increase in poverty of 3 percent.

Some high-tax states, such as California, Hawaii, and New York, suffered catastrophic increases in poverty. As California began to reject the low-tax legacy of the Reagan governorship, the state’s poverty rate jumped 13 percent in the 1990s.

The connection, of course, is clear. Lower tax rates leader to greater economic growth, which leads to more job opportunities at all levels of the economy. The Democrats will be taking over Congress next month, and have already vowed to roll-back the Bush tax cuts, the one thing the GOP did in the past six years that actually helped the country. If they really cared about the poor, they’d keep them in place and encourage states like California, New York, and Hawaii to follow suit.

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