One of the oft-made claims by self-styled Libertarians is that ‘taxes are theft’ (and are therefore ‘bad’). This kind of assertion underpins most of the Libertarian position, and also the bulk of any anti-tax/pro-small-government arguments by folks of any political stripe. Unfortunately, it’s rare to hear this position defended as the self-styled Libertarians don’t seem all that well-read with regards to their own literature.
In the 1950s and 1960s, Ayn Rand was gaining prominence, but there were no Philosophers backing her corner, partially because she spouted utter drivel and partially because to side with Rand was engage in self-loathing (Rand was notoriously anti-Philosophy/ers).
Enter Robert Nozick, with his tome “Anarchy, State and Utopia”. Nozick is well-regarded in Philosophy for articulating what was inarticulate, and defending the generally indefensible. Nozick sketched out the Libertarian claims, largely as a response to John Rawls’s defense of Social Justice, and, well… His arguments are not obviously terrible (as much as we may disagree with them). His arguments are certainly compelling, if you have a tendency to ignore all counter-arguments to your position. But hey, that’s the human condition, right?
So let’s dive in. And hold your nose (and your breath), because Nozick doesn’t make the argument that ‘taxes are theft’. Nope: “Taxation of earnings from labor is on par with forced labor.” Yeah, he went there.
Before breaking it apart, first it needs to be broken down. For the record, this is a ‘good’ argument, insofar as ‘good’ means ‘when accepted on it’s own terms, the argument doesn’t fall apart due to inherent contradictions’. That the argument is preposterous, or horrible, or presents a shitty worldview does not mean that the argument is flawed: those feelings certainly serve as the basis for a counter-argument, but are not a counter-argument in and of themselves (and are unlikely be effective as such).
Nozick’s argument (drawn from page 169 of “Anarchy, State and Utopia”) is as follows:
Some persons find this claim obviously true: taking the earnings of n hours labor is like taking n hours from the person; it is like forcing the person to work n hours for another’s purpose. Others find the claim absurd. But even these, if they object to forced labor, would oppose forcing unemployed hippies to work for the benefit of the needy. And they would also object to forcing each person to work five extra hours each week for the benefit of the needy. But a system that takes five hours’ wages in taxes does not seem to them like one that forces someone to work five hours, since it offers the person forced a wider range of choice in activities than does taxation in kind with the particular labor specified. (But we can imagine a gradation of systems of forced labor, from one that specifies a particular activity, to one that gives a choice among two activities, to . . . ; and so on up. ) Furthermore, people envisage a system with something like a proportional tax on everything above the amount necessary for basic needs. Some think this does not force someone to work extra hours, since there is no fixed number of extra hours he is forced to work, and since he can avoid the tax entirely by earning only enough to cover his basic needs. This is a very uncharacteristic view of forcing for those who also think people are forced to do something whenever the alternatives they face are considerably worse. However, neither view is correct. The fact that others intentionally intervene, in violation of a side constraint against aggression, to threaten force to limit the alternatives, in this case to paying taxes or (presumably the worse alternative) bare subsistence, makes the taxation system one of forced labor and distinguishes it from other cases of limited choices which are not forcings.
That’s all a little wordy, so here’s an illustration: Chun and Fang both live and work in the same city, with roughly comparable lifestyles, and they both use the infrastructure of the city to roughly the same degree. Let’s say that income tax is set at 10%. To simplify things, let’s say that they both work 20 hours a week. Their taxes are equivalent to two hours of work at their jobs.
Let’s say that Chun enjoys eating out at restaurants, going to galleries, and other expensive pursuits. Let’s say that Fang enjoys spending time in parks and at beaches, and is otherwise a homebody. In order for Chun to facilitate her interests, Chun decides to work an additional 18 hours a week, on which she has to pay an additional 2 hours of taxes (framed in the way that Nozick wants to frame these things). Fang maintains her 20 hours, giving her essentially an extra 20 hours over Chun to pursue her non-work interests. Now in order to live ‘a happy life’ (as defined by each of them), Chun is requires to contribute 4 hours of pay (per week) to the government, whereas Fang is only required to contribute 2 hours. This, on the face of it, would seem inequitable.
Both women use the system to the same degree, both are equivalently ‘happy’ and well off. Arguably, Chun ‘contributes’ more to the economy than Fang, given that she spends her additional income (thus contributes more to the general circulation of money). So why is it necessary for Chun to work those additional 2 hours to pay the government for the same access/use of infrastructure that Fang has? Would we consider it reasonable for Chun to cut back to 38 hours per week (so 18 more than Fang), and refuse to pay more than 2 wage-hours of taxes to the government (i.e. pay the same as Fang)? Nozick thinks that we wouldn’t (and, in my case at least, he’s correct).
What would be the likely repercussions to Chun if she refused to pay those additional 2 wage-hours? The state would shift from benefactor to aggressor, and demand (via various legal channels) that Chun ‘pay her share’. Tax evasion is a jailable offence in many jurisdictions, so it is actually the case that Chun is required/forced to pay this money to the state. Nozick contends that, for those of us for whom ‘equity’ is an important thing, this should seem unjust. Why?
Well, let’s take the other end of things: someone who doesn’t work at all (Qiao). Fang is still working 20 hours a week, 2 of which are effectively paid to the government in trade for her access to the infrastructure of her city. Qiao pays nothing at all in income tax, yet has full infrastructural access. This does not seem equitable. Would it be reasonable to require that Qiao work for 2 hours a week to ‘pay’ for access to the infrastructure? What if Qiao could choose any job at all (given the constraints of her training/ability)? That would seem unjust, right? But requiring Chun to work 2 additional hours (above the 38 that she chose to work) in order to pay for her infrastructural access is not unjust? Nozick is making the point that these two positions are in tension, if not outright contradiction.
So take a minute or two, and think it over. Other than lashing out (i.e. calling the argument ‘stupid’, or dismissing it as an ‘academic’ issue or some such), how could you reconcile these two apparently unreconcilable positions? This is the root of the ‘taxation is theft’ argument.
The solution involves re-framing the entire discussion. When the issue is presented in the manner that Nozick does (with the emphasis on individual choice), it’s very difficult to find a solution. And this is mainly because Nozick ignores a large chunk of the picture, ignoring the forest to focus on a single tree. When viewed in the full context, the problem magically vanishes.
The fact of the matter is that to have a city is to have infrastructure. Pretty much by definition, if there is no infrastructure then there is no city (or at least a very strange city where every building provides its own power, water, waste management, etc). Someone has to pay (by some combination of time and money) for this infrastructure: for the initial installation, the ongoing maintenance, and possible future expansion. Nozick is arguing that it’s unfair to force people to pay for it. Alright then: what are the alternatives?
- Nobody pays for it. This is clearly untenable: no-one paying for the infrastructure means that it would all fall apart and become useless, resulting in the city ceasing to be viable. This is clearly not an option.
- One very wealthy person pays for it, owns the whole thing, and provides free access to everyone else. This seems both extremely unrealistic and extremely unfair: what’s preventing them from charging people, or arbitrarily limiting access? Furthermore, if no-one chooses to pick up the tab, what then? This is clearly not an option.
- One very wealthy person pays for it, owns the whole thing, and charges flat-rate tariffs to everyone else (charging a percentage of income would require that one wealthy person know precisely how much every other person in the system earns. This would seem to open a large can of worms that I’m not going to get into). This is problematic for a variety of reasons.
- Unless this benefactor actually starts the city themselves (John Galt anyone?), the basic infrastructure is going to come from… Where?
- This is highly unlikely to occur even if a mysterious benefactor were to be local: the sunk cost of the infrastructure is likely to be huge, and would not be recovered for decades. To expect our mysterious benefactor to sit back and simply wait for their return is unrealistic.
- Again, how are we going to force this mysterious benefactor to initially invest, and to patiently wait for their return?
- Flat rates disproportionally target the working-poor and serve as additional barriers to where and how people work. To set the rates as ‘affordable’ for those at the bottom of the income scale is to set them as ‘irrelevant’ for those at the top. To set them as ‘affordable’ for those at the top, is to deprive those at the bottom of access to the infrastructure. Furthermore, low cost housing is typically situated farther from the central business districts (due to the price of land dropping off the farther you go from the CBD), thus if charges are based on an usage (which Nozick is implicitly arguing in favour of), then the poor who have to commute farther would have to pay more as a result of their being unable to afford to live close to work. Lower socio-economic groups also tend to have larger families, which would require that family to use more power/water/schooling/etc than other higher socio-economic families. While everyone may have to pay the same ‘rate per km traveled’, the end result is that the poor would necessarily pay more in terms of actual money, and a lot more in terms of a percentage of their income, than those at the upper ends of the income scale.
Given these arguments, I don’t see how this is a viable choice at all. This is highly inequitable. While it certainly allows for the greatest ‘freedom of choice’ without force: what happens to those poor who wish to use the infrastructure without paying the tariffs? The force of the state must also be invoked here, but in this case it would be invoked against those whose circumstances of birth simply don’t allow them to pay (Qiao), as opposed to those who simply don’t want to pay (Chun).
- A small group of people owning the infrastructure is a variation of points 2 and 3 above, and subject to the same criticisms.
- The infrastructure is held collectively by the society (through the government). The government charges nothing at all, nor collects taxes to pay for this. This is essentially the same as situation 1.
- The infrastructure is held collectively by the society (through the government). The government charges a flat-rate tariff to everyone. This is essentially the same as situation 3.
- The infrastructure is held collectively by the society (through the government). The government charges based on the percentage of income that people earn. This would be the system that we currently have.
It would seem that this is an exhaustive list of all possible options, and that options 1 through 6 are significantly more objectionable than option 7. So sure, taxes may be theft, but all the other options result in no infrastructure, or else money being forcibly taken from someone for the maintenance of infrastructure: theft, as defined by Nozick/Libertarians, is not an ‘optional’ component of living in a society.
In response to the claim that “taxes are theft”, arguing that “no they’re not” gets you precisely nowhere: the burden is on the libertarian to explain how we could run society without the taxes. Instead, they have opted to start the argument with an emotionally inflammatory statement (the Prejudicial Language Fallacy). Ironically (or perhaps intentionally?) many libertarians self-declare as 1) rational beings who don’t make emotional arguments and 2) criticise people who become emotionally inflamed by the libertarians’ emotionally inflammatory language for being emotionally inflamed. Declaring that ‘taxes are theft’ is little more than a gambit to manipulate people into missing the huge problem with their argument.
In short (too late, sez you): the most productive/effective response you can make to the claim that “taxes are theft” is to say “so in the magical land of NoTaxes, how do we pay for the infrastructure that we all need to live in the world, in a way that doesn’t simply compound the benefit of being born into a financially secure family and penalize everyone else merely for being everyone else?”
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[This was originally posted on The Crommunist Manifesto]