Is Taxation Theft?

Jimmy Ji

The Forbidden Flourish

June 25, 2024 10:01 Shanghai

Introduction

Taxation is a fundamental aspect of modern society; it is the means by which citizens provide necessary resources for governments to fulfill their duties. Due to legitimate property rights, consent given to the government, and defined legality, taxation should not be viewed as theft. However, some argue that taxation constitutes theft because it involves a coercive social contract and violates the principle of non-aggression of "natural rights".

This article will explain the basic rationale for taxation and the debates surrounding property rights, consent, and legality; thus reaching a general consensus after discussing these arguments. The article will focus on whether taxation should be classified as theft, but will not consider the nuances of whether taxation is positive or negative for society and the differences in tax systems.

Understanding Tax

Before delving into theories, it's important to first grasp the basics of taxation.

Taxation refers to the compulsory collection of funds by the government from individuals and businesses to finance public expenditures. It comes in various types, targeting different economic activities. It plays a crucial role in funding services such as infrastructure, education, healthcare, and defense, which citizens are theoretically supposed to benefit from.

Taxation is administered by statutory government bodies and is subject to legal frameworks that should maintain transparency for all tax-related policies, such as tax rates, payment procedures, who is obligated to pay, and how the tax is used. Failure to pay the necessary amounts may result in legal penalties administered by government authorities.

Taxation can also play a redistributive role, as wealthier individuals with higher incomes may be required to pay more taxes, while the collected taxes will be used to help less affluent people with lower incomes through public services such as universal healthcare or education circles, who don't need to pay as much. (Encyclopedia Britannica 2023)

Property Rights

Property rights and the expansion of property taxes have been one of the most contentious sub-topics of this issue. Philosophers often discuss here whether a right is naturally given or legally bound. Realists argue that "natural property rights", which are essentially property rights that are completely morally consensual and unbound by law (for example, if a person builds a cabin, they have the "natural property right" to that cabin), are fair. In contrast, legalists believe that property rights should be primarily controlled by the government and legislation.

Political and ethical philosopher Michael Huemer suggests that when discussing property rights, people may primarily take three broad views, and he evaluates each (in this case, due to its breadth, the "moderate" view between legalists and moralists will not be considered) (Huemer, 2014). From the realist perspective, property rights are natural rights that individuals naturally possess and should not be restricted or interfered with by legal frameworks. From the legalist point of view, property rights depend on and are regulated by government-made laws in all aspects, and there are no "natural property rights".

The extreme realist view is not practical because morality lacks specificity. Economist David Friedman gave an example to illustrate this point. "If I fire a gigawatt laser at my neighbor's house, I would be violating his property rights. On the other hand, if I turn on a light in my house, knowing that some photons will fly out the window and hit my neighbor's house, I would not be violating his property rights. The only physical difference between these two actions is the number and energy level of the photons I'm firing at my neighbor." The difference between these two examples cannot be determined by "natural" or "moral" laws and requires social structures to handle (Friedman, 1994).

The extreme legalist view can work well for urban societies where detailed laws constrain all members and property. However, this is not an ideal solution for two reasons. Firstly, the legal system has flaws. This could lead to people perceiving local laws as unfair. For instance, modern people would likely not consider the property laws of ancient Rome or Confederate states to be fair, as they defined slaves as personal property. However, this can be avoided as social norms change and legislation gradually weakens. Secondly, how would this view apply if an area is global commons or rural enough that it is not under any government jurisdiction? As economist Bryan Caplan exemplified, if someone happens to come across a person living in a rudimentary hut and forcibly enters and paints the hut, then according to this theory, this does not constitute vandalism because technically the hut is not the person's property (Caplan, 2014).

The United Nations' "Universal Declaration of Human Rights" lists the "right to own property" as a fundamental human right (Universal Declaration of Human Rights, 2023). Therefore, if "natural property rights" are indeed valid, then taxation would be seen as theft because it is charging people for human rights. It would then be morally incorrect to tax people for the right to not be tortured. In contrast, if property is managed by the government and legislature, property owners should rightfully fulfill their tax obligations as part of the legislation managing the property.

In the analysis above, we can understand that the realist view is useless in most cases because the definition of what is rightful is too vague. The legalist view is proven to be viable in urban societies under law. However, "natural property rights" may exist in cases where judicial power is not apparent, and taxation might be viewed as theft, so the compromise is that due to this idea of legitimate property rights, taxation should remain effective among people under government rule. Philosophers Liam Murphy and Thomas Nagel also reached this conclusion in a similar manner in their 2002 book "The Myth of Ownership: Taxes and Justice" (Murphy & Nagel, 2002).

Social Contract Theory and Consent

Social contract theory, sometimes also referred to as the fiscal social contract, has been a focus of debate on whether taxation constitutes theft.

The fiscal social contract theory, proposed by Thomas Hobbes and developed by John Locke, Immanuel Kant, and Jean-Jacques Rousseau, describes the nature of taxation as a presumed connection between citizens and the government. Citizens pay taxes in exchange for public goods and government orders. Social contract theory is central to the discussion of taxation because it defines the framework of our relationship with the government on tax issues (D'Agostino et al., 2021).

The core point of conflict in social contract theory lies in property rights and consent. The previous section discussed property rights. Consent is important because it determines whether the act of taking is theft. Thus, if a person takes a book with another person's consent, it is not theft. If there is no consent, then it is theft. As philosopher John Locke said, "The authority of government comes from the consent of the people." Therefore, the focus of the debate is whether citizens have explicitly expressed consent (Locke, 1689).

19th-century philosopher Lysander Spooner stated, "Taxation will not be supported because individuals have not explicitly consented to pay taxes." He claimed that citizens have no choice but to sign and comply with this social contract, thus it is involuntary (Spooner, 1852). Although a widely accepted theory holds that using public services paid for by taxes is essentially acknowledging consent to this social contract. This is a reciprocal, trade-like relationship between citizens and the government, rather than a predatory one.

However, this is not always correct, as some people do not use these services. This is especially true under progressive tax systems, where wealthy people who pay more taxes may reduce their use of public services such as public transportation. Philosopher Michael Huemer also argues that the reciprocal relationship between government and citizens does not justify taxation. He argues that if a thief stops a person in an alley, forcibly takes their money, but in return gives them something valuable, such as a book. Even if the person receiving the book may have gained more valuable knowledge from the book, thus earning more money than the thief took, it is still robbery (Huemer, 2017).

However, benefiting from public resources paid for by taxes is not the only way to express consent. Another way people express consent is by obtaining citizenship. The details of tax regulations are not obscure because they are published and updated by the government. Citizens can also choose to emigrate and no longer be governed by that government. Therefore, those who choose to become citizens of a certain government have already expressed consent.

Another critic of social contract theory argues that the punishment for not paying taxes constitutes tax evasion. The logic behind this theory is that if a person willingly gives money to another person who demands money, it's not theft. However, if the same interaction occurs with one person pointing a gun at another's head, it becomes theft because a person can only give consent under free will. This critic does not consider the fact that in the case of taxation, consent already exists, and punishments like lawsuits are just ways to ensure the contract is completed. Similar to the role of fines in commercial contracts.

In conclusion, the main content of this section is that citizens express consent to the government by using public resources and claiming citizenship. After discussing critics of the social contract, it is clear that taxation does not count as theft due to legitimate property rights and citizenship, as well as the consent given by using public resources.

Legality

French philosopher Frédéric Bastiat described taxation as "legal plunder". Legal plunder is defined as the government or legislature plundering or taking goods in a legal manner (Bastiat, 1850). It contrasts with illegal plunder, which theft falls under. Bastiat did not support legal plunder at all, believing that legal plunder is no different from illegal plunder, except that the beneficiaries are protected by the legal system, and those trying to defend themselves would be punished. Therefore, in the context of the debate, Bastiat considered taxation to be theft because it takes property from one citizen and gives it to another, for example, in progressive tax systems where wealth is redistributed from the rich to the poor. Bastiat did not assume in his argument that citizens had already consented, but as summarized in the previous section, consent has been given. Thus, his argument is refuted.

Although this statement again touches on the concepts of property and consent, as it assumes that the government takes property from citizens without their consent, it is presented separately to distinguish between legal and illegal plunder. This means that the government has the power to define through legislation what is theft and what is not. Therefore, technically, legal plunder such as taxation cannot be defined as theft. While this rebuttal seems meaningless due to the inherent universal consensus on theft, it is still valid and should be considered.

Conclusion

From the conclusions drawn from the three areas of property rights, consent, and legality discussed above, it is clear that in the debates of each section, the legalist view is more practical and logical than the realist view in contemporary society.

Therefore, in conclusion, taxation should not be viewed as theft.

Citation List

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Huemer, Micheal. “Is Taxation Theft?” Libertarianism.org, 16 Mar. 2017, www.libertarianism.org/columns/is-taxation-theft#:~:text=Taxation_is_not_theft_2C_because,return_for_the_government%E2%80%99s_protection. Accessed 29 June 2023.

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Writter: Jimmy Ji（Student of UWCSEA Singapore）

Editor: Roy, Sandy, Georgina