Taxation is Theft?

From the moment I started writing on the moral concept of theft (as applied to consecrated communion wafers), I was waiting for somebody to respond as Jimmy_D responded on July 28th,

And now let's apply this to taxes.

Because, clearly, if theft is the taking of property from another through deception (fraud), stealth (burglary), or force (robbery), then taxation is theft. We pay our taxes – we hand over our property to the government – because we are threatened with harm if we do not.

First point: There is no such thing as intrinsic value. Value exists in the form of relationships between states of affairs and desires, and moral value exists in the form of relationships between malleable desires (desires that can be molded through social forces) and other desires.

Desire utilitarianism recommends an aversion to acquiring property through deception, stealth, and force. We should all feel very uneasy about taking property from other people without their consent. Because, to the degree that we are uncomfortable with (have an aversion to) this type of activity – to that degree all of our property is more secure, we can make better plans, and we are less likely to go to war with each other.

This, by the way, is what I consider important about the case of the communion cracker. It is not the value of the cracker itself, but it is the value of the aversion to taking property through deception that I sought to defend. That moral principle has implications far beyond communion crackers. It affects all of us in the security of our own possessions. The idea that it is a minimal crime for others to walk off with our property whenever they disagree with our reasons for wanting to hold onto it leaves all of us less secure.

Anyway, looking at the issue through desire utilitarian terms, there are two areas (at least) in which the strict principle described above will thwart desires rather than fulfill them. As a result, the desire that best tends to fulfill other desires is a bit more complex than a simple aversion to the use of deception, stealth, or force to acquire the property of another.

Public Goods

One of the area where a strict application of this principle will thwart desires is in the area of public goods. Public goods are goods where we cannot limit the benefits of a particular good only to those who pay for them.

The problem with public goods is that, if people can obtain the benefit without paying for them, then the goods tend to be under-funded and under-developed. We lose a great deal of desire fulfillment because people are sitting around on their hands hoping to be ‘free riders’ – to obtain the benefits of somebody else’s contribution, without making a contribution of their own.

Example of public goods are national defense (it is difficult to defend 514 Pearl Street without also defending 516 Pearl Street), police and court system (we are all better off when a rapist is taken off the streets, not just those who paid for the police and court system that captured and imprisoned him), education (we all benefit from having a well-educated population), clean air (it is difficult to give one person clean air but not his neighbor), and the prevention of human extinction (to the degree that people value human survival).

If we left these goods up to entirely private funding, we would suffer a free-rider problem that will give us less of each of these goods than will actually fulfill our desires. Of course, the only way to get people to make contributions to these goods (in many cases) is to use force against them. It is to tax them, and to threaten to put in jail those who do not pay their taxes.

So, we have reason to promote a modified moral concept of theft. We want people to be uneasy about taking the property of another through deception, stealth, or force – except when the money is used to provide (desire-fulfilling) public goods, in which case there should be less aversion to taking the money through force.

There should still be some aversion, or the practice of taking money for public goods gets out of hand. People will have an unfortunate tendency to see ‘public goods’ where none exist - when doing so allows them to then use force (through taxes) to get money from others.

In fact, it is possible to argue that we are better off foregoing the benefits of public goods then we are establishing a system of taxation to provide public goods. The latter will inevitably be corrupted, with the corruption thwarting more desires than the public goods would fulfill. However, this is an empirical question. Furthermore, it does not refute the principle that where providing public goods does more good than harm, then taxation for the purpose of providing public goods is morally legitimate.

The Wealth Effect

In a community where people have different levels of wealth, those with a great deal of wealth have the power to bid resources away from those who have little wealth – even though the person with little wealth would have fulfilled more and stronger desires with those resources.

I have used an example in previous posts, following Hurricane Katrina, where water is scarce. One person with a great deal of money wants to use some of the limited water to shampoo her dog, and does not care about the price. So, she bids up the price of water. As she does so, she bids it up above the price that another woman, who has a sick and dehydrated child, can afford to pay.

Many conservatives argue that, in a free market, property goes to its most highly valued use because it goes to the person willing to pay more. This isn’t true – because $20 to somebody who has $20 million is worth a lot less than $10 to somebody who has $100. In order to find who whether the person who wants to shampoo her dog or the person who wants water for her sick child values the water more, we have to ask who would bid the more for the water if they had equal wealth. That is to say, if the value of the money was the same for both agents.

We see a world today where those with a great deal of money bid significant amounts of resources away from those who are barely able to survive. We see people bidding up the price of food so that they can use it to produce energy, much of which goes to entertainment, making others significantly worse off (thwarting extremely strong and stable desires) along the way.

In a recent discussion that I heard, one of the participants suggested that price should be used to allocate who gets immunizations in the case of a global epidemic. Yet, this is nothing but a recipe for a situation where the wealthy (and those who are favored by the wealthy) survive and the poor die. When a rich person lives instead of a poor person, we have absolutely no reason to believe that his life is more valuable than that of the poor person who died. We have no reason to believe that rich people have more or stronger desires than poor people and, realize more value through living than poor people do. So, there is no reason to believe that rich people realize more value in living than poor people do – all else being equal.

In desire utilitarian terms, there is nothing to recommend this method of distribution.

Here, too, we have reason to worry about the possibility of people using this power of the government to do harm instead of to do good. Seeing the government hand out money, they decide to use government force to take (tax) money from others and direct it into their own pockets. They merely pretend to be interested in making sure people with little wealth are able to acquire higher-valued resources. They lobby and lie to promote a program that they falsely claim to have legitimate ends, when it does not have those ends.

Here, too, we might be better off abolishing the practice, because the good we forego by preventing the rich from bidding more highly valued resources away from the poor is less than the harm done by a culture that invests huge amounts of money taking from the poor and middle-class and giving it to people who already have enough money to manipulate the system.

Institutions

Desire utilitarianism says that a person with good desires would probably have no aversion to the taking of money by force (taxation) for the purpose of promoting public goods such as national defense, courts, and education. She would also probably have no aversion to taxation for the purpose of preventing people with a great deal of wealth from bidding resources away from people who have little money but a more highly valued use for those resources.

Still, the person with good desires still has reason to look for institutions that make sure that the money is taxed for the purpose of public goods and most highly valued uses, and to prevent people from exploiting the system to divert funds to less valued uses. The test of whether a person with good desires would support taxation is the test of whether the program actually does promote a public good that would have otherwise gone underfunded or corrects the problem of wealthy people bidding resources away from more highly valued uses.