Carlos

Taxation, Regulation and Government Programs in a Free Nation

388 posts in this topic

At the moment I have come to the conclusion that voluntary taxation as a means to support the proper government of a free nation (Police, Military, Courts) is a virtual impossibility in reality, especially given the tremendous budget of modern Militaries. I therefore think it is completely proper for the United States to enforce involuntary taxation only for the essential services required in order to protect Freedom and individual rights within our nation. As a counter to the argument that involuntary taxation violates individual rights, I say that you are welcome to leave the USA (or worse yet, go live in the wilderness) any time you want!

I have come to this conclusion (and several others concerning Fire Departments, emergency economic regulation, and public roads) from looking at History and practical thought experiments. One such simple example is this:

I am currently reading a biography of George Washington, and right now in the book I'm at the American Revolution. The Continental Army (American Rebels) is half starving, half clothed, and generally short of any and all supplies. So little people have shoes that there is blood on the snow from people walking barefoot in the snow at Valley Forge. Worse yet some of the suppliers they buy from are hoarding supplies and jacking up the prices, putting further strain on the Continental Army. In desperation Washington even ordered the grain and cattle of some Farmers to be seized.

The British Army on the other hand enjoys plentiful supplies, and fully clothed and fed men.

The reason for the difference is that England simply enforces taxes to pay for its bountiful Army, whereas Washington (at this point in the book) enjoys no such source of funding. And Washington certainly can't count on voluntary support, because there is a remarkable deficit of patriotism or support for the war from the people.

If we arrive at moral principles from looking at what is practical for man's life in reality, then I can't avoid reaching the conclusion that involuntary taxation is morally right in the proper context.

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Who is going to define what is an "essential service?"

Even with all the difficulties that you are reading about and may some day read about, I would like to remind you of who still won the war with very little wealth.

One arrives at moral principles not by looking at what is practical, but by looking at the nature of man. Is it practical for a starving man to steal from his neighbor today so that he can survive? Or is it practical and ethical for the man to recognize his nature, part of which is that he must produce to survive and then act in a practical, ethical manner?

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I don't have the time or interest now to get into a detailed debate, Carlos, but I disagree.

Among my objections:

Comparing the British government to Washington's army is a comparison of apples to oranges.

1. Americans were already paying taxes to the British; they weren't people free of taxes who elected to not volunteer support.

2. Some, like the very wealthy John Hancock, donated large sums. (When the signers of the Declaration of Independence pledged their lives, fortunes, and sacred honor, they knew they were likely to end up poor, as some in fact did.)

3. The British government was, well, a government -- a system of courts, legislature, and the like -- while the Continental Army was a voluntary rebellion against that state. This means the issue of how to properly finance a government could not draw upon this example for evidence. Washington, at the time, was not trying to establish a system of courts and so on; that came later.

The issue of financing a free government is one that's been talked over and over through the years by Objectivists (and Ayn Rand has an essay on the topic). Among those comments:

1 In a free state, the size of government and its scope of functions would be a tiny fraction of what it is today, meaning the amount of money would be far less -- not the trillions spent today. This suggests both a more vibrant economy, with more individual wealth, so the fraction of money a person needs to pay for government services would be much, much smaller than today.

2. There are many proposals for financing the government that do not require taxation. Do you object to all of those as well?

3. Fire departments can be, and have been at times, private. One plan: property owners pay insurance, and part of that insurance funds a local fire department. Also, voluntary fire departments have provided an ability to, during emergencies, augment the professional fire fighter staff.

4. Roads are often argued to be public in order to provide access. Yet current law covers issues of easement.

There also objections of a more philosophical nature -- like how to delineate a limit on the initiation of force (via taxation) one the principle is breached, or how to reconcile the use of force with the requirement of man's mind to be free to think in order for a man to live. But I'll leave those, and follow up arguments, to others should they choose to join in.

By all means, base the conclusion of whether taxation is really necessary on the facts. But the argument you've presented so far doesn't address the myriad of counterexamples and counterarguments that exist. Until those get answered, I have to maintain my disagreement with you on this issue.

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The Founding Fathers found 'taxation without representation' and 'trials without a jury of peers' as the manifestation of tyranny. They were not a free nation and they rebelled against Briton's will to tax America involuntarily. In 1765, John Adams wrote the following

Sir,--In all the calamities which have ever befallen this country, we have never felt so great a concern, or such alarming apprehensions, as on this occasion. Such is our loyalty to the King, our veneration for both houses of Parliament, and our affection for all our fellow-subjects in Britain, that measures which discover any unkindness in that country towards us are the more sensibly and intimately felt. And we can no longer forbear complaining, that many of the measures of the late ministry, and some of the late acts of Parliament, have a tendency, in our apprehension, to divest us of our most essential rights and liberties. We shall confine ourselves, however, chiefly to the act of Parliament, commonly called the Stamp Act, by which a very burthensome, and, in our opinion, unconstitutional tax, is to be laid upon us all; and we subjected to numerous and enormous penalties, to be prosecuted, sued for, and recovered, at the option of an informer, in a court of admiralty, without a jury.

We have called this a burthensome tax, because the duties are so numerous and so high, and the embarrassments to business in this infant, sparsely-settled country so great, that it would be totally impossible for the people to subsist under it, if we had no controversy at all about the right and authority of imposing it.

(p. 39, The Revolutionary Writings of John Adams, Selected and with a Foreword by C. Bradley Thompson)

Involuntary taxation in a free nation is a contradiction of terms.

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At the moment I have come to the conclusion that voluntary taxation as a means to support the proper government of a free nation (Police, Military, Courts) is a virtual impossibility in reality, especially given the tremendous budget of modern Militaries. [. . . ]

I don't think it's impossible at all. If we strip the federal government down to the 'essentials,' which I define for this post as the Judicial branch (all federal courts at all levels) as well as the Departments of Defense and Justice, a modest national sales tax could easily pay for these functions.

For example: From the Department of Commerce's Statistical Abstract of the United States we find, for FY 2004:

Total federal outlays of $2292.2 bn.

Outlays for my 'essential' functions:

Defense: $455.9 bn

Justice: $29.0 bn

Judiciary: $3.9 bn

Total outlays: $488.8 bn (21.3% of above total outlays!)

Now, personal consumption expenditures (which I understand to mean spending on durable and non-durable goods as well as services) was $8229.9 bn. If I've worked my abacus correctly, it would take a sales tax rate of 6% on these expenditures to pay for the 'essentials' and then some. The sales tax rate, btw, for Colorado Springs is 7.4%.

The above was just for illustrative purposes only and not intended to be proof of anything.

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Here is a small related question about the justification of the method of voluntary payment for the army:

An army is protecting the entire country (because for an army, there is no way to discriminate between individual citizens), but yet some people may not pay for this service (in a free nation).

I was thinking whether or not this is just for some people to get protection, while not paying for it, when this protection is necessary for them to remain alive, unlike some other product that a person can choose as luxury. So there seems to be an unfair element here, of getting something one absolutely needs which is paid for by other peoples' money.

Basically, if some people decide to create something, and that something benefits people who do not pay for it, this is fair. But in case of a type of benefit which is essential for survival, when a person's choice comes down to die or have this "product", I'm not sure if it is just to choose life and yet not pay those who allow it for you.

What do you think about this?

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Here is a small related question about the justification of the method of voluntary payment for the army:

An army is protecting the entire country (because for an army, there is no way to discriminate between individual citizens), but yet some people may not pay for this service (in a free nation).

I was thinking whether or not this is just for some people to get protection, while not paying for it, when this protection is necessary for them to remain alive, unlike some other product that a person can choose as luxury. So there seems to be an unfair element here, of getting something one absolutely needs which is paid for by other peoples' money.

Basically, if some people decide to create something, and that something benefits people who do not pay for it, this is fair. But in case of a type of benefit which is essential for survival, when a person's choice comes down to die or have this "product", I'm not sure if it is just to choose life and yet not pay those who allow it for you.

What do you think about this?

You have to act in your own interest when it comes to defence. If others don't want to man the barracks with you, and are willing to accept the consequences, well that is their decision. Even if it means defeat for all, as long as their free ride isn't a direct hamper on you, there is no justification to force them. After all, you may be wrong, but even if not, only they can decide their choices. Free riders are a fact of life.

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I don't have the time or interest now to get into a detailed debate, Carlos, but I disagree.

Among my objections:

Comparing the British government to Washington's army is a comparison of apples to oranges.

1. Americans were already paying taxes to the British; they weren't people free of taxes who elected to not volunteer support.

2. Some, like the very wealthy John Hancock, donated large sums. (When the signers of the Declaration of Independence pledged their lives, fortunes, and sacred honor, they knew they were likely to end up poor, as some in fact did.)

3. The British government was, well, a government -- a system of courts, legislature, and the like -- while the Continental Army was a voluntary rebellion against that state. This means the issue of how to properly finance a government could not draw upon this example for evidence. Washington, at the time, was not trying to establish a system of courts and so on; that came later.

-----------

I would like to second your criticism here of Carlos' analysis. The example of comparing the British army to the Revolutionary army is non-commensurate. The members of the Revolutionary army were British citizens; there was no American government. To whom would the "Americans" volunteer their "taxes"? A group of revoluationaries? Those who were part of the revoluation already had voluteered most of their wealth. Does Carlos expect British citizens to voluntarily finance a revolution if they don't support the revolution? Washington may have "ordered the grain and cattle of some Farmers to be seized" but those farmers were British citizens.

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Basically, if some people decide to create something, and that something benefits people who do not pay for it, this is fair. But in case of a type of benefit which is essential for survival, when a person's choice comes down to die or have this "product", I'm not sure if it is just to choose life and yet not pay those who allow it for you.

What do you think about this?

This is economically called the "Free rider problem." The short answer is that it's not really a problem. One example would be the U.S. (or any capable country) funding and building an anti-asteroid weapon that would deflect a humanity destroying asteroid headed towards the earth. If there are not enough individuals in the world who would care about such a rock, after scientific evidence has shown the inevitability of the hit if undiverted, then humanity deserves to go the way of the dinosaurs. But there probably would be enough individuals who do care and would fund it. Those who cannot or will not pay are getting a free ride for those who can and do, but that's just their good luck. It's along the lines of the quote by Hank Rearden in Atlas when he says, to the amoral/immoral businessmen, "Gentlemen, I regret that I shall be obliged to save your goddamned necks along with mine", or words to that effect.

My thoughts on coercive funding are:

-- To take the U.S. Civil War as an example, the entire war was fought and won by the Union before income taxes existed (except for a very small, brief period that probably set the stage for the 20th century disaster to come.) No war since has even begun to approach its relative magnitude. That in itself should be a cautionary historical note about the supposed necessity of income taxes.

-- Ethically, a country that actually needs a large military should either get the voluntary funding it needs, or perish as it deserves. Instituting tyranny in order to fight tyranny is a common but nonetheless ludicrous contradiction, along with such things as drafting men to fight for freedom (supposedly).

-- Looking at the full philosophic picture in context, it is extremely doubtful that large militaries are actually needed by any country that acts rationally - i.e., one that does not altruistically pay to support its enemies (e.g. the U.S. and Israel), and which does not withhold its strongest weapons in order to be nice to its enemies (e.g. the U.S. and Israel), and which does not strangle its own economy with controls so that the relative funding (of the entire economy) required for a rational military is a much larger percentage than it ought to be (e.g. the U.S. and Israel).

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I therefore think it is completely proper for the United States to enforce involuntary taxation only for the essential services required in order to protect Freedom and individual rights within our nation. As a counter to the argument that involuntary taxation violates individual rights, I say that you are welcome to leave the USA (or worse yet, go live in the wilderness) any time you want!

That is exactly the same argument that was commonly given in support of the military draft preceding the replacement of military conscription by the all volunteer military in the early 1970's. The argument is fallacious, as illustrated by the above reductio ad absurdum.

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One arrives at moral principles not by looking at what is practical, but by looking at the nature of man. Is it practical for a starving man to steal from his neighbor today so that he can survive? Or is it practical and ethical for the man to recognize his nature, part of which is that he must produce to survive and then act in a practical, ethical manner?

But that doesn't mean the 'practical' is unrelated to ethics or man's nature. The moral is the practical, but you can't look at the 'practical' for isolated cases out of context and without regard for what is practical for whom and at whose expense.

In the context of the draft as an example:

Just as an individual has the right of self-defense, so has a free country if attacked. But this does not give its government the right to draft men into military service -- which is the most blatantly statist violation of a man's right to his own life. There is no contradiction between the moral and the practical: a volunteer army is the most efficient army, as many military authorities have testified. -- Ayn Rand "The Roots of War" in Capitalism the Unknown Ideal

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"We have called this a burthensome tax, because the duties are so numerous and so high, and the embarrassments to business in this infant, sparsely-settled country so great, that it would be totally impossible for the people to subsist under it, if we had no controversy at all about the right and authority of imposing it."

(p. 39, The Revolutionary Writings of John Adams, Selected and with a Foreword by C. Bradley Thompson)

And those "so numerous and so high" taxes were much, much less than today's routine taxes.

The Founding Fathers found 'taxation without representation' and 'trials without a jury of peers' as the manifestation of tyranny... Involuntary taxation in a free nation is a contradiction of terms.

Involuntary taxation is not the same thing as taxation without representation, but both are a serious problem today. Several states now impose higher taxes on non-residents because they know that non-residents can't vote against it. In Maine, the governor (a progressive New Leftist) tried to get a constitutional amendment that would have imposed a 25% higher mil rate for property taxes on out of state property owners. More recently he tried to impose a 'homestead' scheme, like Florida's, with the same effect: valuation of property used as a primary residence would be essentially frozen, shifting property taxes onto owners of businesses and other homes, especially those owned by non-residents. There is already a 'homestead rebate' in Maine exempting a portion of primary residences from property taxes paid for by those who don't qualify. Local officials in Aroostook County -- where there aren't many tourists but the businesses noticed now taxes were being shifted onto themselves as a minority -- coined the phrase "shift and shaft".

There is currently a campaign to "export taxes" to non-residents through all kinds of taxes intended to force non-residents to pay for Maine's tax burden -- which for years has been the highest per income in the country. Having driven investment and industry out of the state, causing lower incomes with escalating taxes, the politicians are openly seeking to milk tourists and other non-residents. I wrote an op-ed about this and their non-sensical anti-concept of "exporting taxes" a few years ago for the regional newspaper.

Such 'taxation without representation' is a perfect example of Ayn Rand's princple in her essay "The Roots of War":

When a statist ruler exhausts his own country's economy, he attacks his neighbors. It is his only means of postponing internal collapse and prolonging his rule. A country that violates the rights of its own citizens, will not respect the rights of its neighbors.

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...

There is currently a campaign to "export taxes" to non-residents through all kinds of taxes intended to force non-residents to pay for Maine's tax burden -- which for years has been the highest per income in the country. Having driven investment and industry out of the state, causing lower incomes with escalating taxes, the politicians are openly seeking to milk tourists and other non-residents.

...

It sounds like Maine is a particularly bad example of the phenomenon of states taxing non-residents, but it's quite common in other states too.

The two examples that come to my mind are taxes on motel/hotel room rents, and taxes on car rentals.

I've found that it's quite common for these taxes to be very high - much higher than the general sales tax rates. The idea is that it's mostly non-residents that rent motel rooms and cars, and of course they don't get to vote on these taxes - so, just raise those rates and make the "outsiders" pay. (I've visited places where the motel tax is 15%, even though the general sales tax is 6%. Washington is particularly bad about car-rental taxes, as I discovered once when I had to rent a car while mine was in the shop; these are used to partly pay for all of the subsidized sports stadiums they build around here.)

(Even Oregon, which doesn't have a general sales tax at all, has a tax on motel/hotel rooms, at least in some cities.)

All of which goes to show that there are many people who don't like high taxes, but they aren't against the taxes in principle - they think it's just fine if they can force somebody else to pay them. :(

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The British Army on the other hand enjoys plentiful supplies, and fully clothed and fed men.

Not to be too down on you here, but ~ No, it doesn't

One of our guys was shot by insurgents after being ordered to give his body armour to another soldier going into a 'riskier' area. The coroner reported that the body armour may have saved his life.

Similarly, our guys for months had the wrong camoflage uniforms

The Landrovers are inadequately armoured and armed

We have insufficient air support

My friend, a paratroop sergeant, guys not given to excessive complaints by any stretch, said in Afghanistan, they often get only two daily meals. He lost 30lbs on the most recent tour. Very often because of a lack of ammunition, they use captured AK-47's.

That said, on the substantive point you make, I reckon you could fund a minimal state by sales taxes alone.

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...

There is currently a campaign to "export taxes" to non-residents through all kinds of taxes intended to force non-residents to pay for Maine's tax burden -- which for years has been the highest per income in the country. Having driven investment and industry out of the state, causing lower incomes with escalating taxes, the politicians are openly seeking to milk tourists and other non-residents....

It sounds like Maine is a particularly bad example of the phenomenon of states taxing non-residents, but it's quite common in other states too.

You mean a good example of something bad :ph34r:

Many states cynically pull stunts like this -- for example even NH charges a dollar toll for a few miles of highway connecting Massachusetts and Maine, probably in retribution for Maine taxing NH residents on income just over the border and on a disputed island. But Maine does it with an open ideological fervor and demagoguery that is frightening.

The whole phenomenon appears to be a growing outbreak of war on non-residents across the country and will probably get worse under the current mentality following Ayn Rand's principle in "The Roots of War".

The two examples that come to my mind are taxes on motel/hotel room rents, and taxes on car rentals...

All of which goes to show that there are many people who don't like high taxes, but they aren't against the taxes in principle - they think it's just fine if they can force somebody else to pay them. :o

Most people don't get involved with politics on any issue that doesn't affect them directly, which is constantly exploited by the politicians. In Maine the demagogues don't even bother to hide it during the summer when out of state tourists are reading it in the newspapers.

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To add further support to mcvideo's argument, an article by John Stossel in Capitalism Magazine says Americans spent 260 billion in charity in 2005. I am fairly positive more is spent annually on the redistribution of wealth. Taking mcvideo's estimate as correct or even close to the mark, I don't find it hard to imagine Americans contributing twice the amount they spend on charity if they have no income tax to provide for things they can readily see are necessary (how many Americans don't think they need police, a military, and a judicial system?).

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If we arrive at moral principles from looking at what is practical for man's life in reality, then I can't avoid reaching the conclusion that involuntary taxation is morally right in the proper context.

If we arrive at moral principles from looking at what is practical for man's life, then I can't understand how you can support theft. An institution that steals in the name of "protection" is a contradiction. The mafia works in such ways. I don't live here by permission of my government, I live here by right. No institution, private or public, has a right to seize my property without my consent. If it is in my interests to use what I create in the way I see fit, then it cannot also be in my interests for my neighbor or my government to claim it for themselves.

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If it is in my interests to use what I create in the way I see fit, then it cannot also be in my interests for my neighbor or my government to claim it for themselves.

Which is "practical" -- at the social level -- for those taking it only until the "principle" is uniformly applied and the whole system degenerates into mutual looting, destroying everything under the resulting dog-eat-dog welfare state, all in the name of obtaining "necessities". So much for its "practicality".

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If we arrive at moral principles from looking at what is practical for man's life in reality, then I can't avoid reaching the conclusion that involuntary taxation is morally right in the proper context.

If we arrive at moral principles from looking at what is practical for man's life, then I can't understand how you can support theft.

Perhaps, this disagreement hinges on what Carlos E. Jordan means by "the proper context."

Ayn Rand wrote [emphasis added]:

The question of how to implement the principle of voluntary government financing—how to determine the best means of applying it in practice—is a very complex one [...] The choice of a specific method of implementation is more than premature today—since the principle will be practicable only in a fully free society, a society whose government has been constitutionally reduced to its proper, basic functions.

[...]

Any program of voluntary government financing is the last, not the first, step on the road to a free society—the last, not the first, reform to advocate. It would work only when the basic principles and institutions of a free society have been established. It would not work today.

I take this as Ayn Rand saying that voluntary financing of government would work only as the last step after all the other necessary political changes had been made. Until then, "the proper context" would not exist.

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I take this as Ayn Rand saying that voluntary financing of government would work only as the last step after all the other necessary political changes had been made. Until then, "the proper context" would not exist.

I agree with your summary, and I don't disagree with Ayn Rand here. At the moment, the government is serving irrational functions that voluntary taxation simply couldn't support. That's why when people object that it wouldn't work, I point out that it wouldn't work with this system, but I think it would work with government limited to protecting our actual rights (rather than presumed entitlements).

However, I don't believe this is the same as saying that involuntary taxation is moral, and Miss Rand did not use that term. The alternative to keeping the taxation would be the collapse of our current government. It's the choice of a mixed government over anarchy that is moral, not involuntary taxation itself. Another example of this is Social Security. Social Security is immoral, but it would be wrong to deny tax payers who have already paid into the system the returns that they have been promised. Therefore it should be phased out, rather than eliminated at once. It's bad to take tax payer money without consent, but it's worse to take it promising some benefit and to renege on it. In my judgment, this is not the same as saying that Social Security is moral now anymore than it is at some future time.

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Wrong war Stussy88.

You maybe missing the point. The post started with a general question about taxes funding the modern state, and used the American rebellion as an example.

My point referred to the wider concept that taxes fund everything (they clearly don't) but in fact, the British Army (against Washington) had serious supply problems in fighting the rebels, despite government funding. Indeed, it's one of the (many)reasons why we couldn't hold the colony.

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You maybe missing the point. The post started with a general question about taxes funding the modern state, and used the American rebellion as an example.

My point referred to the wider concept that taxes fund everything (they clearly don't) but in fact, the British Army (against Washington) had serious supply problems in fighting the rebels, despite government funding. Indeed, it's one of the (many)reasons why we couldn't hold the colony.

I think another problem is a philosophical one, that using wartime policy as an example is like trying to infer moral principles from emergency situations.

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You maybe missing the point.

No, I got the point. I was just commenting that the British Army that faced Washington probably didn't have poorly armored Land Rovers. Your post was a non-sequitur, even though the underlying point you were trying to make was understandable.

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I've been busy for a while and now I'm back.

One quick argument I want to make is this:

I assume that most members here would think that it would be proper for the Military, FBI, or Police to have a bomb squad to be used in the event of some attempted terrorist attack. But if it is legitimate for the government to have a bomb squad to defuse a bomb before it kills everyone, why wouldn't it be legitimate for the government to have a Fire Department to put out the raging fire that the bomb will cause?

The Military has it's own branch of Fireman that they use (someone correct me if I'm wrong), so why on earth can't the government protect its own people with a similar department?

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