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Taxation is Still Theft, No Matter How Many Logical Fallacies You Employ

November 21st, 2008

Responding to Taxation Really Is Theft, smally pointed me to four essays by Liz Anderson (forgive my familiar tone; “Elizabeth” is just too formal for me to keep typing) which were, in smally‘s opinion, the most comprehensive arguments he’s encountered, against the “Taxation is Theft” argument.

I can save you a lot of time: at no point in Anderson’s four essays did she put forth an argument that was original or compelling to justify taxes.

If you’re still interested, Anderson’s posts begin with How Not to Complain About Taxes. Let’s see what she has to say:

[T]he fact that some property is mine does not entail that other people do not have rightful claims to some portion of it. I am entitled to my salary; it’s mine. But my children have a rightful claim to support from my income. In some states, such as California, I have a legal obligation to support my parents out of my income, if they cannot support themselves. I have to pay my bills out of my income. If I negligently injure someone, I am liable to pay them damages from my income. The fact that this income is mine does not settle anything about who else might have legitimate claims to some portion of it, and on what grounds. Note also that I did not have to give my personal consent for some of these others to have a claim on it.

In some of the cases above, the claim arises from an action or negligent inaction, that is, a creditor’s claim upon my income does not arise because I earned the income, nor does it arise simply because the creditor and I are members of the same society, however defined. His claim arises because of (and is validated by) an agreement between the two of us. Likewise, the injured party’s claim to a portion of my income is divorced from my having earned it, at all. The injured party claims my income because I injured him, it is required as recompense for damages caused, and for no other reason.

Even if we assume the validity of these arguments (the California example, in particular), we cannot begin with the presumption that “others” have rightful claims to some portion of our income. Instead what must happen, is for those “others” to make a claim for such portion of that income which can be justified. The mere existence of a State which does not recognize property rights should not be construed as disproving property rights, in general.

So here’s my second point: unless one is a bomb-throwing anarchist, an advocate of natural property rights must concede the legitimacy and indeed necessity of a state, at least as an institution for collective protection and impartial adjudication of claims–the so-called “minimal state.” And such a state will have a legitimate claim on every member’s property, to the extent necessary for everyone to pay their fair share for its maintenance, as Locke rightly insisted.

I should have stopped reading, here. I would like to call particular attention to the ad hominem in her “second point,” namely, that unless you accept the premise of her argument (that a minimal State is the only viable form of social organization and that said minimal state must be funded by taxes), then you are a violent, “bomb-throwing” anarchist.

I would like to pause for a moment, and remind Ms. Anderson that the most violent and oppressive bomb-throwers in recorded history have been nation States. In any event, I’d expect more from a professional philosopher than ad hominem attacks on her intellectual opponents, followed by a textbook example of the “No True Scotsman” fallacy. If you’re interested, here is some truth about what anarchists want.

However, I can’t disagree with everything she says. In particular, in Part 2, Anderson describes (farily accurately, IMO) what’s wrong with capitalism:

Advanced capitalism requires a vast apparatus of socially engineered institutions to sustain itself. To put some specificity on these claims, I’ll argue as follows. (1) Certain types of property rights and rules found in advanced capitalism have no sound basis in “natural” property rights but are nonetheless essential to advanced capitalism.

…Under the capitalist system we have today, people’s claims to property arise from a vast artificial system that has no natural foundation, and that rightly contradicts many natural property claims. The system couldn’t be capitalistic if it didn’t.

Again, I agree completely that many claims to private property, as we know it, “arise from a vast artificial system that has no natural foundation.” Where I disagree, is that this lack of natural foundation “rightly contradicts many natural property claims.” A general pattern that I notice in her writing is that she lauds State capitalism where lauding it might bolster her arguments, and she condemns State capitalism if it helps her arguments to condemn it. This is not a principled approach, it is cherry-picking at its finest.

She brings up the examples of Limited Liability Corporations, and Intellectual Property laws, which are state intrusions in the market, to which many libertarians (some more vehemently than others) object. All we can validly conclude from these arguments is that the current State-capitalist economy does not rely on natural rights principles. To extrapolate from this conclusion, that therefore natural rights do not exist, is a textbook example of post hoc ergo propter hoc, or, “after this, therefore because of this”.

Moreover, if rights do not exist independent of government, then no government can justifiably be established in order to protect those rights. The converse of this, however, that governments may exist to the detriment of human rights, is not falsified.

So far, I’m not impressed. Let’s see how she does with Hayek

Let’s consider first Hayek’s claim that prices in free market capitalism do not give people what they morally deserve. Hayek’s deepest economic insight was that the basic function of free market prices is informational

…Claims of desert are essentially backward-looking. They aim to reward people for virtuous conduct that they undertook in the past. Free market prices are essentially forward-looking. Current prices send signals to producers as to where the demand is now, not where the demand was when individual producers decided on their production plans.

I’ve not heard anyone put forth the argument that wages are due in exchange for virtuous conduct of the past. All this talk about “moral dessert” is a straw man.

One’s claim to income, in exchange for labor, is not made on the grounds that he “deserves it,” but rather because it was something to which he and his employer voluntarily agreed and pre-arranged. In this sense, the laborer does in fact “deserve” his wages, but only conditional upon the fulfillment of the agreement.

Free-market prices are indeed forward-looking, and profits accrue to those individuals who are most capable (or occasionally lucky) in forecasting uncertain future demand, while bearing risk for society during the time-to-completion. In a free market, unsuccessful businesses quickly and unceremoniously dissolve, and labor is mobile and competitive.

And so far, no argument that people have a moral claim to their pretax incomes, sufficient to preclude taxing it for insurance purposes, has survived critical scrutiny. Certainly, “I deserve it” doesn’t.

There’s this thing called Moral Hazard…

Look, I want to help people as much as the next guy. I don’t want to see pain and suffering. But it is at the very least, unimaginative, and at worst, downright cruel, to suppose that the only way we can possibly help Group A, is by positively inflicting harm on Group B. Perhaps more importantly, this is an argument that can cut both ways: just because one cannot establish that he “deserves” his income, is not sufficient to conclude that others do, in-fact, deserve a portion of it, nor to establish what portion would be appropriate.

Anderson’s “critical scrutiny” somehow avoided any research of fraternal orders, Friendlies, mutual aid societies, or more visibly and more recently, the billions of dollars and millions of labor hours that (e.g.) Americans donate to charity, domestically and abroad, every year. Despite the fact that we are taxed to the hilt (to her credit, Anderson is open to the argument that we are taxed too greatly), people still find a way to freely and voluntarily help those who are truly in need.

In part 4 of How Not to Complain About Taxes, Liz falls back on

[O]ur capitalist economic system does not in fact reward people according to the proposed principle–in this case, according to their individual productive contributions.

This is yet another indictment of State capitalism, not the principal. If people are not rewarded in accordance with their productive contributions, the problem is (most likely) not the rewards, but the system which tolerates such an injustice, and encourages rent seeking, which precludes others from earning their keep.

In a Free Market, wages and prices tend towards their respective opportunity costs. Under such constraints, the decisions and consequences thereof are left solely to the individuals, to whom they impact the most. If people should earn what they deserve (whatever that means), the first step towards achieving this goal is the eradication of any impediments thereto, up to and including the dissolution of labor cartels, license restrictions, state-sponsored monopolies, etc. She continues,

More generally, market wages don’t track any physical measure of positive productive benefits conferred on others, since they vary with factors independent of the firm’s production technology. Wages vary with the number of other people competing for the same job, the power of competitors to hold out for better terms, the costs to the worker of changing jobs, the availability of alternatives, and the costs the worker can impose on the firm by quitting. These factors don’t track physical measures of a worker’s contribution. Rather, they track people’s bargaining power.

Liz, if you’d like to have your cake, you can’t eat it, too. Whereas she previously lauded State capitalism as all that’s good and right in the world, she is now vilifying it. Anderson fails to recognize the role of the State in the market-power disparities. (As an aside, I find it comical that it took four blog posts to recognize that economic phenomena like “market wages” are subject to the laws of economics.)

For example, the availability of alternatives can be severely impacted by State interference. Try establishing your own TelCom and let me know how it works out, or, better yet, try starting a School. Or a Police Department. Furthermore, bargaining power may be reduced by the non-transferability of health insurance, a not insignificant portion of many workers’ total compensation packages. Many of the “costs” associated with changing jobs are artificially high, due to State manipulation of industry and the labor market.

I am, frankly, embarrassed. Anderson is the one making the positive claim, and accordingly the burden of proof is upon her, a burden that can’t be overcome by saying “this straw-man caricature of an opposing viewpoint doesn’t prove the opposing viewpoint!” Instead, she has literally run the gamut of logical fallacies, with which her arguments are so riddled, she couldn’t pass Philosophy 101 at the local community college.

I believe that I am now dumber for having read them.

It’s possible that the only way it could get any worse, is if Anderson stuck her fingers in her ears and started screaming “LALALALALALA!”

no third solution

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