no third solution

Blogging about liberty, anarchy, economics and politics

Category Archives: Taxation is Theft

Property Taxes are NOT “Rent”

December 6th, 2008

When challenging the maxim that Taxation is Theft, some people like to make an analogous argument: “Think of it as rent,” they say. (I saw this on a reddit discussion about one of my posts.)

OK, let’s think of it as rent A non-negotiable rent. Backed by the “social contract, so-called, a complete fiction which no man ever accepted because it was never lawfully offered, and one which may at any moment be unilaterally altered by the Landlord, who may reduce the quality of the services, add more services for which the tenant hasn’t asked (yet for which he still has to pay), may raise the rent, may reclaim the property, may evict the tenants on a lark, etc.

That’s not the sort of rental agreement that free men would tolerate.

It is not rent if there’s no way out. The Antebellum slaves were not “renting” their lodging, and “buying” their sustenance with their labor? The difference is only one of degree; we may have access to more property than they did in their time, but we’re not “renting” our livelihood any more than they were.

It’s not rent if there’s literally nowhere to go without having to rent, from essentially the same landlord. Since the tenants (i.e., taxpayers) simply have no method by which they can opt-out, i.e, you can’t buy allodial title, it’s only reasonable to conclude that taxes are definitely not rent.

Instead, they more closely resemble a feudal tribute, they are a “fee” which you are obliged under pain of death to pay “voluntarily” in exchange for “services” that you can’t opt not to purchase. Rothbard was fond of describing taxes as “ransom for permission to live”, that fits.

Theft by any other name is still theft.

Public Goods Do Not Justify Taxes

November 30th, 2008

A lot of people want to make an argument in favor of government or in particular, in favor of taxation, on the basis of public goods. Public goods, you might recall, are non-rival, non-exclusive goods, the production of which benefits everyone, but since the benefits cannot be excluded, many people presume that such goods will be underprovided in a free market. Typically, what they mean is that these goods may be provided in a smaller quantity than they’d prefer.

For the casual reader, an example of public goods are parks and roads. Without resorting to a childish absurdum (i.e., but my garden is a public good for my neighbors…), we can see some problems with the public goods foundation, from the get-go. Private roads exist in probably every county in the Union. Private parks do exist: Ski resorts, private beaches, dog parks, etc. The largest trade artery between the U.S. and Canada is privately owned, maintained, secured, and operated, and has been for 80 years. All of these maintain some degree of exclusivity, and they are able to do so based on well-defined property rights. (I like to think in terms of Coase’s discussion of the Lighthouse Problem.)

Slightly more sophisticated cases are often made for insurability problems, like protection from forest fires, or neighborhood fire departments which have been privately provided in the past, by people even dumber and less technologically-equipped than we are, today. The plain fact of the matter is that survivor and life insurance programs under the guise of Social Insurance Programs, the forced subsidization of risk via taxation, actually encourages more risky behavior. It’s called moral hazard.

But the point of this post was not to belittle the public goods argument on economic grounds, although for what it’s worth, I’m not convinced that the argument holds much water. Even if we grant that certain goods are non-rival and impossible to exclude, even if we accept the premise that these goods will be provided in suboptimal quantities if the market is left to fend for itself, we’ve still got one hell of an is-ought gap to bridge.

Assuming: Schools are public goods. Roads are public goods. Security is a public good. So what?

That a good happens to be “public” in nature says nothing about whether that good ought to be produced, or in what quantities it should be produced (if at all). The “public” nature of certain goods is not enough, in its own right to justify as a moral imperative, the taxes used to provide for their production, since, by virtue of the good’s “public”-ness, we can’t deduce that it must be provided, we cannot justify taxing people in order to provide these goods on account of their “public”-ness.

The proper response to the public goods argument is: So what?

Comments on Comments #30

November 26th, 2008

Here are some responses to your comments, prior to the Thanksgiving Holiday. Blogging may be light during the next few days as I try to catch up on reading, then again, blogging may be prolific. Who knows.

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Mike Gogulski 1955Design left a comment on Metablogging, in regards to my inquiry about the Twitter badge in the sidebar.

Mike and 1955Design report that they see the Twitter badge correctly.  Must be something local to my machine, although it was visible at first.

If readers are seeing it (and I’m not) then I’m not worried about it.

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I’ve had a few technology-related issues in recent months.  This morning, this website was haxxed.  It may be a WP security issue, but appears like it might be a server hack.  In any event, some of my readers have been kind enough to offer advice for dealing with these problems.  Although I haven’t needed their help, it’s great to know that people who are essentially strangers are willing to help me out. That’s voluntaryism.

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Mike Gogulski points out that Taxation is still theft no matter how many logical fallacies you employ was getting some attention on reddit|Anarchism. I’m glad there’s discussion, but a lot of the comments were obvious trolling. I don’t follow reddit, digg, etc., although reddit and stumbleupon have been driving some traffic to my site lately.

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On the metablogging note, Billy Beck @ Two–four.net recently linked here. I got a lot of traffic from that hit. I’m very happy people are noticing and reading my blog. If you don’t read two–four regularly, I suggest that you do.

Traffic for November looks to exceed 4,000 absolute unique visitors according to AWSTATs. I’m getting anywhere between 50-150 unique visitors each day, and approximately 500 pageviews, daily.

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Brad left a comment on No Nation Ever Taxed Itself Into Prosperity, Either:

What are you and RG trying to solve? It sounds like a battle of “I have read more books than you so I’m more qualified.” RG sounds like a politician.

I think your argument of taxation brings no good is simple enough. There just needs to be a better way to collect taxes instead of just taking it through income taxes or raising taxes on certain products (like yachts). I like a flat federal retail tax. This way the government can only get as big as the market will let it.

LOL @ the first part of the comment. I sensed it was kind of going that way, and asked RG to post his commentary at his own blog (he doesn’t have one) or to feel free to correspond with me via e-mail. He has yet to do so. He left a number of comments that I’m trying to put together into a coherent post, rather than piecemeal comments/responses, they’re not going unnoticed or unchallenged.

The second part of Brad’s comment is WRONG.

I oppose a flat tax for the same reason I oppose any tax. Taxation is theft, and it even though a flat tax is somewhat more transparent (allegedly) it still amounts to ransom for permission to live. In a free society, that is intolerable.

Brad is a budding libertarian, so there is hope for him, yet. The problem is buried as a hidden premise to “There just needs to be a better way to collect taxes”, which is, “Government is the only entity capable of providing certain things, from which it follows that taxes are necessary for the provision thereof.” I could probably write a book on that topic.

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I’ll respond to one of RG’s comments

Also — as much as you have studied economics, I find it hard to believe that you support the market-distorting mortgage tax deduction. Granted, you believe nobody should ever pay taxes and we should live in caves. But given current circumstances, surely you can see that the tax deduction is nothing more than a transfer of wealth from renters and homeowners (e.g. no mortgage) to people who are somewhere on the 30-year journey to homeownership.

Taking off my anarchist hat, for a moment, from a policy perspective, it seems far more reasonable that a deduction be based not solely on mortgage interest paid, but rather on the total monthly housing expense. In this manner, no matter where you are on the 30-year amortization continuum, or even if you rent a home, you’d be eligible for a deduction based on the monthly payment. This proposal might also base the deduction on the property value instead of monthly payment, in order to reduce/eliminate the incentive to remain indebted.

Insofar as the current incentive serves as a transfer, it falls primarily on the renters, since homeowners at one point benefited from the deduction (or, if they paid cash, had the opportunity to benefit from it). I don’t support it as a general principle, I’m just trying to point out that repealing that deduction would be the single largest increase in effective tax rates, probably in the history of the world.

But wait: If reducing tax burdens for some people “distorts” the market (I agree that it does), is it not also true, that raising tax burdens for some people is also distortionary?

Yes, that must also be true. That’s one of the points I’m trying to make in that series of posts.

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Enjoy the holiday weekend.

no third solution

Blogging about liberty, anarchy, economics and politics