Jan
20
“Throughout man’s history, money was always seized by looters of one brand or another, whose names changed, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, and deprived of honor. Yet through all the centuries of stagnation and starvation, men exalted the looters, as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised the producers, as slaves, as traders, as shopkeepers—as industrialists.”-Ayn Rand
Thousands of years back, when Rehoboam’s main tax collector Hadoram set out to collect his revenues, Israelites met him with all their might. Stones were thrown upon him that he had to die. History tells us that power and authority were always opposed when first imposed, though the opposition did wear off in course of time. How do we fare up with the ancient Israelites? When did we learn to praise the power hungry as ‘aristocrats of the bureau’? When did our perceptions get so muddled, mind so feeble and soul utterly devoid of self-respect that a biblical story is needed to remind us of our folly?
Wealth is goods made by man. Wealth, as such doesn’t exist simply on earth. It doesn’t simply grow on trees. It is not absorbed from the atmosphere. Wealth ought to be produced, and it is produced by individuals. It is man who creates the character of goods as wealth. What is produced by individuals rightly belong to them. No body else can have a rightful claim on it. To say that someone other than the producer can have a claim on wealth would mean that it belongs to the person who hasn’t produced it, but not to the producer. Nothing can be more ridiculous than such a claim.
If wealth produced by a person belongs to him, it should be obvious that taxation is robbery. Taking the produce of another person is definitely robbery. I don’t think I have to point out that robbery is evil and immoral. What is shocking is that most people don’t see taxation for what it is. They fail to realize that to tax is to rob. Of all the nonsensical notions held by man, the most ridiculous is that taxation is voluntary. If taxation is voluntary, why is it conducted at the point of a gun? Is it possible for a person to evade taxes? If it is not possible for one to evade it, then by what code of logic is it voluntary?
People are so used to the practice of taxation that they are unable to think of a world without it. They are unable to think logically and realize how monstrous it is to rob Raman to pay Rehmaan. When it is pointed out that taxation is robbery, statists argue that we get goods and services in return for the taxes that we pay. They totally miss the point. Why not let the people keep their money and have them spend it on whatever goods and services they consider necessary? Why forcefully extort money from them? Is it possible for the government to provide services to people according to their contribution of tax money? If it is possible to do so, what is the whole point of it? Implicit in the notion of taxation is the belief that wealth should be redistributed. Taxation redistributes wealth in a reckless fashion.
Most people are of the opinion that wealth should be distributed fairly so that the poor would be taken of. There are several problems with this notion. No matter what ones need is, a person doesn’t have a rightful claim to the wealth produced by another person. Even if a person is poor and starving, he doesn’t have a right to another person’s wealth. The notion of redistribution as a fair practice takes wealth as a given. They naively believe that wealth would be produced no matter what policy the government adopts. They fail to realize that taxation reduces the incentives for both the producer and parasite to produce. Why should a person work if sustenance is guaranteed to him? Why should he educate his child at his expense if education is provided free of cost? Why should he pay for health care if it is free for all. While it is true that all do not depend on government for these services, it should be taken in account that a vast majority of people become parasites given a chance. The fact that most of the children study in government funded schools and most avail “free” health care is enough evidence to justify this conclusion. Consider the case of education. Most children are forced to go to government funded schools as their parents are taxed to fund it. The same goes for health care and other services.
Another fallacy regarding taxation is the the money taxed out of the private industry is spent on the public sector. However,the government doesn’t spend the money just as the tax payer would have spent it. If government spends just as the tax payer would have spent it, it would have no excuse to step in and tax. It is also said that there should be some government investment to stimulate growth, to reach a particular level of growth, especially in the case of underdeveloped countries. Nothing can be more ridiculous than that. Government spending is consumption and not investment. Investment is done to serve the ultimate consumers and not the investor himself. In the case of government spending, money is spent in a manner which makes government bureaucrats and politicians happy. It is consumption, pure and simple.
It is also held that taxation helps the poor. Behind this belief is the notion that people would keep on producing wealth no matter what government does to their wealth. When government taxes around 40% of the income of individuals, businessmen would not be able to expand production. It reduces incentives to take risks. Would anyone take a lottery if he has to divide the prize among those who hadn’t paid for it? Taxation also reduces the wage rates received. Wages are dependent on productivity of labor, which in turn depends on the capital invested. It is taxation which tampers with capital accumulation and reduces the lives of the vast majority of the population to poverty.
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1 views13 Responses to “The Evils Of Taxation”
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gopi Says:
January 21st, 2009 at 1:35 pmnice work.. really nice :) when u say “In the case of government spending, money is spent in a manner which makes government bureaucrats and politicians happy. It is consumption, pure and simple.” - r u referring to corruption?
Unpretentious Diva Says:
January 21st, 2009 at 5:10 pm@ Gopi. here is the answer. http://www.reasonforliberty.com/objectivism/the-destructive-collective-taxation-an-explanation-of-what-are-taxes.html
deadmanoncampus Says:
January 21st, 2009 at 5:51 pmNo.I was not referring to corruption.All Government spending is in a form which makes the politicians and bureaucrats happy.There is no other way in which government money would be spent.
GP Says:
January 21st, 2009 at 8:26 pmIs it possible for the government to provide services to people according to their contribution of tax money? If it is possible to do so, what is the whole point of it?
<<<<Not necessarily all services you can get from private companies. The best example would be “Defence service”. Personally I do not agree with re-dtribution of wealth through taxation concept.
the whole point of taxing the citiznes is to provide them basic infrastructures(constructions of tunnel,dams,flyovers,public re-creational places,etc.),providing communications and logistics
which can help as tools for other businesses to grow upon , to provide protection to citizens from antisocial and antinational threats/attacks
( I do agree there is no 100% success rate and biggest failures were “attack on parliment and recently on Taj hotel in Mumbai”) through Defence forces and internal cops(police force),etc.
Few difficulties of govt.( my perceptions not officially declared or even written anywhere -
#1 even though single person can claim that - “I don’t want or intend to use govt. infra structure and in return I don’t want to pay any taxes” as govt. I (read : govt.)
cannot keep a track of whether he is using it or not and hence, just by mere assumption - they are not using it and are dead honest I can’t simply give him/her complete tax waiver.
#2 Currently I(read - govt.) can’t see any private bodies which are ready to take mantle of all above services completely on their shoulders which currently govt. taking care of and if I do see them and found they are capable of running it with profit and in turn
giving public much better quality services then I am gladly opting for privatising those sectors perhaps in phased manner even if I need to face the “antipoor” remarks by communists and leftist political parties in INDIA.
#3 Privatisation of PSU’s was first step in this regard (http://www.thehindubusinessline.com/2006/08/22/stories/2006082203110300.htm )
and I (read - govt.) do agree its implementation is not completely satisfactory so far due to inherent flaws such as “corruption”,favourism”,”abuse of power and position” in democratic and indian beaurocratic setup
but we are working on making it more transparent and clean and as first step you can refer to our “RTI (Right To Information) act” which can be availed by public to bring more accountability in current beaurocratic setup.
After recent corporate scam of “Satyam” we are also thinking of introducing the same(read - RTI act) in corporate sector too.
#4 Still those who thinks Govt. is evil(technically not as its a composition of elected leaders)and looting general public money through taxes
then they shud come up with list of tax categories/types( e.g. VAT,sales tax,etc.) which currently they are paying and think its unjust and shud be waived by govt.
if they ( read - those ppl) can come up with xyz company which act as replacement for the govt. services which are being availed by them. Note : here in this case u need to take all points in consideration , including
practical feasibility of ur solution/implementation technique across whole country.
Disclaimer : I hope u will publish my comments as my view of govt’s approach and not as official stand of govt.
gopi Says:
January 22nd, 2009 at 12:03 pmif u r not referring to corruption, then what is this form of spending which makes politicians and government bureaucrats happy? cud u explain that bit? and regarding this site, i support most of the views held here (even privatization of roads though i wonder what i’d do if the private owner of an ‘important’ road decides not to permit me or my family from accessing it;maybe due to personal conflicts.. do i hav a choice??whom do i turn to?)… except for de privatization of defence.. i’d b obliged if neone cud put up an article supporting their view that defence shud b privatized..
deadmanoncampus Says:
January 22nd, 2009 at 7:09 pmGopi,
I was not referring to corruption.The very term “Government investment” is wrong.There can be no such investment.What we call investment is what businessmen do to serve the ultimate consumers.In the case of the government,spending is just to satisfy the politicians and bureaucrats.If it is to serve the consumers why not have the tax payer keep that money with him and invest.Government enterprises are not run with a profit test.There is no way to know whether a government enterprise is serving the customers or not as there is no profit mechanist.What I mean was that it is economically wrong to say “Government investment”.There is a quote in Ayn rand’s Fountainhead-Gail Wynand speaks to Howard Roark-He says something to this effect-“There are only two ways to pander to the masses.One is to decide what they want and ram it down their throats.The other is to give them what they want.” Government does the first and businessmen do the second.Hope you get the point.
The question you asked regarding the case of roads is very valid.So many people ask that question.There would be the right to boycott in a free society.That doesn’t mean that it would end up like that.Rothbard answers this question in one of his books-I think it is “For A New Liberty”.He says that it is tantamount to asking what would a person do if he is not allowed to move out of his house by his surrounding neighbours.
I will deal with the concept of privatized defense in another blog.I have been thinking of writing one for a long time,but have never got around to do it due the complexities of the subject.It is a huge topic.
deadmanoncampus Says:
January 22nd, 2009 at 7:36 pmGP,
Defense services could be provided by private defense agencies and courts and they would provide it much much more efficiently than the Government.The Government has no business in doing the infrastructure business.There are several problems with it,but I don’t want to get into it here.As I have said earlier,roads too could be privatized easily. Your questions are well discussed here http://www.reasonforliberty.com/reason/what-really-are-taxes.html
Gopi,
What would happen if Google decides to remove a persons site due to personal conflicts? Here it should be obvious that it would be wrong to coerce Google to do it. There are people who say that power shouldn’t be misused even if they got the power through the right means.Some say that if a person has a button on the desk and could harm anyone by pushing the button,it still would be wrong to push even if the button got there through the right means.I don’t share that view point.Individual rights ought to be respected,no matter what the cost.
gopi Says:
January 22nd, 2009 at 8:48 pmgoogle does not hav monopoly… u can use other sites or create ur own sites. or express urself by other media. but if only 1 road can b laid between 2 places and it is owned by someone who does not like u, u’re right to movement is restricted (unless u r rich enuf to afford a helicopter). i agree de private constructor of roads hav full individual right to his road… but doesnt others have a right to move to other places?both hav rights and both rights cannot b upheld at the same time… y shud one prefer de right of one person over another?
AJ Says:
January 22nd, 2009 at 9:01 pmWell written
Unpretentious Diva Says:
January 22nd, 2009 at 10:09 pm@ gopi,
This post doesn’t talk of private roads, it talks of taxation.
Why don’t you shift your argument to the right place(post) please?
Here is the post about Private Roads http://www.reasonforliberty.com/objectivism/private-roads.html
Unpretentious Diva Says:
January 23rd, 2009 at 12:24 amPrivate Roads are not a futuristic dream, but a reality of present. We discussed the viability of Private Road systems, and their validity and usefulness over state roadways system. (Please read here.)
Let us discuss some of the major objections on the idea of private roads here again.
The first argument put forth against private road system is, private road system will deny a poor man to use it freely. Would this mean that all roads become toll roads?
Actually, Private Roads will be almost free for the common users and pedestrians and there will not be road taxes. Corporations and businesses and shops located alongside these roads will make it a point to have their admission roads in good condition with abundant parking space, they will maintain the roads in good shape whole round the town, city or village. (How? Please click here)
Second argument is, private roads will make it monopoly of the owner. What if there is only one road from a town to other city, will the owner of that road not have monopoly on that road?
So why will one go to live in a town which is not connected with another towns and cities by roads?
First situation is there was no road to a town until the owner of this owner of the road came and built road obviously, it is good to have a road rather than having no road. Second situation is, there is only one road from a town to a city and someone buys it. Will it affect the people of the town? The buyer may be an enemy of the whole town people and want them to punish, what if it so?
The abuse of monopoly will hurt the owner of the road alone.
Firstly, if the road owner increases the charges of road abruptly, people of the town will use it less and less, that will decrease the revenues for the owner, it will be his loss. Moreover, it will provide a demand of new road and hence competition for the road owner and hence ending any situation of monopoly. Third, people may just leave the town, leaving the road operator with a worthless road. That is, in any case, if the road owner abuses the monopoly, he will be in loss.
There can be no reason for a road owner to want as much user as he can get to use his road.
The third argument against private roads is, what if the owner of a major highway wanted to prevent some arbitrary group, say, Kakusa people, from using the highway, and felt so strongly that he went to great lengths to make sure no Kakusa people drove on his road? Is there anything to stop him?
It is highly improbable for a road owner to ban any one or any group from using the road he owns. It would be very expensive way for him to show his anger or opposition to Kakusa people, why will he not want to earn from the potential Kakusa user of his road? The situation would be just like the town situation, if the road owner restricts Kakusa people using his road, Kakusa people will move away, and the competitive road owner/maker will succeed in market.
(For any further argument/debate over privatization of Roads, please put it on here http://www.reasonforliberty.com/objectivism/private-roads.html
GP Says:
January 27th, 2009 at 8:49 pm@deadmanoncampus
I think we already explored the flaws in private courts
i.e. 1) Judges should be mutually agreeable for both parties before presenting the case before the court.
2) I don’t think you will be able to justify private defence agencies — -> I am talking about guarding the boundaries of nation and not personal security guards( again they are subject to changing loyalties and coercion no matter how much money you pay them ). But I have kept my mind open to read your thoughts on this.
renegade_division Says:
January 28th, 2009 at 12:39 am@GP Said:
Are you saying that there is no way by which a Hospital can determine whether someone is using their resources or not?
There is no way by which an insurance company can find out whether someone is using their insurance or not?
There is no way by which a Sam’s Club determine whether a non-member is buying stuff from them at discount(for member’s only) rate or not?
There are no private bodies which are running railways because the of the LAW against entry of private competitors in Railways.
Seriously dude what is wrong with you? I mean am not sure we are having a dialog here I mean what really is your ideology, and how come every article which appears on this blog is in contradiction to your beliefs, irrespective of what it talks about.
There is a law against Guns, owning Tanks, owning mortars, AK-47s, running railways, making roads, running your own private currencies, banking without RBI’s approval, carrying letters, and doing a zillion things. And then you ask “how will free Market run its own private currencies, I don’t see any company doing that??”, “How will free market run railways, there are no currently known companies having their own railway tracks?”.
All these costs are externalized to tax payers, so why would anyone pay for a private agency doing the same job for more price.
Is that a flaw or is that a positive point for a private judiciary?
Coz I don’t know how imposing a monopolistic judge on everyone is a positive point?
If two people don’t agree on a common third party Dispute Resolution Organization(DRO) they will go to their own respective DROs, if both the DROs give same decision then both the parties will be abided by the decision and dispute is said to be solved.
If both the DRO’s give different decisions then they are said to be in a dispute and they will go to a commonly agreed third party DRO.
Whichever DRO they agree to, its decision will be binding to both the parties and then dispute will be said to be solved.
If the DROs themselves cannot agree upon a common DRO, they can again follow the same pattern as their clients did, but it cannot go on indefinitely because its really costly to seek justice, and the costs will be bore by both the DROs.
There is no nation, nation is merely the area having a nation’s govt’s monopoly. If there is no govt, there are no public properties, if there are no public properties every property is privately owned, that means every private property owner will have to subscribe to their own private defense agencies. So a defense of the “so called nation”(lets say if Pakistan decided to attack the properties in Punjab), will be defended by unifying the defense against the rouge state.
In simple words, if you and me are one of the numerous private defense agencies providing services to people of Punjab and Pakistan invades the properties adjoining their border its in our best interest to contribute in the defense of those properties(whomsoever are the subscribed agencies in those areas).