This is an edited extract from Eamonn Butler’s latest book, ‘An introduction to taxation‘.
The moral arguments against taxation are heard rarely, though they are surprisingly numerous and strong.
First, taxation might be necessary, but it still relies on the use of force. Taxation at today’s historically high levels is possible only because non-payers face fines or imprisonment. To prevent a greater evil (such as invasion or terrorism), such coercion might be justified. But force is a moral evil: can it be justified for facilitating everything that elected officials do?
Moreover, taxation forces people to pay for things they may have fundamental moral objections to, e.g. state-funded abortion, foreign wars or mixed-sex schools. Yet we force them to live with the dismal thought they are funding things they believe are wicked, even murderous.
And how do we know that society actually benefits from tax-funded activities? The gain to those who benefit and the loss to those who pay are subjective personal feelings. We cannot measure them objectively, so how do we know the balance is worth the compulsion?
Even if people accept that their tax contribution does do some good, they may still believe that too much of it is wasted by bureaucracy, politics or corruption. Can we justify forcing them to pay into a system they think fails them?
To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.
– US President Thomas Jefferson (1742–1826)
Taxes reduce people’s ability to use their own resources as they believe is right and proper for themselves and their families. That makes them incomplete moral beings, less able to take responsibility for their own actions. People can be considered moral or immoral only if they are in control of what they do. Taxation denies them much of that personal control.
There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.
– US author Robert A. Heinlein (1907–88)
There may be a case for elected governments taking some decisions on behalf of citizens, but that is a slippery slope. If we grant the state moral authority over some of people’s choices, where does that end? There seems no logical limit. And remember, only individuals have values; institutions such as the state do not have values. People might associate for collective projects such as defence, but their association is not some superhuman entity with its own values that can override those of the individuals who make it up. Only they have values and morals. Taxation, however, tries to put some supposedly ‘collective’ morality above them.
Personal responsibility
Taxation (continues the criticism) undermines personal responsibility. People may wish to take care of elderly relatives, say, or provide a better education for their children. But tax-funded services replace those choices with someone else’s priorities.
Furthermore, paying taxes may convince people that they have no further social obligations. People are told that their taxes pay for vital services such as education, welfare and policing. So, they may feel no moral compulsion to intervene when they see children neglected or vandalism committed, believing these are the responsibility of the various authorities they pay taxes for.
Taxation also crowds out private giving. Charitable giving is important to good causes such as schools, hospitals, libraries, art galleries, orchestras, medical research and care homes, but high taxes leave potential donors with less money to support these activities. And when people believe that the state will provide, they see less reason to contribute themselves: why support education, medical research or social care when the government has taken on these responsibilities? What difference can one person make compared with the government’s vast resources?
Americans have a long tradition of philanthropy. The Scottish-born Andrew Carnegie, for instance, sold his steel company in 1901 for $480 million and used most of that money to fund scientific research, schools, libraries and colleges. And today, Bill and Melinda Gates are giving away almost their entire software fortune on education, health care and the eradication of malaria. Part of the reason why US citizens give so much more to charitable causes than other countries do is that the US takes far less of its citizens’ money in taxation and incentivises private giving. In higher-taxed countries, people’s charitable giving is sapped by the imposition of higher taxes.
Another problem is that taxpayers get very little say in where their money goes. Elections are years apart. When they do come, people are asked to vote, not on individual spending programmes, but on a whole package of spending – as diverse as education, welfare, transport and defence. It gives legislators a poor idea of taxpayers’ priorities, and electors end up voting for items in the package that they object to morally.
Furthermore, as economists of the Public Choice School point out, taxation is supposed to be spent in the public interest. But public policy decisions are rife with personal interests – such as the party interests of politicians and the personal interests of officials. It is hardly a moral basis for taxation.
Interest-group politics
The bigger the public sector grows, the larger the number of people (e.g. government workers and those on state pensions and benefits) who potentially gain by voting to keep it expanding. So, the state grows, not through necessity, nor public interest, nor moral justification, but through plain self-interest. And the bigger the state becomes, the less people think about the public good and the more they think that a greater share of state spending should come to them.
And the more money that flows through the political process, the more opportunities there are for politicians, officials and lobbyists to promote their own self-interest at the expense of taxpayers.
Elections are advance auctions for stolen goods.
– US satirist H. L. Mencken (1880–1956)
As F. A. Hayek (1976) noted, this promotes conflict between social groups. In the marketplace, different people can choose different products: you buying an iPhone does not stop me buying an Android. In politics, however, the legislature decides for everyone – say, how much should be spent on defence rather than the arts, or whether the wages of doctors should be higher than those of teachers. So, different groups, with different values, become pitted against each other in the fight to secure government funding for themselves. Such factional rivalry undermines the morality of society.
You can read Eamonn’s book, ‘An introduction to taxation’, here.
Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.
CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.
