by Katherine Revello
Private property is the font of individual liberty. An individual cannot possess and exercise rights unless his mind and body are considered his own inviolable property. That inviolability must extend to the physical objects produced by his efforts. They are uniquely his because, absent his labor, they would not exist.
When government levies direct taxes, it launches an attack on property rights and places a cap on the individual’s productive capacity. If the government is able to lay claim to a portion of a citizen’s income, that money cannot truly be considered that individual’s property. Income is the tangible representation of the contract that exists between employee and employer: in return for the productive labor of his workers (which helps the employer bring his vision into substantive being) the business owner offers a wage that both parties agree is a fair value compensation.
Money, after all, is a tool: it’s a scale that standardizes value across society. Symbolically, money affirms the worth of an individual’s productive capacity. When a consumer purchases a good or service, the money exchanged is a tangible expression of the value he sees in that product. Likewise, when an employer pays an employee, his action affirms the value he sees in the labor done for him. But when government lays claim to the portion of the income an individual has earned through his productive efforts, it creates an intermediary between a man and his property. Only after the individual has satisfied a government’s claim to a portion of his income is he free to dispose of the remains as he sees fit: to pay his bills and pursue those endeavors that spark his passions. The individual’s needs become a lower priority than the government’s, for he must first worry about the tax man.
In this exchange, government never suffers; only the individual (and, by extension, his productive capacity) suffers. Government is impervious to personal misfortunes that draw upon the individual’s pocketbook; it does not care if the individual is attempting to save money so that he might pursue some long dreamed of passion project. The demands of the tax man follow a strict timetable and it is the individual’s responsibility to comply or face the consequences of running afoul of the law. Such a system does not respect individual sovereignty; it runs roughshod over the individual’s right to be master of his own property and severly limits his ability to satisfy his own needs.
If property rights are to be respected, government must limit its means of raising revenue to various forms of consumption taxes.
It took a Constitutional amendment to make the federal income tax legal. Prior to the passage of the 16th Amendment, direct taxation was illegal precisely because it represented an unbridled ability of government to compel its citizens into compliance with the law.
As Samuel Bryan, an Anti-Federalist advocate of the Constitutional Convention, prophesied in The Dissent of the Pennsylvania Minority:
The power of direct taxation applies to every individual, as congress under this government is expressly vested with the authority of laying a capitation or poll-tax upon every person to any amount. This is a tax that, however oppressive in its nature, and unequal in its operation, is certain as to its produce and simple in it collection; it cannot be evaded like the objects of imposts or excise, and will be paid, because all that a man hath he give for his head. This tax is so congenial to the nature of despotism, that it has ever been a favorite under such governments. Some of those who were in the late general convention from this state, have long labored to introduce a poll-tax among us .The power of direct taxation will further apply to every individual, as congress may tax land, cattle, trades, occupations, &c. to any amount, and every object of internal taxation is of that nature, that however oppressive, the people will have but this alternative, either to pay the tax, or let their property be taken for all resistance will be vain.
And, indeed, what form of wealth today is beyond the purview of the federal tax assessor? The inequality innate to direct taxation is also deeply troubling. In the days when direct taxation was barred, the federal tax burden was apportioned according to usage. States were responsible for collecting an amount proportionate to the resources they consumed; the revenue-raising measures they used to pay back the treasury was a matter of their discretion. As the degree of influence residents have over their respective state officials is much closer than that citizens have over federal officials, a greater degree of latitude is more amenable to just tax policy and also to electoral accountability.
There is, however, no such relationship between the assessment of income taxes and personal wealth. To the contrary, the apportionment of directly assessed taxes is based on perceptions of social fairness. Direct taxation empowers federal officials to use law as a tool to codify their personal feelings and beliefs. Taxation today is an issue of social “fairness” first and a function of revenue second. The progressive tax system compounds the autocratic nature of direct forms of taxation: now not only is man alienated from his property, but his whole system of behavior is contingent upon public censure. His mode of living and his values may, if government officials deem his wealth to be in excess, be subject to an extra level of confiscation not applied to his less affluent neighbor, whose plight legislators deem more worthy of protection by the aw. The noble concept of “equality before the law,” which is the cornerstone of any government that claims to uphold individual rights, is reduced to little more than a transparent platitude by such policy.
This is made worse that social concepts of tax “fairness” have no basis in economic reality. In 2017, the Pew Research Center published a study of 2015 tax data that showed the top 0.1% of filers paid 20.4% of the federal tax burden while the bottom 43.8% of filers paid 1.4%. In terms of proportionality, this massive disparity hardly seems fair. Yet, because “fairness” is a construct of social conditions—which are entirely relative to one’s perspective—the matter is open for debate. And this uncertainty breeds soft despotism: law becomes a matter of opinion, which means individuals are held hostage to the views of those with the most power.
Despite the breathless rhetoric of soapbox-pounding politicians, the share of the tax burden paid by the richest Americans is more than their “fair share.” According to data collected in 2018 by the Institute of Taxation and Economic Policy, the top 1% of income earners earn 22.9% of the nation’s overall income, yet pay 22.9% of the nation’s overall tax burden. This means they pay out more than they take in.
The tax debate is more concerned with societal cohesion than it is with actual economics. All the bluster about “fairness” is unmoored from any discussion of the on-the-ground economic reality. If “fairness” is going to be the yardstick for tax policy, then the standard should be a consumption tax. The “fairness” of one’s tax burden should be determined only with respect to one’s individual activities, not some esoteric idea of social justice that cannot determine a numerical number for fairness. Even if such a number could be calculated, it would be a reflection of the viewpoints and values of those in power; it would not be an objective value, which means it would negate the neutrality necessary to law in a free society.
Consumption taxes advance a much more objective form of fairness: what one pays is proportion to what one uses. The frame of reference for such a tax is individual action. As an individual is master of his own action, he, and he alone, determines what services he uses and to what extent. This means he is master of his own tax burden. Government is not confiscating his wealth. Rather, he is making a payment for the services he has voluntarily used. Direct taxation places man directly under the thumb of government. Consumption taxes fairly apportion the tax burden and allow man to remain master of his own property. This is the only standard for morality and fairness in tax policy.
Bryan, Samuel. “The Address and reasons of dissent of the minority of the convention, of the state of Pennsylvania, to their constituents.” Library of Congress. https://cdn.loc.gov/service/rbc/bdsdcc/c0401/c0401.pdf
Desilver, Drew. “A closer look at who does (and doesn’t) pay U.S. income tax.” October 6, 2017. Pew Research Center. https://www.pewresearch.org/fact-tank/2017/10/06/a- closer-look-at-who-does-and-doesnt-pay-u-s-income-tax/
Warmhoff, Steve. “Who pays taxes in America in 2018?” April 11, 2018. Institute on Taxation and Economic Policy. https://itep.org/who-pays-taxes-in-america-in-2018/
Jemma Hooper's Rebuttal to
'Taxation is Theft'
The respondent advancing a case against taxation has at the heart of their argument, a specifically US-centric argument informed by the point that the right to own private property is an inviolable and absolute right. Whilst libertarian philosopher John Locke advanced such ideas, they were never fully realised in law. Those harking back to such arguments are putting forward an anachronistic position which has been rejected by those advancing the concept of the social contract, first described in the Enlightenment Era by Jean-Jacques Rousseau. (1)
Unfortunately, the idea that such rights are absolute and unlimited is a fallacy. In the American “Declaration of the Rights of the Man and of the Citizen”(1), clause XXIII expounds on the Right to Property as follows: “Every person has a right to own such private property as meets the essential needs of decent living and helps to maintain the dignity of the individual and of the home.” Read in context with Clauses XXXV to XXXVII, it is clear that the right to property does not exempt people from the duty to pay taxes, to work if possible to do so, or to contribute towards social security and welfare systems as might be required to ensure the adequate delivery of such systems as per Clause XVI.
In fact, in a broad survey of property rights, there was no unlimited right to private property in legislation or international charter. Such rights are always qualified by the need to contribute meaningfully to the broader community as one’s wealth and income permit.
For example, the European Convention on Human Rights (ECHR) outlines the “Right to peaceful enjoyment of possessions” as follows:
Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. (3)
Without diving too deeply into detail, Africa has a similar approach, which reserves the right for the state to control access to private possessions where such possessions are in excess of the need for maintaining a reasonable standard of living.
With all of the legalistic definitions aside, there is another broader issue that needs to be addressed: That the unabridged right to unlimited possessions is a cause of significant economic inequality, in which those who control capital and the means of production can hoard their wealth and possessions to the detriment of all others in their economy. It is this problem that causes trickle-down economics and neoliberal economic theories to be debunked as a nice, but ultimately impractical idea, as it ignores the cumulative propensities of wealthy individuals.
We could quote statistics on the increasing concentration of wealth within the top hundreds, or maybe thousands of households in OECD economies. We could talk about the decreasing share of GDP that goes to increasingly large percentages of OECD populations (e.g. 2.8% of wealth in the bottom 40% of Australian households). But to be blunt, laying out the horror of the situation as it is and has been trending since the Thatcher and Reagan administrations is something that readers can do for themselves. Laying it all out in this rebuttal would be a depressing thing to write and to read.
In summary, the right to peaceful enjoyment of private possessions has – if ever a reality in law – been squarely rejected as unworkable. In the early years of the industrial revolution, factory owners built accommodation, roads, rail terminals, etc… to house their workers and get their goods to market. But we no longer live in a society where such blatant exploitation is considered appropriate conduct; and the idea that we should return to such a situation where workers are treated as little more than slave labour and stripped of their dignity is anathema to most. Ultimately, that’s where unqualified protections of property will lead us.
It’s with some irony that I write this rebuttal on Bastille Day, which celebrates the revolution of the working and middle classes against wealthy landowners who tried to seize too much of their nation’s wealth unto themselves. The fact of that revolution, and subsequent ones, should be a reminder that hoarding wealth without limit is a recipe for finding oneself losing everything when people run out of patience.
1. Rousseau, Jean-Jacques. Du contrat social; ou, Principes du droit politique. Amsterdam : s.n., 1762.
2. Ninth International Conference of American States, Bogota. American Declaration of the Rights and Duties of Man. Organisation of American States. [Online] 1948. https://www.oas.org/dil/access_to_information_human_right_American_Declaration_of_the_Rights_and_Duties_of_Man.pdf.
3. Protocol I to the Convention for the Protection of Human Rights and Fundamental Freedoms. Council of Europe. Paris : Council of Europe, 1952 (Ratification 1954). Protocol 1, Article 1.