Thread:Johnny-Swing/@comment-35243805-20180423191321

It is not your money in the first place
Many political arguments start from the assumption that taxation is the government taking ‘our money’ off us. When austerity hit the arts in 2011, Dr Steve Davies of the pseudo-think-tank the Institute of Economic Affairs argued on Channel Four news that the 20% cuts to the arts didn’t go far enough: art funding should be entirely abolished on the grounds that it’s unfair to take people’s money off them by force to pay for something they may not want. Again and again the economic right stoke resentment at the state allegedly taking what’s ours by force, and use this resentment to build support for a programme of small government.

But even those who believe in relatively big government tend to share this understanding of taxation as the appropriation by government of ‘our money’. Most on the economic left start from the assumption that it is all things being equal a bad thing that the state takes our money from us, but hold that this prima facie bad is justified by the public goods which taxation makes possible. Well-meaning public intellectual Alain de Botton encourages us to think of taxation as charity: we give up what’s ours for the greater good of our society.

So both sides tend to agree that one has some kind of right or entitlement to one’s pre-tax income. The economic right believe that the right to pre-tax income is inalienable, or at least that it is trumped only by the absolute necessity of providing the basic requirements of society, such as roads and rule of law. In contrast, the economic left tend to value the good of making society more equal, or of providing a basic standard of living for all, above the good of letting people keep their own money.

This feeling that your pre-tax income is ‘your money’ is difficult to shake. It’s hard not to see the pre-tax figure on your payslip as representing what’s really owing to you for the work you’ve done, and hence to feel that the state is taking away from you something that is yours by right. However, a little careful reflection shows this almost universal assumption to be utterly confused. There is no sense in which you have a right to your pre-tax income.

To see this, we have to ask what kind of right it might be supposed one has to one’s pre-tax income. Presumably, it is either a legal right or a moral right. Once we separate out these alternatives, we can see that the former option is incoherent, whilst the latter is utterly implausible. You clearly don’t have a legal right to your pre-tax income, as you are legally obliged to pay tax on it. This is a simple analytic truth that follows from the definition of taxation. People who don’t take pay their taxes go (or at least legally ought to go) to gaol.

So if there is a general right to one’s pre-tax income, then it must be a moral right. But it is implausible to suppose that each person has a moral right to his or her pre-tax income, for that would imply that the distribution of pre-tax incomes the market happens to throw up is perfectly just, and this is clearly not the case. There is no justice in the fact that the pre-tax income of a City banker is many hundreds of times the pre-tax income of scientist working on a cure for cancer. This is just an accident of the way our market economy is structured. To hold that each person has a moral right to their pre-tax income would be to hold that the market economy just happens to deliver to each person exactly what they deserve, and this is clearly not the case.

Perhaps there are specific cases in which a person happens to deserve their pre-tax income; these would be rare and happy co-incidences in which the market happens to deliver exactly what is deserved. But the mere fact that your pre-tax income is £X does not entail that in any morally significant sense you are entitled to £X. The money the market happens to throw at you is not necessarily the money you deserve. No doubt you have worked hard for that money; no doubt you have made a contribution to the public good; you have special talents that others lack, etc. But others also work hard/are talented/make a contribution, and the market has not taken these morally significant factors into consideration in working out what to give to whom. For better or worse it’s almost certainly not fair that you have what you have relative to what others have got.

It’s the responsibility of law makers, then, not to respect pre-tax incomes, but to disrespect pre-tax incomes. Insofar as the market fails to yield a just distribution of incomes, the state should work to correct that distribution. Of course, to some degree the scope for such correction will be limited by economic realities. The pragmatic argument between right and left as to the relationship between tax levels and incentives to work or invest is a perfectly sensible one. But it is crucial to distinguish the pragmatic argument of the economic right, ‘We must lower taxes in order to encourage investment’, from the moral argument of the economic right ‘We must lower taxes in order to give people more of their money’. The former argument is based on an empirical claim which stands or falls with the data. The latter argument is based on the wholly confused notion that there is something morally significant about the distribution of incomes the market happens to have thrown up.

Your pre-tax income isn’t the money you deserve; it is the money the amoral market has gifted you. A government may have cause to respect the whims of the market as a matter of practical necessity. But the state has no moral reason to respect the whims of the market. The only legitimate bar to redistribution is economic reality. Any politician who thinks it a good thing, in and of itself, to give people more of ‘their money’ is confused.

Taxation is not theft
Just as all political debates inevitably end with someone making a Hitler comparison, all debates with libertarians sooner or later involve the claim that taxation is theft. It doesn’t matter whether you are discussing the welfare state, universal healthcare or a TV licence, at some point a libertarian will accuse the government of acting like the mafia and stealing people’s money (just the last day a commenter asked me to “stop promoting the use of force against me or my family“, by which he meant don’t regulate bitcoin). Of course we all know this argument is melodramatic hyperbole, but it would be useful to spell out why.

Let me use an analogy that I think will best get the point across. Think of taxes as like paying rent. The state owns the land and if you want to live on the land you must pay rent. The state is like a shopping centre (or shopping mall for my American readers). If you want to enter it you must agree to abide by its rules. If you refuse, you will be punished by the security guards. If you don’t like this shopping centre go to a different one instead. A libertarian may complain that this is unfair because no matter where they will go they will have to live in a state and therefore be subject to someone’s rules. But if you refuse to go to one shopping centre you still have to go to one somewhere. Likewise if we abolished the state, then no matter where you went you would still be one someone else’s private property and therefore subject to their rules.

It is not theft if you receive something in return. If someone steals my car, that is theft. If I have to sell my car in order to pay my rent, that is not theft. Libertarians sometimes act as though taxes disappear into a black hole and are never seen again. In reality, we receive from the government protection and a commitment to justice. We also receive education, healthcare, transportation, safe food, employment protection and enforcement of contracts. There is also redistribution and welfare in the event of sickness, poverty and old age. So libertarians make the bizarre argument that the government is a thief who gives more than he steals (due to economic inequality most people receive more than they pay in taxes).

Furthermore, what sort of thief lets you decide how your money is spent or how much he takes? If I told a car thief that myself and the neighbours had decided that he shouldn’t take my car, would he listen? Yet the government is subject to the will of the people. We choose whether we want our taxes to be higher or lower when we vote. Based on the failure of libertarians to win elections, most people seem quite content with taxation. There’s nothing stopping a libertarian party from being set up and winning an election. If taxation really was theft, then such a party would easily win a landslide and could promptly end the theft. A key element of the definition of theft is that the victim does not consent to it. But if people do not vote for parties that promise to reduce taxes, but instead for parties that keep taxes at the current level, then must not consider themselves the victims of theft. They must consent to taxes.

But a libertarian would argue that they never agreed to this. Even if they receive more than they pay, they never consented to pay anything. But that is an implicit part of citizenship. Being a citizen comes with rights and responsibilities. You have a right to protection and certain services but also a responsibility to pay for these services. You have a right to vote but a responsibility to accept the result even if your party does not win. Sure I never consented to being a citizen of Ireland, but then again I never consented to capitalism either. I never agreed to live in a society with either democracy or private property. I never agreed to elections being held every five years or the current distribution of property. Do we have to have a social revolution every time someone disagrees with the way things are? The fact is that there are lots of things we never agreed to, but have to live with. We have to live under some sort of political and economic system that will be to some extent arbitrary, but it simply isn’t feasible to have everyone make up their own rules.

The problem with most libertarian arguments is that it assumes we have only rights but no responsibilities. It assumes that we have no duties to the poor, the sick, the elderly or even to children. If a man was starving and a libertarian had two loaves of bread, he wouldn’t share it with the man unless he felt like it. That is not a political ideology but a mental problem called sociopathology. We do have responsibilities to others in society and the government exists to enforce them. Our common humanity unites us and means that the suffering of others is our suffering too. We cannot rest easy if the streets outside our house are full of destitute. A libertarian world would be a cold and empty one, where people sit alone counting their money, blind to poverty, hunger and misery.

Libertarians make the mistake of thinking of people as isolated individuals isolated from the rest of the world. They act as though, I and I alone earned my wage and therefore it belongs to no one else. In reality, we are hugely dependent on others and society. Would we earn anywhere near enough money if we did not have public roads, education, health, energy etc? I did not create everything myself, but instead built on the work of previous generations and worked alongside other members of society. No man is an island and there is no such thing as a self-made person, in reality we are standing on the shoulders of giants. We got to where we are today due to in large parts due to the society we live in, so it is only fair that we pay something to support it. If you don’t believe me, compare your life to what it would be if you lived in a Third World country? Isn’t it worth paying to avoid that?

In reality, libertarians do not truly object to coercion or taxes, they only object to the government doing so. If a private landlord compelled people to live by onerous rules about drugs, guns and religion, libertarians would have no problem. Yet when the government does the same thing, libertarians are up in arms crying oppression. If a starving man agreed to work for half the normal wages because otherwise he would die, a libertarian praises the free market. If a man has to pay half his wages in taxes without which he would die, a libertarian is outraged. Every abuse of government power that libertarians rail against would still occur in a libertarian society, the only difference would be that it would be even worse. If the government was replaced by a private landlord, there would just as much coercion and arbitrary rules, without any of the democratic rights we currently have. The very notion of property is dependent on the state, without which we would be reduced the endless strife and the rule of the strongest. Taxes are a payment to support civilisation and avoid a descent into anarchy.

Theft is the taking of assets of from people without their consent and giving nothing in return. Taxes on the other hand are consented to by citizens (as seen by their continual support for taxation parties and their refusal to vote for libertarian parties or move to tax havens) in exchange for services. Citizens choose the level of these taxes and where they go as well as consenting to abide by majority rule if their preferred option is not selected. Taxes are no more theft than rent is extortion, by living in that location we are agreeing to abide by its rules and pay the charges. If we don’t agree we can either change the rules or move.

Sources:
 * Taxes in the Ancient World, University of Pennsylvania Almanac, Vol. 48, No. 28, 2 April 2002
 * The Myth of Ownership: Taxes and Justice, University of Oxford Almanac, Vol. 26, No. 12, 13 November 2003
 * See Section 3 'International Taxation' e.g. Torvik, 2009 in Commission on Capital Flight from Developing Countries, 2009: Tax Havens and Development
 * IMF Working Paper 108/12 (2012), Mobilizing Revenue in Sub-Saharan Africa: Empirical Norms and Key Determinants 