Is Tax A Legal Disguise for Theft?
Introduction
Taxation is a fundamental aspect of modern societies, it is the way for citizens to provide the necessary resources for governments to fulfil their responsibilities. Taxation should not be considered theft because of legal property rights, consent given to the government, and the legality surrounding the definitions, however, some individuals argue that taxation constitutes theft, as it involves a compulsive social contract and violates the non-aggression principle of “natural rights”.
The essay will explain the fundamentals of tax and the debate on fields of property rights, consent, and legality; hence concluding on a general consensus after discussing the arguments. This essay will focus on whether taxation should be categorised as theft, but will not entertain the nuances of whether taxation is positive or negative to society and differences in the systems of tax.
Understanding Tax
Before going into the theories, it is important to first grasp the basics of tax.
Taxation refers to the mandatory collection of funds by the government from individuals and businesses to finance public expenditures. It comes in different types to target different economic activities. It plays an essential role in funding services such as infrastructure, education, healthcare, and defence where the citizens are ultimately supposed to be the beneficiaries.
Taxation is managed by governmental statutory bodies and is bound to legal frameworks that are supposed to be transparent with all the policies regarding tax such as tax rates, the procedure of payment, who is liable to pay, and how the tax is utilised. Failure to make the necessary payments can result in legal penalties managed by government authorities.
Taxation can also serve a redistributive role as the rich who are in higher income brackets may be required to pay more tax and the tax through methods of public services such as universal healthcare or education circles back to help the less wealthy who are in lower income brackets who are not required to pay as much. (Encyclopedia Britannica 2023)
Property Rights
Property rights and the extension of property tax have been one of the most debated subtopics regarding the question. It has been a venue in which philosophers discuss if a right is naturally given or legally bounded. Realists argue for “natural property rights”, which are essentially property rights that are entirely a moral consensus and not bound by law (such as if a guy builds a hut, he has the “natural property rights” of that hut), are fair. In contrast, legalists argue that property rights should be largely controlled by the government and legislation.
Micheal Huemer, a political and ethical philosopher, argues that one might take mostly three broad views when discussing the issue of property rights and evaluates each. (In this case “Moderate” view set between legalists and moralists will not be considered due to its broad nature) (Huemer, 2014)
The Realist View: Property rights are natural rights that individuals naturally possess, and should not be limited or interfered with by legal frameworks. The Legalist View: Property rights are in every aspect and detail dependent and regulated upon government-created laws and there exist no “natural property rights”
The extreme realist view is not pragmatic due to morality lacking specificity. This is demonstrated by an example from the economist David Friedman. “If I fire a thousand-megawatt laser at my neighbour’s house, I thereby violate his property rights. On the other hand, if I turn on a lamp in my house, knowing that some photons will go out the window and hit my neighbour’s house, I do not thereby violate his property rights. The only physical difference between these two actions lies in the number and energy levels of the photons that I send my neighbour’s way.” The differences between the two examples then cannot be determined by “natural” or “moral” law and need social constructs to process. (Friedman, 1994)
The extreme legalist view could apply well in urban society with detailed laws bounding all members and property. However, this is also not the ideal solution due to two points. First, flaws in the legal system. This could cause one to recognise the local law as unfair. For example, a modern person most likely wouldn’t recognise the ancient Roman or Confederate states' property law as fair as it determines slaves as personal property. However, this could be avoided as legislation erodes as social norms change. Secondly, if an area were to be a global common or rural enough that it is outside of any government’s jurisdiction, then how would the view be applied? As economist Bryan Caplan exemplifies, it would not be vandalism in this theory if someone happens to confront a man living in a rude hut and proceeds to forcefully enter the hut and paint the hut as it isn’t technically the man’s property. (Caplan, 2014)
The “Universal Declaration of Human Rights” published by the UN includes “The right to own property” as a basic human right. (Universal Declaration of Human Rights, 2023) Hence, if “natural property rights” are in fact valid, then the tax would be deemed theft because it is charging people money on their human rights. It would then be morally incorrect such that taxing a person on the right of not being tortured is. In comparison, if the property were to be managed by the government and legislation, the property owner should rightfully fulfil the tax requirements as it is part of the legislation that the property is managed by.
In the analysis given above, we can understand that the realist view is not useful on most occasions as the definitions of what is rightful are too blurry. The legalist view proves to work in urban society under the law. However “natural property rights” could exist in occasions where juridical power is not apparent and tax could then be considered theft, hence the compromise would be that tax should remain valid in populations under a government due to this idea of legal property right. This conclusion was also reached by philosophers Liam Murphy and Thomas Nagel in a similar fashion in their 2002 book “The Myth of Ownership: Taxes and Justice”. (Murphy & Nagel, 2002)
Social Contract Theory and Consent
The social contract theory, sometimes called the fiscal social contract, has been the centre of debate on the topic of whether tax is theft.
The fiscal social contract theory proposed by Thomas Hobbes and developed by figures such as John Locke, Immanuel Kant, and Jean-Jaques Rousseau describes the nature of tax being that of an assumed contact between citizens and their governments. The citizens pay taxes to trade for public goods and order from the government. The social contract theory is at the heart of the tax discussion as it defines the framework for our relationship with the Government on topics of taxation. (D’Agostino et al., 2021)
The core points of clash regarding the social contract theory lie on the topic of property rights and consent. Property rights have been discussed in the previous section. Consent is important because it determines if the act of taking is theft or not. Such that if one person has taken a book from another person with their consent, it is not theft. If without consent, it would be theft. As philosopher John Locke proclaimed, “The government’s authority arises from the consent of the people”. Thus the debate centres around whether consent is clearly given or not by the citizens. (Locke, 1689)
Lysander Spooner, a 19th-century philosopher, stated that “taxation would not be upheld because no explicit consent was given by individuals to be taxed.” He claims that the citizens have no choice but to enter and comply with this social contract, therefore making it non-consensual. (Spooner, 1852) Although a widely accepted theory argues that the use of the public services that the tax is paying for would be essentially admitting consent to this social contract. It is a reciprocating, trade-like relationship between the citizens and government instead of a plunderous one.
However, that is not always true due to the fact that some people do not use the services. This is especially true when under a progressive tax system, the wealthy who are paying more tax likely use less public services such as public transport. Philosopher Micheal Huemer also argues that the reciprocating relationship between the government and citizens does not justify taxation. He argues if a thief stops a person in an alleyway, forcefully takes their money but gives them something valuable in return, for example, a book. Even though the person receiving the book may derive more valuable knowledge from the said book for the person to earn even more money than the thief took, it is still a robbery nonetheless. (Huemer, 2017)
However, benefitting from the public resources that are paid by taxation is not the only way that consent is given. Another way the people have given their consent is through being in the status of citizenship. Details of the regulations surrounding taxation are not obscure as they are announced and updated by the government. Citizens also have choices of immigration to no longer remain under the rule of said government. Therefore the people who choose to be a citizen of a certain government have given their consent.
A separate critic of the social contract theory argues that the punishments that follow when not paying tax make tax theft. The logic behind the theory is say if a person willingly gives money to another person demanding money, it is not theft. However, if a person points a gun at the other person’s head and the same interaction occurs, it would be theft because a person can only give consent under free will. This critic doesn’t consider the fact that consent is already given in the situation of tax and the punishments such as lawsuits are simply ways to ensure that the contract is completed. Similar to the function of fines on a business contract.
In summary, the main takeaway from this section is the idea that consent is given by the citizens to the government in ways of using public resources and claiming citizenship status. After discussing the critics of the social contract, it is clear that tax would not count as theft because of legal property rights and consent which is given by citizenship and the use of public resources.
Legality
French philosopher Frédéric Bastiat described taxation as the term “legal plunder”. Legal plunder is defined as anyway the government or legislative bodies plunders or take goods in a lawful manner. (Bastiat, 1850) It lies in comparison with illegal plunder, which theft is categorised as. Bastiat was not at all a supporter of legal plunder, he argued that legal plunder is no different from illegal plunder except that the beneficiaries are shielded by the legal system and people who attempt to defend themselves get penalised. Thus for the context of the debate, Bastiat argues taxation would be theft because it is taking away the property of one citizen and giving it to another, for example, the wealth redistribution from the rich to the poor in a progressive tax system. Bastiat did not assume the citizens have given consent in his argument, but as the previous section concludes, consent is given. Hence disproving his argument.
While the statement again touches on the idea of property and consent due to its assumption that the government is taking property from citizens without their consent, the purpose it is brought up separately is for its reasoning for differentiating legal and illegal plunder. This means that the government holds the power to define what is and is not theft through legislation. Therefore legal plunder such as taxation cannot technically be defined as theft. That as a rebuttal can seem very pointless due to there being an inherent general consensus about theft but is still valid and should be considered.
Conclusion
Derived from the conclusions of the three areas discussed above of property rights, consent, and legality; it is clear that in each part of the debate, the legalist view is more pragmatic and logical than the realist in contemporary society.
Thus, in conclusion, taxation should not be considered theft.
References:
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Huemer, Micheal. “Is Taxation Theft?” Libertarianism.org, 16 Mar. 2017, www.libertarianism.org/columns/is-taxation-theft#:~:text=Taxation_is_not_theft_2C_because,return_for_the_government%E2%80%99s_protection. Accessed 29 June 2023.
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