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by Benjamin Marks, Economics.org.au editor-in-chief

Joseph Schumpeter famously said, “The theory which construes taxes on the analogy of club dues or of the purchase of the services of, say, a doctor only proves how far removed this part of the social sciences is from scientific habits of mind.”1 Despite its fame, this sentence is still totally ignored by so-called think tanks, public and state intellectuals, and the independent commentariat. It shows a fundamental blindspot in their worldview, a yawning gap in their education, a crucial oversight in their supporters, and a cowardly and corrupt evasiveness in their arguments. I’d like to be proven wrong. Answer this: When attempting to justify government expenditure on utilitarian grounds, how do you take the coercive nature of taxation into account? When answering, please consider these four points:

  1. Taxation is coercive — There are no written, signed and witnessed contracts agreeing to the relationship. True, the taxpayer may not rise up against the government, but it does not then follow that he consents to the arrangement. It could mean that he submits in the face of officially-endorsed threats of force (such as property confiscation and imprisonment for tax evasion). How can it be proven otherwise? Obeying government and paying taxes no more proves consent than the payment of a ransom transforms kidnapping into babysitting. If the kidnapper protects the kid from other kidnappers, he is still a kidnapper, and has still failed to justify why he himself kidnapped the kid, especially since he denies others the right to do so.
  2. Taxpayer does not want to pay tax — A forced transaction means the victim is not putting his money where he most wants to. Therefore, he experiences a disadvantage. How can this disadvantage be measured in a way that shows it to be offset by any possible advantage received later from government expenditure? Prices cannot be used, since what is not for sale has no price, and government-imposed “prices” fail to take the coercive nature of taxation into account.
  3. Taxpayer would have put his funds elsewhere — The taxpayer, if he was allowed to keep his money and spend it as he wishes, would possibly experience some advantage from his own spending. This cannot be calculated, since it has not happened yet. To base your analysis on how the taxpayer has chosen to spend his money in the past, means your analysis must take into account, that, wherever he chose to spend his money, is where he most wanted to spend it. In any case, one must be careful predicting the future from the past: such things as innovation and changing one’s spending habits have happened in the past; how are they taken into account?
  4. Whether public good or not irrelevant — The existence of public goods are often used to answer the question, but it just delays answering it, and dealing with the three points above. How can the benefits of government provision of public goods be shown to offset the disadvantages in taxing people to pay for it? They would not just have thrown their tax money in the rubbish bin, and they may not want to use the “public good” that others force on them anyway. Why should they be forced to fund something that they never contracted to fund, and that would not be viable if they were not forced to fund it?
Footnote
  1. Joseph A. Schumpeter, Capitalism, Socialism and Democracy (New York: Harper, 1975), p. 198.
(in order of appearance on Economics.org.au)
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  2. Why Sports Fans Should Be Libertarians
  3. Ron Manners’ Heroic Misadventures
  4. Government Schools Teach Fascism Perfectly
  5. Deport Government to Solve Immigration Problem
  6. The Drugs Problem Problem
  7. Self-Defeating Campaigning
  8. Gittinomics: Economics for Gits
  9. Exclusive Ross Gittins Interview on The Happy Economist
  10. Population Puzzle Solved
  11. An Open Letter to the CIS
  12. Principled Foreign Policy Options: Reinvade or Shut Up and Get Out
  13. WORLD EXCLUSIVE: Political Corruption Exposed!
  14. Feedback please: Is this worth doing?
  15. CIS and IPA Defend State Schooling
  16. A Thorough Review Without Spoilers of Wall Street: Money Never Sleeps
  17. Dead Reckoning and Government: A Proposal for Electoral Reform
  18. Quadrant Defends State Schooling
  19. The MPS 2010 Consensus
  20. Slogans for Property Rights Funeral
  21. Government is Impossible: Introduction
  22. Government is Criminal: Part 1
  23. Exclusive John Howard Interview on Lazarus Rising
  24. Response to Senator Cory Bernardi and the IPA
  25. Earn $$$$$ by Justifying Government Against Anarchocapitalism: Survey
  26. Statism is Secrecy: WikiLeaks vs Economics.org.au
  27. One question the Labor Party, the Liberal Party, the Greens, the CIS, the IPA, Ross Gittins, Ross Garnaut, Ken Henry, Gerard Henderson, John Quiggin, Clive Hamilton, Tim Flannery, Catallaxy Files, Club Troppo, Larvatus Prodeo, Phillip Adams, Robert Manne, Michael Stutchbury, Miranda Devine, Andrew Bolt and Dick Smith are scared to answer
  28. Libertarian Philanthropists Should Exploit Tax Evasion Convictions
  29. Ronald Kitching Obituary
  30. The Minarchist Case for Anarchism
  31. Libertarianism in a 300-word rant
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  33. Libertarianism In An Executive Summary
  34. The Banking Bubble Blow-by-Blow
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  37. An Open Letter to Dick Smith
  38. Economics.org.au at 42
  39. "My boyfriend calls himself a Marxist and votes Labor, what should I do?"
  40. "He says if I leave him due to politics, I should leave the country too."
  41. No Booboisie at Gülçin’s Galt’s Gulch
  42. "Hey, Mr Anarchocapitalist, show me a society without government"
  43. The Three Epoch-Making Events of the Modern Libertarian Movement
  44. Government is Criminal: Part 2 - Methodological Individualism
  45. Government is Criminal: Part 3 - Subjective Utility
  46. Government is Criminal: Part 4 - Praxeological Synonyms
  47. Government is in a State of Anarchy
  48. Limited Government is Absolute Government
  49. Why the 2012 double Nobel laureate is coming to Sydney
  50. Exclusive Oliver Marc Hartwich Interview on Hans-Hermann Hoppe
  51. A Critique of the Opening Two Sentences of the "About CIS" Page on The Centre for Independent Studies' Website, www.cis.org.au
  52. An invitation for ANDEV members to the Mises Seminar
  53. Sell the ABC to Rupert Murdoch: Lid Blown on ABC Funding Disgrace!
  54. www.inCISe.org.au, The Centre for Independent Studies new blog
  55. The Unconstitutionality of Government in Australia (demonstrated in under 300 words)
  56. The Best Libertarian Film Is ...
  57. Launch Southeast Asian Military Operations to Free Australian Drug Dealers and Consumers
  58. Workers Party Reunion Intro
  59. Hoppe's Inarticulate Australian Critics: The Hon Dr Peter Phelps, Dr Steven Kates and James Paterson
  60. Vice Magazine Westralian Secession Interview
  61. Sideshow to Dr Steven Kates' criticism of the Mises Seminar: Davidson vs Hoppe on Adam Smith
  62. The Best Australian Think Tank Is ...
  63. Announcing a new magazine to rival Time and The Economist
  64. The exciting new Australian Taxpayers' Alliance
  65. Neville Kennard Obituary
  66. Contrarian Conformism
  67. An invitation for Dick Smith, the IPA and other Walter Block fans to the 2nd Australian Mises Seminar
  68. Westralian mining legend Ron Manners of Mannkal belongs in The Property and Freedom Society
  69. What would Bert Kelly think of the Mises Seminar and Walter Block?
  70. Bad news about the Mises Seminar
  71. Gina Rinehart Fan Club gives big to Australian political education
  72. Sam Kennard wins North Sydney by-election by unanimous consent
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