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by Benjamin Marks, 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?
  1. Joseph A. Schumpeter, Capitalism, Socialism and Democracy (New York: Harper, 1975), p. 198.
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  22. Government is Criminal: Part 1
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