Pig in a Poke

You never know what you're buying. It may look, smell, and drive like an automobile, but there's more. In addition to the car, you're buying something else, but you don't know what. You cannot drive off in that new vehicle without paying the sales tax, and that means that some of what you pay is going into the hands of nameless strangers, to be spent as they see fit on projects you can't even imagine, and certainly wouldn't support if you could. Possibly this annoys you.

It's a quaint idea, but perhaps the buyer should know what he's buying, and not be forced to buy more than he wants, or worse, something he doesn't want at all. In that case, of course, an automobile purchase is a poor example, because the buyer is forced to buy a number of things which he may not want: airbags, seatbelts, door-guard beams, etc.

Well, how about a work of art? A certain painting catches your eye, or a statue. Not only is it beautiful (assuming it's not modern art), but it may be a good investment, as well. So you decide to buy it. Art can be very expensive, however. If your purchase is for $100,000, for example, you will, in New York state, have to pay $108,250 for your $100,000 object. The additional $8,250 is for New York to spend on whatever it wishes. What could be more reasonable than that you pay New York $8,250 because you want to own a $100,000 painting? After all, had you bought a painting for a paltry $1,000, New York would only have demanded $82.50, and in the case of the more valuable work, it's obvious that the state deserves one hundred times as much. Isn't it?

Some incredibly obtuse individuals would say "No!" They seek to avoid the sales tax. That would seem to be easy: just buy in another state. If I, as a Missourian, bought a painting for $100,000 in Illinois, could the state of Illinois demand a tax from me? What jurisdiction does Illinois have over Missourians? Could Missouri demand the sales tax? But I didn't buy the painting in Missouri.

Avoidance of sales taxes on big-ticket purchases, such as art, is virtually a tradition. And New York, for one, doesn't like it. Sales taxes are its second largest source of revenue. The DA in Manhattan, liberal octogenarian Robert Morgenthau, is thoroughly annoyed with the likes of Dennis Kozlowski, head of Tyco International, for allegedly evading about a million bux in sales taxes, by having purchases in New York shipped to the firm's New Hampshire office. Once there, it is charged, the purchases were then returned to New York. In a few cases, the trip to New Hampshire was simply skipped altogether, it is charged, except for the paperwork, which showed the art as being shipped out of state.

Morgenthau is going to take Kozlowski, and others, it is rumored, to court. Other states have inaugurated amnesty programs, according to which they would not prosecute "offenders" who paid up the sales taxes they had evaded – with interest. Of course, the legal defenses in these cases will scrupulously avoid coming to grips with the real issue: why should the state be entitled to anything because A sells something to B? The idea seems to be that government cannot exist without taxation, and taxation means taking citizens' money, on virtually any premise whatever. But how about this premise: why should government exist at all?

Evaders of the sales tax are referred to as "tax cheats." How extraordinarily prejudicial! To attempt to keep, using the letter, if not spirit, of the law, what is one's own, is "cheating." On the other hand, the seizure by the government of another's money, on the most ridiculous and flimsiest of excuses, is quite legitimate and ordinary.

That, in fact, may be the problem: it is ordinary. We are so accustomed to the predations of our rulers that we accept it as the ordinary course of events, which, sadly, it has become.

Perhaps some dealer with a valuable painting will give it away. He could provide the recipient with a statement indicating that it was a gift. The grateful beneficiary of this largesse could indicate his gratitude by offering the dealer some token of appreciation – an envelope, perhaps, containing a thousand paper chits each marked "100." No sale; no sales tax.

Never mind: Mr. Morgenthau, if this occurred in his bailiwick, would naturally assume that this maneuver, designed to avoid a sales tax, was itself unlawful, and descend upon the individuals involved like an avenging angel – or, more realistically, Al Capone seeking vengeance upon those who failed to pay their protection money.

The letter of the law, the spirit of the law, indeed, law itself, is irrelevant. Laws apply to us, not the rulers. When they want their tribute, they want it, and neither law nor reason is going to stand in their way. As Bastiat wrote "When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it, and a moral code that glorifies it." Morgenthau proves the point.

June 26, 2002

Dr. Hein [send him mail] is a semi-retired ophthalmologist in St. Louis, and the author of All Work & No Pay, which will soon be available at Amazon.com.