Are Taxes Theft? Dealing with the Unjust Government

This questioner asks if taxation is always theft. I answer in the positive. Details below.

—–Original Message—–
From: BT
Sent: Sun 10/9/2016 11:44 PM
To: [email protected]
Subject: Is taxation always theft?

Professor Block I always enjoy your LRC Blog discussions of libertarian theory. TAXATION IS THEFT ! Scratch any libertarian’s interest in talking taxes and sooner than you can say Murray Rothbard the slogan “Taxation is Theft” will be heard. I concede the argument that taxation is theft in an anarcho capitalist utopia. The Non Aggression Principle would rule! But is the phrase applicable to a minarchist or classical liberal polity as well? Let me put it bluntly: Is it a violation of the Non Aggression principle to tax a privilege bestowed by government in the first place?

Granted, the bestowal of the privilege may certainly be a violation of the NAP, but after the privilege is bestowed (to an applicant who seeks it), it seems to me to be benign for the government to tax the privilege. Since being in government is not a right, but a privilege, that means that government offices can be taxed. So can profits, rents, tips, commissions, etc earned through the exercise of the government bestowed privilege to government agencies, instrumentalities, contractors, employees, judges, office holders etc. Such an excise tax was well known in the late nineteenth century, and was referred to as a “duty” rather than a tax. A public office duty. The reasons classical liberals gave to justify the tax were that such a tax did not violate liberty principles because it taxed privileged income from the Treasury and the investment profits derived from the privileged income were these:

1. Those who earn federally connected privileged incomes voluntarily sought the privilege. The privilege grantor can without coercion tax a portion of the privileged income from the grantee

2. This enables the grantor to maintain contact with and understand the worth of its privileges and how privileges are used

3. The grantor of the privilege can control the activities and mission of the grantees at least to some extent.

4. The tax allows a portion of the income bestowed by the privilege to be returned to the treasury, where supposedly it would be used for the common good.

5. The tax on the income derived from a privilege is therefore not a levy on the income as property, but merely uses the income as a means to measure the privilege.

6. It would not even be a violation of the NAP to have a progressive income tax in this scenario, because what is being taxed is not the labor of a free person in a relatively free economy. Rather, the tax is on the privilege bestowed by the state that elevates the recipient above others. It gives the grantee access to special privileges not available to just anyone. For example, National Banks are instrumentalities of the Federal Government. When Bank of America applied for National Bank status, its press releases talked about how being a National Bank would give them more privileges.

I would appreciate your thoughts on this. Is a public office duty in and of itself theft? Perhaps the privilege itself is a form of theft, but is taxing that privilege also theft? BT

Dear BT:

Yes, taxes are always theft. The anarcho-capitalist fully appreciates this, the minarchist less so, much less so. Suppose the government pays a worker $100 per day, and “taxes” him $25, daily. I place scare quotes around “taxes” because they are not really taxing him. Rather, they are only paying him $75, and the $25 is just to fool the yokels. Murray Rothbard writes about this somewhere, but I’m not sure where.

Ron Paul held a “public office” for many, many years, and even I, as a full, radical, anarcho-capitalist, do not think him guilty of theft. I have already written about this. Instead of doing so again, I urge you to take a peek at these:

Block, Walter E. 2004. “Radical Libertarianism: Applying Libertarian Principles to Dealing with the Unjust Government, Part I” Reason Papers, Vol. 27, Fall, pp. 117-133;
http://www.walterblock.com/wp-content/uploads/publications/block_radical-libertarianism-rp.pdf

Block, Walter E. 2006. “Radical Libertarianism: Applying Libertarian Principles to Dealing with the Unjust Government, Part II” Reason Papers, Vol. 28, Spring, pp. 85-109; http://www.walterblock.com/publications/block_radical-libertarianism-rp.pdf; http://www.walterblock.com/wp-content/uploads/publications/block_radical-libertarianism-rp.pdf; http://www.reasonpapers.com/pdf/28/rp_28_7.pdf

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1:38 pm on October 11, 2016