by Thomas R. Wells
The idea that ‘taxation is theft’ is one of those thrilling, paradigm shifting recognitions that are continually being rediscovered and shared. It is a classic case of pseudo-intellectuality, in which the excitement around an idea determines its popularity, rather than its quality (previously).
First, unlike theft, taxation is legal – and this turns out to be a more significant difference than it first seems since we rely on laws to determine who owns what. Second, taxation is a device for solving collective action problems and thus allowing us (by coercing us) to meet our moral obligations to ourselves and each other – including our obligations to respect each others’ property rights. One can’t coherently be in favour of enforcing property rights, e.g. by having a police force and judges to catch and punish thieves, without also being in favour of a sustainable system for funding that enforcement.
1. Taxation is Legal
The straightforward rebuttal of the claim that taxation is theft goes like this:
- Theft is when someone takes something from you in a way that violates your legal property rights
- When the government taxes money from you they do not violate your legal property rights
- Taxation is not theft
To many people this semantic analysis is rather unsatisfactory. Whether things are legal or not is after all determined by the government. But whether something is right or wrong is determined by morality, which is not something determined by governments. The point of the claim that taxation is theft is that taxation is immoral in just the same way that theft is, i.e. that taking people’s property from them against their will and under threat of violence is wrong whether it is done by an ordinary person or by an agent of the government.
I agree that people do have an intuitive idea of moral concepts like property, consent, and theft independent from how governments choose to define them. Yet these ‘pre-political’ intuitions are impractically vague. As natural rights theorists like John Locke acknowledge, we need to know much more precisely what property means if we are to successfully respect each other’s moral rights in a complicated modern society. For example, if I own a piece of land do I also own the part of the river that runs through it? Do I also own (some of) the fish in it? Do I also own the copper underneath it? If I mine the copper and kill the fish, do I owe people downstream compensation for killing ‘their’ fish? If I rent the land to someone else and they invest in agricultural improvements, who should get what share of the increased yield? If I go bankrupt who should decide which creditors get what share of my land and other assets? And so on.
It is clear that we need clear and reliable answers to such peculiar questions if we are to know where we stand – who owns what – in a modern economy with its sophisticated and complex economic transactions and interdependencies. But it is also clear that these questions don’t have straightforward common sense answers that are already obvious to everyone in the way that our moral intuitions are supposed to be. We need another source for those answers, and that source is the laws made up by governments.
Therefore it turns out that law is of greater moral significance than it at first seemed. The strong normative intuition that people shouldn’t take your things without your consent requires a clear shared understanding of exactly whose things they are in the first place. You can only say that such and such is your property and that someone else who takes it is a thief because of the legal definitions provided by the government (and also interpreted and enforced by them, as we will come to below).
To put it another way, the very idea of private property can be understood as one person’s right to exclude all others from using certain objects without their consent, i.e. property rights are a restriction of the freedom of all other people except the rightful owner. Suppose one of those people disagrees with another about who owns an object. The moral determination of which person is the rights holder and which is the wrong doer will turn on the application of legal definitions.
If the idea of theft itself depends on government defined and interpreted laws, then law is clearly not so irrelevant to our moral intuitions after all. Thus the fact that taxation is legal is a central, not incidental, difference with theft. Governments make the laws on which the definition of property depends. To deny the relevance of laws to determine what counts as whose rightful property is to undermine the concept of property on which the concept of theft itself depends.
2. Funding Property Rights
Government in general and taxation in particular are cultural technologies that allow us to overcome collective action problems and fulfill our moral obligations to each other. For example, suppose it is generally agreed that all children should have access to a good quality education regardless of their parents’ ability to pay, or suppose it is generally agreed that a new waste water treatment plant is needed. The practical problem is that however good an idea it may be from the perspective of the whole society to build these public/club goods, from the perspective of individual members of that society it is an even better idea to avoid paying your share of its costs.
Individuals’ ranking of outcomes in order of preference
- Everyone except me pays their share, which is enough to provide the public good.
- Everyone including myself pays their share, so the public good is provided.
- No one pays their share, so the public good never gets provided.
- No one except me pays their share, which is not enough to provide the public good.
Every individual would prefer to have their cake and eat it too, i.e. that the public good is provided without them having to contribute to it (outcome 1). The very worst outcome is if they contribute and no one else does (outcome 4). Hence, the rational choice for every individual is not to contribute their share. Therefore if contributions are voluntary no one will contribute. Unfortunately that means the actual outcome we will get is number 3, in which the public good never gets provided.
This is a standard collective action problem (prisoner’s dilemma) that afflicts the provision of public goods. Societies unable to bridge the gap between the collectively and individually rational behaviour will be much poorer than they could be. The main technology we have developed for this is government, including the power of taxation to compel people to make the required contributions (and hence achieve outcome 2). This is a power of coercion but it is not theft, since it consists in forcing people to live up to the implications of their moral obligations to other people. If you accept the goal, then by implication you already accept the means required to achieve it.
The obvious challenge here is that people can disagree about what a society’s goals should be. For example, whether or not taxation is the most efficient way of providing things like public parks or manned missions to Mars doesn’t mean this is the right kind of goal for society to have, and hence to spend ‘its’ resources on. Libertarians have been vocal in objecting to the imposition of such goals as illegitimate, even where supported by democratic majorities. Hence another popular claim, that ‘taxation is slavery’, since it forces people to work for money to pay for projects that some other people have decided are a good idea.
It is worth noting that the examples of education and pollution control that I gave are ones that more than pay back their costs, and hence make the whole society richer than it would otherwise have been by most sensible measures. This is the opposite of the extractive economic model of slavery in which the labour of some is exploited for the gain of others. Nevertheless let me defend this principle that taxation is justified with respect to the category of moral obligations that even libertarians believe we have to each other: the duty to respect each others’ property rights.
The problem is that any real world system of property rights will require institutions to interpret and enforce them – a property register, police, impartial courts, and so on – and these institutions will require funding. (Joseph Heath explains this point very well.) Moreover, as we have already noted, societies cannot fund such institutions on the basis of voluntary contributions. However much people agree that they are a great and necessary idea, they will still prefer not to put any of their own money in the hat when it comes around. Hence those institutions won’t function and so property rights will be no more than an idea. People in this society won’t be able to live up to their moral obligations to respect each others’ property because they won’t be able to tell who owns what, report possible transgressors, and so on.
Once again investigating the logic of ‘taxation is theft’ has revealed a contradiction in practical reasoning. If we believe that we ought to have a society with a functioning property rights system, in which for example theft can be identified and punished, then we must also believe that we ought to have a system for funding the necessary institutions. But raising this funding presents a collective action problem that we need taxation to overcome.
The result is that anyone who really believes in private property that no one may take from you without your consent must also believe that the government can take property from people without their consent, at the very least for the project of institutionalising property rights. Far from being in conflict with each other, taxation turns out to be a practical requirement for the existence of property rights.
This short essay set out to identify the logical and practical incoherence of the idea that taxation is theft. Such incoherence is a marker of pseudo-intellectual claptrap that should always be pointed out. Taxation is not wrong in itself.
Of course none of this analysis supports the claim that taxation is always morally right. Taxation certainly can be morally wrong in its goals and methods, just like the police or any other institution of government. The history of states is until very recently almost entirely a history of the unjustified and unjustifiable forced extraction of wealth by politically connected elites (though they generally relied more on the rents generated by their special privileges than monetary taxes). But criticising such failures of justice requires a more sophisticated set of concepts and moral standards than property rights alone can provide.
Thomas Wells teaches philosophy in the Netherlands and blogs on philosophy, politics, and economics at The Philosopher’s Beard