Tibor Machan: Taxes don't have to be inevitable

By TIBOR R. MACHAN

Chapman University business ethics professor

For most people, taxation is a burden that's accepted in large part because they know the alternative is worse. As a friend pointed out, it is like dealing with someone who holds you up in a back alley. To put up a fight can be fatal, and, up to a point, almost everyone can tolerate the loss. But as the economist Arthur Laffer observed, everyone has a point at which no further taxation can be lived with. Kind of like pain – we all can put up with some of it and will not succumb until the level is just too high. But it is never a good thing.

Taxation was the charge the ruler levied on his subjects for being able to live and work within the ruler's realm. Kings, czars and pharaohs were thought of as the owners of their countries. So they extorted funds from everyone at the point of a weapon. It wasn't a free exchange, as between, say, a dentist and a patient. No, the king ruled, indeed, by some accounts owned, the subjects and confiscated what he chose from them, in property and labor, leaving them just enough to survive.

This extortion is what Robin Hood was protesting, by the way, not great wealth. His rebellion was to take back what the taxer took and return it to those who were the victims of taxation.

Taxation, then, was on par with slavery and serfdom, not with free trade. Once the American idea – learned from the English philosopher John Locke and some predecessors – of natural individual rights to one's life caught on, both serfdom and slavery started to crumble. They lost their moral foundation. And, once it was demonstrated that everyone also has the right to private property, the notion that the monarch owns the country also took a major hit.

Sadly, however, all this wasn't taken far enough. It was all too revolutionary, that no one owns anyone else, only one's own life and property. Probably in part because that's the only way political thinkers could see their way through to funding the legal services – the civilization – that provide.

As it was realized a bit later, nobody is entitled to another's life, even if one needs that life very much, as, for example, in fighting a war in defense of a country or for harvesting a crop. Americans for a long time accept military conscription, even though it violates the right to one's life. So they also accepted with taxation, even though it violates the right to one's labor and property.

But it need not be that way, in either of those cases. People can be paid, or given other benefits, to fight, and an army will arise quickly enough, especially if the cause is just, not imperialistic adventurism. And essential government services can be financed without confiscating private property, mainly by charging a fee for all economic transactions that need the protection of the law. Both these methods avoid coercion.

People could avoid such contract fees simply relying on a handshake, but it is better to enter into a binding contract to have the protection of the law.

Of course, the details of such systems would be very involved. Sadly no one is studying this since public finance is so intimately tied to the system of taxation. But, just as the switch from conscription to a volunteer military wasn't impossible, so, too, would be a switch from taxation to the contract-fee system.

Taxation by no means is the best way to fund government services, quite the contrary, just as any other involuntary service isn't the best way to obtain the work of others. It is high time this fact is realized and the extortionists sent on their way.