These are two questions that I have been wrestling with. First whether the concept of taxation of individuals by a state is legitimate and moral, and second, what basis of taxation is the least unjust. Here I just consider the legitimacy and morality of the concept of taxation.
Anarchists and libertarians see taxation as theft. They see it as the oppression of the individual (private or corporate) by the greater society – ostensibly for the “common good”. Communists and socialists see it otherwise. For them there is no individual ownership of property and all wealth is owned by the masses. It is a manifestation of the conflict interface between an individual and the larger society. Some – libertarians for example – suggest that the “greater society” cannot abrogate to itself an authority which is not delegated to it by its individual members. And the power to confiscate the property or wealth of some of its members is not an authority that originates with the individual “victim”. Liberal democrats would argue that taxation is merely the membership fee for individuals to be part of the “club” represented by the “greater society”.
There have been many headlines in the last week about HSBC and the manner in which it has assisted its clients to avoid and evade taxation (where avoidance is legal whereas evasion is illegal). The indignation of politicians rings rather hollow. That the poor resent the rich is not surprising. It is inevitable that in a “democracy” the majority poor will seek to oppress the rich minority. But the bottom line is that all taxation is a confiscation of an individual’s property or wealth by a society (state). It is confiscation by force or under the threat of force. But much of the recent turbulence is based on envy and resentment and of various socialist politicians attempting to create a populist wave out of such resentment and envy. (Of course they conveniently forget that the poor are not poor because the rich are rich. Most are poor because they do not, or do not have the opportunity to, create wealth).
I am persuaded that the concept of taxation as practised today is immoral. It is fundamentally a coercion of an individual by a larger (stronger) society. It is an enforced confiscation (by threat of legal action) of an individual’s property or wealth. It cannot be seen as a membership fee for being a member of the society because leaving (or being expelled from) the society is not an option. It is closer to the extortion of “protection money” than to the membership dues for a golf club. The use to which the funds are put is irrelevant. The key point is whether the payment is voluntary or coerced. When early Christians paid a “tithe” to the Church voluntarily it was not immoral. But when the payment was coerced and no longer voluntary, the system became immoral. Similarly Islam requires the payment of zakat on individual wealth over the minimum nisab and this also shifted from a quite unexceptionable and moral voluntary payment to become an obligatory and immoral coercive confiscation.
I don’t quarrel with the need for any society to generate “common funds” to improve the well being of that society. But the legitimacy of appropriating the funds lies only in that the society (state) is stronger than the individual. Might becomes right. I come to the conclusion that a tax code by which the amount a “good citizen” should contribute to society is calculated is quite moral as long as the payment is then voluntary. There would be no moral issue if all taxation was voluntary. The immorality lies in the use of threat or force to confiscate the payment. It is the oppression of the minority by the majority which is immoral. (I observe that all democracies use the very fact of being a “democracy” as being a justification for the oppression of minorities when that is the will of the majority. As if being in the majority – by and of itself – ensures proper behaviour). But, the good socialist will argue, compulsory payment of tax is necessary to ensure the funds for the common good. Without coercion society as a whole would suffer. The common good – as seen by the majority – is worth the oppression of the minority who do not pay their dues.
And so we come full circle. The end justifies the means. Oppression of the minority by a majority is acceptable for the good of the majority. A society must be able to use force and coercion against its own minorities for the greater good. Taxation is made legitimate only because the state is stronger than the individual.
But that does not alter the fact that involuntary taxation is fundamentally immoral.
Whether a tax code should be based on wealth creation or wealth consumption is a question for another day.
