According to the Tax Foundation, Americans will spend about 30 percent of their income on taxes in 2008. For comparison, in 1900, it was around 6 percent. Put differently, for almost four months out of the year you work just to pay for government. In the current system most types of income are taxed, sometimes twice, and often progressively. These are just some of the taxes levied by government: federal and local income tax, sales tax, property tax, gasoline tax, cigarette tax, liquor tax, vehicle sales tax, utility tax, marriage license tax, inheritance tax, and capital gains tax, etc. On top of that, you pay to compensate for taxes levied on others. For instance, you, as a consumer, pay higher prices for goods and services because of the corporate income tax levied on businesses. The government, if it is to exist, should protect people from force and fraud. Therefore, at most, government should tax only to maintain a national defense, a police force and law courts. But instead, legislators seek to fulfill the so-called “needs” of the constituencies and special interest groups that put and keep them in office. So, the government has tasked itself with providing cheaper prescription drugs for seniors, improving education for children, supporting for farmers by keeping food prices high and paying them for any product they fail to sell, covering the living expenses of the poor, paying for medical research, and so on. The result is not a system that protects our individual rights but a system that provides benefits to some at the expense of others. Typically there will be concentrated benefits and dispersed costs, which makes organizing resistance difficult and leads to even larger government interference.

Taxes violate individual rights. Specifically, it violates your property rights. By using taxation to benefit some people, the government says that you have no right to keep what you have earned or how you spend it, as long as there is someone else who needs or wants it, and that it, the government, has the right to seize your property in order to provide it to the person or group they see fit. That’s damn close to making you a slave. As John A. Pugsley stated, “How does the IRS agent who collects our taxes differ from the gunman? He does not. You are forced to pay under threat of imprisonment (the gun). Your money is taken without your voluntary consent. It is used by other people who claim that their need is a just demand of your property. The process is justified because a group of people (voters) decide as a group that you should be robbed and that the money should be used for whatever purposes they deem proper.”

The current tax system creates winners and losers. The government does not create wealth, but only usurps and redistributes it. The winners in this redistribution are legislators and the special interest groups that pander to them. Also, foreign producers win because the taxes levied on businesses increase prices on domestic goods. Tax accountants win because they garner more business due to the complicated the tax codes. And, people who are the least productive win because their income tax is lowest; some do not have to pay income tax at all. The losers are clearly productive individuals, those who have created wealth by providing goods and services to others, who have chosen to voluntarily patron their business. But more than that, everyone who pays income tax loses because they have to spend time and money to complete complicated income tax returns. As Mark Skousen penned: “Oliver Wendell Holmes once said, ‘Taxation is the price we pay for civilization.’ But isn’t the opposite really the case? Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned and totalitarian state represents a complete defeat for the civilized world, while a totally voluntary society represents its ultimate success.” Taxes trample the idea of virtue. Forcing individuals via taxation to pay for the “needs” of others (often determined by a bureaucrat) does make them benevolent or charitable. What makes people charitable and benevolent is realizing that there are persons in true need and causes well worth while contributing to. Many people do realize this, which is why they give voluntarily. Moreover, excessive taxation discourages charitable giving because people have less money to give, or figure that their taxes already pay for helping the needy.

Taxation is frequently “progressive.” That means that individuals who earn more are forced to pay more. But why? They do not derive any greater benefit from the government by doing so. The underlying assumption of progressive taxation is that wealth is a like a fixed pie from which some people get to take a larger piece, thereby decreasing the share of others. Accordingly, income inequality is the expression of unfair wealth distribution and should be decreased by reallocation from the top to the bottom. Hence, those who make more should pay more because they have to give back in some way what they have taken from others. This depiction of the economy is inaccurate. More production generates more economic progress which leads to an increase in wealth for everyone (at least in a free market system), so that the pie does not remain a fixed size.

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Tax Slavery Sucks

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Tags: economics, ethics, memes, money, property rights, taxation, taxes

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Rent-seeking refers to the behavior of individuals or groups expending resources to achieve public policy decisions that transfer wealth to them at the expense of others. Some examples:

• A nonprofit organization might seek for the government to spend taxpayer money on their pet cause, such as protecting the environment or researching a disease.
• A workers’ union might want the government to force employers to provide higher wages, more benefits and greater job security.
• A corporation might seek subsidization to support an unsustainable business model instead of working to become more profitable.

While the rent-seekers should be faulted for the behavior, it is the government granting rent-seekers what they want that is the real problem. As it shells out more benefits and privileges, government has to collect more taxes to administer and pay for them, thus vastly increasing its size and scope.

Rent-seeking is theft. A rent-seeker wants to achieve a wealth transfer in his favor without having to provide value in return. In a mixed economy, companies and organizations find it more effective to petition the government for protection (i.e. subsidies, tariffs, entry barriers, regulations, etc.) than to compete by providing goods and services that consumers want to pay for. Since in a free market the choices of other individuals might not go in his favor, the rent-seeker would rather have the government initiate force against those individuals. The free market, on the other hand, is predicated upon and respects individuals’ free choices. Rent-seekers hinder the dynamism of the free market. When you and I trade in the free market, we each give the other something the other wants more than we want it, relative to what we receive in exchange. By contrast, when the government initiates force in favor of a rent-seeker, it makes everybody but the rent-seeker worse off. It leaves the rent-seeker’s competitors worse off, because the rent-seeker now has a government-enforced advantage, whether in the form of a government-approved monopoly, or stifling regulations faced by would-be entrepreneurs. Because market forces and signals are hindered and distorted, this leaves consumers worse off. They are forced to pay higher prices for poorer quality goods and services.

Rent-seeking harms economic growth. Instead of companies investing their money in new technology, new jobs, offering consumers better products and better prices, or increasing their employees’ pay, the money ends up in the pockets of lobbyists and the politicians able to grant favors. Consumers are forced to pay more for goods and services and taxpayers have to foot the bill for the rent-seekers’ government-enforced advantage. So, over time, as government arbitrarily favors one group over another and expands in size in order to pay for rents, rent-seeking erodes the mechanisms that make economic growth and wealth creation possible: the impartial rule of law, limited government and individual rights.

Statists, whether out of distrust of individuals or faith in the ability of the government, prefer that the state controls people instead of people controlling themselves; they opt for government intervention rather than individual liberty. Statist policies can include regulation of the economy, provision of social goods, and control over personal behaviors. Many political ideologies can be subsumed under the label “statist” — communism, fascism, authoritarianism, totalitarianism. Even a democracy can become statist if it does not create or does not follow constitutional safeguards against the majority imposing its will without regard for the individual rights of the minority.

Statism is anti-liberty. Individuals have property in themselves, also called self-ownership, which entails they should be free to control their bodies, their minds and their lives. The only way to interfere with that freedom is by means of physical force. The job of governments is to defend individual rights by protecting individuals against the initiation of physical force. However, when governments institute statist policies, they initiate force against individuals who are not infringing on the liberty of others and thus violate individual rights. For instance, regulations, tariffs and subsidies for businesses violate the rights of entrepreneurs and consumers, who both are prevented from voluntarily determining the terms of their interactions with others. If I choose to not give my money to a certain business, government has no authority to overrule that decision. It violates my freedom of choice and deprives others of the property they would have gained in the absence of government interference. Immigration restrictions violate the rights of individuals, since they are prevented from peacefully living and working where they choose to. Bans on smoking and the use of other drugs, speed limits and seat belt requirements, and laws preventing the sale of organs violate your rights since you are prevented from making decisions about your own body.

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Stop Rent-seeking

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Tags: economics, individualism, liberty, memes, private property, taxation

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Lost Productivity – “Ever wondered how much time and money are lost through federal tax returns? It actually is rather astounding even by conservative estimates.”

Newspeak – “Governments manipulate language for their own purposes constantly. It allows them to circumvent truth in the public square (at least to the unobservant eye and ear).”

The Truth About Government Spending – “Every cent that the government spends is the tax, not merely what is collected. Every cent spent is an income tax. Cutting collected taxes without cutting spending is merely tax deferment, nothing more.”

Privacy and Personal Income – “Let’s ask again, what right does the government have to my income, or even the information about my income? Constitutionally, the government does not have the right to force information about my income from me.”

Your Tax Dollars at Work – “Think about all the crazy things you know your tax money pays for…”

Withholding Taxes – “The withholding tax allows the government to make their insane demands more palatable to us. A penny here, a penny there – these won’t add up to much in the end, right? Withholdings from every paycheck is like silent theft, gone unnoticed.”

Caesar’s Benevolence – “Government benevolence is notoriously inefficient. Statistics show that for every dollar the government uses in a ‘benevolent way,’ only 25 cents actually is used to ‘help’ those in need.”

Living in Fear – “To say that the tax code is complicated would be the understatement of the century. It is, in fact, far beyond complicated, so much so that no one in this world could possibly understand it.”

Taxation is Theft – “I have already said and illustrated this numerous times in previous articles, but I will say it once again: Taxation is theft, period.”

Lost Prosperity – “We have to realize that trade, the social mechanism of increasing our economic well-being, is a win-win proposition. By definition, when you and I agree to trade the fruits of our labor, we are implicitly agreeing that we are both better off by making the transaction. Conversely, government force is a lose-lose proposition.”

Epilogue – “The government has over $56 trillion of outstanding, unfunded liabilities – financial commitments that you and I will pay. If this number seems hard to comprehend, then picture that this is $184,000 for every man, woman, and child in the United States.”

Are you attending a Tax Day Protest today? I’ll be at the south steps of the Texas Capitol come late afternoon, speaking out about the evils of the State. I hope you get a chance to do the same soon.

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It’s Tax Day 2010, have you paid your fee to live?

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Tags: ethics, government, taxation, taxes, theft

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On February 18, 2010, Joe Stack set the final plan of his life in motion. At roughly 9:00 a.m., he burned his house down, traumatizing his wife and child. By 9:40 a.m., Stack had departed from the Georgetown airport 21 miles from his home in his Piper Cherokee PA 28 airplane. At 9:56 a.m., he crashed this plane into an IRS office near the intersection of Mopac Boulevard and U.S. Route 183 in Austin, Texas, ending his own life, killing one individual, seriously wounding others, and causing immeasurable grief to many more.

On behalf of the libertarian community in Austin, I want to offer our most sincere condolences and prayers for the victims and their families. Our hearts go out to you.

Joe Stack was a disturbed individual. His motivation for violence was outlined on his personal webpage, EmbeddedArt.com (the site has been temporarily taken offline, but you can see an archived page here). Apparently, he was angry at the government, and in particular at the Internal Revenue Service, for their part in causing his financial ruin. He wrote about his painful history of personal economic distress and how tax laws had left him with little to live on. He had been treated unfairly, just as any taxpayer has been. Nevertheless, though is anger was justifiable, his actions most certainly were not. It was not an act of self-defense, but rather distinctly criminal. In my opinion, he may have simply gone insane. Rational people do not believe that crashing a plane into a building will bring about deeply sought change.

For many Americans, this will confirm in their minds that people who hold anti-government ideas are altogether crazy and delusional. Let us as libertarians be perfectly clear: we do not condone aggression such as this whatsoever. Let us be the first to condemn this violent behavior. For that matter, let us be the first to condemn all institutionalized violence as well, for what else is the State but organized violence? Stack was just as much a victim of the evils of government as anyone, but this fact does not give him, nor anyone else, the right to kill others in response.

We have already begun to see comments after news articles decrying “tea party nutjobs” or even libertarians as a whole. Please, friends, do not think that Joe Stack’s actions are representative of true libertarians at all. We wish to be peaceful voices for peace. We do not believe our good ends – ending the coercive State – justify our means. More violence is not the answer.

Those of us who consider ourselves Christian libertarians will be even more quick to say that Stack’s actions were nothing short of evil. Let us recall Jesus and the tax collector Zacchaeus from Luke 19:1-10. Zacchaeus was likely a far more aggressive person (if our understanding of history is near accurate at all) than anyone in that building, and yet Jesus still entered his house and ate with him. Doing so put Jesus in a position of immense vulnerability to the violence of the state. Tax collectors in Jesus’ day had the power to destroy people outright. Yet Jesus was humble enough to show compassion to “tax collectors and sinners” and his very presence inspired a profound change of heart in Zacchaeus. Jesus even called Matthew, another tax collector, to be one of his twelve apostles (Matthew 9:9-13). We want to exhibit that same kind of compassion towards those who commit aggression against us.

And for any modern-day “tax collectors” reading this, consider the response of Zacchaeus and Matthew. Are you ready to abandon the use of force and follow Jesus?

Murray Rothbard says it eloquently: the State is “a bandit gang writ large.” As libertarians, we seek to end the institutionalized violence of the State. We envision a society characterized by voluntary interaction between individuals, where aggression being criminal and exceptional rather than commonplace and accepted. But, you may wonder, how can we possibly achieve such a society? How can we quell the cycle of violence?

Any lasting change requires changing ourselves first. Surely, more violence cannot be the means for resolving violence. We must refuse to condone this system that continually brings about strife. We do not need merely a new Congress or president, but a philosophical revolution brought about using the means of peace. Philosophical revolution brought forth at gunpoint is worth very little, but through persuasion and reason hearts and minds are transformed.

This is not an easy task; in fact we may never see the defeat of the State in our lifetimes. It is not as though we can fly a plane into the Death Star and end the Galactic Empire in one fell swoop. To truly defeat the State, we must see a drastic shift in public ideology and morality. Nothing else could possibly work! Those who love liberty have been on the losing side for thousands of years, and we will continue to lose until society abandons its love of institutional violence. Unlike Joe Stack, who said, “Violence not only is the answer, it is the only answer,” we know better. Violence is ultimately the greatest enemy, let us not take on the same characteristics of the State that we oppose so much.

May we never forget that we will accomplish our goals by being men and women of peace, not war.

(1) Special thanks to Anthony Gregory for helping me form these thoughts.

(2) Photo credit: Jay Janner of the Austin American Statesman.

Please feel free to comment and express your own condolences.

UPDATE: This article was featured on LewRockwell.com on February 22, 2010.

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Joe Stack and the IRS: A Christian Libertarian Response

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Tags: Austin, News, taxation, taxes, Tea Party, Texas, theft

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Every individual tries to economize his energies by satisfying his needs and desires with a minimum of effort—within the limits of his ethical code.

The urge to achieve better results with less effort accounts for all inventions, including that most fundamental of all labor-saving devices, the market—a name given to the basic human institution which permits division of labor, specialization, and the exchange of goods and services. Human achievement in fields of religion, art, knowledge, and science is possible to the degree that man finds ways to do what he does best and then trades the result for the specialties of other men.

Thus each man draws upon the specialized output of every other man as the most efficient way of meeting his own varied needs. The market process conserves energy; and if this surplus energy is used creatively, civilization is a byproduct of it.

This same tendency to minimize effort drives many persons to practice a kind of black magic; they seek to control other people by means of the political agency and thus obtain economic goods without working for them. That is to say, they regard their fellows as natural hosts for their parasitic or predatory tactics. Instead of satisfying their wants through their own productive efforts, they expropriate the property of others.

Robbery is a labor-saving device for a few, though it has its obvious limitations. Accumulation is necessary before there is even a temptation to rob. And there is no accumulation unless men have access to the primary labor-saving device, the market. Without a market, if such a situation could be imagined, men would live a hand to mouth existence and nothing would be left over to steal.

Some men have employed robbery as a labor saver ever since the dawn of history. They so employ it today. Men are prompted to steal by a perversion of the same good impulse to conserve energy which leads them to invent other labor-saving devices. But good impulses, if they are not to go astray, need to be harnessed to good ethics and good sense.

The robber, once established in his profession, feels the pull of progress and yearns to streamline his methods, just like the for-ward-looking members of the more respectable trades. He does not contemplate anything like personal reformation. To work for what he wants instead of hijacking the fruits of others’ labor would stain the professional honor. But with the general refinement of moral values, barefaced robbery comes into conflict with the code of the tribe—and also runs up against the group’s constabulary. For it is just as natural for the producer to police the routes of trade as it is for the nonproducer to raid them. With the constabulary in action, the independent robber has to use so much energy defending himself against the hostility his acts arouse that robbery ceases to be a labor-saving expedient.

Professional robbery was in danger of becoming a lost art, but the primordial human urge to get maximum return for minimum effort gave it new life by legalizing it.

In order to restore robbery’s labor-saving advantages, the predator and parasite had to effect an alliance with the constabulary. They went about this by setting up a political agency composed of two partners: those who hold public office and control the apparatus of coercion, and those private citizens who appear to benefit by the exercise of political power. The seeming benefits in this arrangement are material; they consist of special privileges—political grants to some at the expense of others. All are taxed; a few are subsidized. The political racketeer sells “protection” to the producers who are his victims, promising that they won’t be robbed by foreigners, nor by natives other than himself, and then only at regular intervals. As part of the deal, the victims are given back a tiny fraction of what they have given up, in the form of “public benefits.”

These “public benefits” seem to appear as if by magic, black magic. In the eyes of many people, political alchemy does what the philosopher’s stone could not do; it waves a wand and housing developments, dams, and power plants appear; it waves a contract, and lo, an industry is built on it; it utters the incantation, “parity,” and the country is buried under eggs, wheat, potatoes, and butter. If this is not black magic, what is it?

It has all the outward signs of magic or legerdemain. And the art of legerdemain, as Houdini used to say, is nine-tenths distraction M the rest is mere jugglery. The hand is not quicker than the eye; unless the hand can palm the card during the instant when the eye is elsewhere, the illusion fails.

The same is true of contemporary political activities. As long as the public can be kept distracted by having its eyes glued to the latest political marvel—a dam, a federal housing project, or whatever the real political game goes on, just as it has since time began. The things which go unnoticed are artful elaborations of the primitive labor-saving device of robbery. What is seen is the new housing or hydro-electric project; not seen is the clothing, food, education, or whatnot that citizens would be enjoying now if their means of obtaining them had not been taxed away for political handouts.

The political action which results in a dam or a pyramid or an office building is not the creation of wealth out of nothing by political alchemy; to the contrary. Such action directs attention away from the incalculable loss of wealth which it necessarily entails. The arithmetical sum of all monies taxed away from producers is a poor measure of this loss, for two reasons. In the first place, a huge percentage of the total is consumed by the partners of this political agency in nonproductive ways. And secondly, if all personal earnings were put to creative use through voluntary exchange—instead of being drained off into pyramid-building or its equivalent—the increase in the total amount of wealth available for distribution would be enormous.

Men are not angels; their actions will always deviate to some extent from their principles. But this is no excuse for erecting the deviations from principle into a solemn high philosophy of society. The natural impulse to satisfy desires along the line of least resistance leads some people into efforts to get something for nothing—which is what black magic really is. But the kind of a universe we live in will not long deliver if it is approached on these terms. Black magic may appear to work for a time, but there is a natural balance in things which assures that they will not be mismanaged long. Nature will not tolerate disorder; God is not mocked.

Originally published in The Freeman, February 1956.

Read more from the Edmund Opitz Archive.

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Black Magic

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