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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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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“Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed. Money is so noble a medium that is does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.”– Ayn Rand

I think Rand is spot on. This is why we need to End the Fed and stop the spending spree.

I highly recommend reading Francisco d’Anconia’s Money Speech from Atlas Shrugged in entirety. Great stuff…

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A Quote from Rand to Consider

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Tags: corruption, economics, Rand, society, taxes, war

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I am a staunch proponent of privatization of road systems, even publishing an article about transportation pollution in a peer-reviewed journal advocating such. But this perverse plan that the Texas government has put out is a sham, and misconstrues what privatization is all about.  Robert Butler says: “The toll roads aren’t a free market privatization plan.  You’re granting monopoly rights to private operators. The bonds backing these toll roads have clauses that prevent competition and are guaranteed with tax dollars.” Thank goodness that it has been defeated!

This is what local activism is all about, self-destructing the plans of autocrats (pun intended) at the local level and saving peaceful citizens livelihood. Well done, LP Texas (esp. Pat Dixon & Robert Butler), Texans for Accountable Government, TURF, and all others unmentioned who have worked so hard to do what is right. If you’re involved in local activism in your community, take this as an example of how you can make a difference.

I should mention that this should not be taken as a blanket endorsement of the LP in every way. I have actually been very critical of LP National in the past and sometimes I think they severely miss the mark in terms of being consistent libertarians. But, I have been extremely impressed by the work of the LP Texas organization and am honored to be a friend to many of the people there.

See the press release below.

Libertarians Put the Brakes on Toll Road Transportation Bill

“Twitter and Facebook Play a Role” (original article link)

AUSTIN, TEXAS – July 2, 2009  -   The Texas Legislature left a controversial new toll road bill pending in committee today and Libertarians are claiming a major victory in stopping a billion dollar scheme to use taxes and pension funds to pay for private monopolies and foreign management of Texas toll roads.

Libertarians worked together with TURF, Texans Uniting for Reform and Freedom, and Texans for Accountable Government (TAG), to stop what some have dubbed the largest tax increase in Texas history.

On Wednesday morning, Libertarians from across the state converged at the Texas Capitol, emailed, and called their state representatives to demand that public-private partnerships funded with Texas tax dollars and pension funds be stopped.

“We used our extensive email lists, Twitter, and Facebook accounts to activate thousands of freedom-loving Texans,” said LPT Executive Director Robert Butler.  “Our people called, emailed, and personally visited every member of the House and Senate.  Our press conference and grassroots effort had a major impact in potentially killing this bill.  We have to continue our public awareness campaign until the special session officially ends.”

“Credit goes to the work of our staff and volunteers for discovering the ugly details behind this legislation,” said Libertarian State Chair Patrick Dixon.  “For an organization with just over $100k in revenue, we certainly do have an impact on policy.”

“Toll roads cost up to twice as much to build as non-tolled expressways,” said LPT Executive Director Robert Butler.  “The toll roads aren’t a free market privatization plan.  You’re granting monopoly rights to private operators. The bonds backing these toll roads have clauses that prevent competition and are guaranteed with tax dollars.”

In 2005, the State of Texas entered a 50-year agreement with a Spanish company named Cintra to develop the Trans-Texas Corridor, a 4,000-mile network up to 1,200 feet wide to carry parallel links of tollways, rails, and utility lines. Cintra’s parent company, Grupo Ferrovial, S.A, was a major collaborator with Spanish dictator Francisco Franco and depends upon its political connections to secure toll road contracts around the world. 

In 2007, by a combined vote of 169-5, the Texas Legislature passed a moratorium on private toll contracts, called comprehensive development agreements (or CDAs) that privatize and sell Texas highways to the highest bidder. That moratorium ends August 31, 2009, and CDAs, except for approximately a dozen projects that were exempted, sunset with it. CDAs are the primary financial vehicle used to construct the Trans Texas Corridor.

“I want to cut taxes and spending,” declared Libertarian activist Wes Benedict.  “They have refused to approve low-cost road improvements claiming they don’t have the funds, then propose rail and toll roads which cost up to ten times more than buses and non-tolled roads per passenger mile of added capacity. Light rail and toll roads cost too much and do too little.”

“We Libertarians and our friends at TURF and TAG have shown that an educated voter can change the course of legislation.” noted Butler.  “This bill will be a litmus test in the 2010 elections, we’ll make sure of that.

Post from: LibertarianChristians.com

LP Texas Helps Defeat $1 Billion Scheme of Fake “Private Roads”

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Tags: activism, Libertarian Party, private roads, taxes

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Chewbacca finds the freedom movement on Earth… May the Rebel Alliance never die!

Okay, I have no idea what is going on here… Moving on…

Scott sent me this lovely explanatory pie graph of theft in America:

I absolutely adore Pearls Before Swine; I’m pretty certain it is the best widely circulated comic in print right now. However, this comic from last Sunday is missing the point somewhat…

Unfortunately, the author doesn’t quite understand that the only reason these bankers can do these despicable things is because the government enables them to do so. Just check out Tom Wood’s book Meltdown or peruse through the Bailout Reader on Mises.org and find out why.

Coincidentally, today’s comic is about the economy as well. Funny stuff!

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5 out of 5 Chewbacca’s Agree: Ron Paul is the Man

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Treasury Department Issues Emergency Recall Of All US Dollars

LOL!

Coming up in the near future… A new podcast interview (with guest Gil Guillory), a few more articles on economics, and an update to an older article. Stay tuned, see you soon.

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Treasury Department Issues Recall of All US Dollars

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Tags: humor, taxes

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I hope you attended or supported your local Tea Party today – Tax Day 2009. Honestly, I wasn’t able to go myself because I had a theology class this afternoon. But no matter, there will be another day to protest.

I saw a very scary article today, and it should confirm everything I’ve been saying in these articles.

Why Your Taxes Could Double

Regardless of what politicians tell you, any additional accumulations of debt are, absent dramatic reductions in the size and role of government, basically deferred tax increases. Remember the old saw? “You can pay me now or you can pay me later, with interest.”

Really? You mean, spending matters?

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. For the average American that makes only about 50k per year, he will work nearly four years of his or her life just to pay this stupid debt off. You probably need to look up this fictitious (and hilarious) accounting firm to help you out.

I shudder imagining what the American Revolutionaries would think of this. Can you imagine our forefathers standing for this? Can you imagine them staying silent as the Federal Reserve and the Federal Government destroy our livelihood and liberties?

I beg you, say something to someone, today. Stay silent no more.

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10 Things I Hate About Taxes: Epilogue

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Tags: economics, national debt, taxes

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1. Lost Productivity
2. Newspeak
3. The Truth About Government Spending
4. Privacy and Personal Income
5. Your Tax Dollars at Work
6. Withholding Taxes
7. Caesar’s Benevolence
8. Living in Fear
9. Taxation is Theft
10. Lost Prosperity

(And there’s an Epilogue too!)

Thanks, everyone, for your comments and encouragement. It was quite fun (and challenging) to compose these articles. I hope you benefited from them as much as I did from writing them.

This series was featured on the LewRockwell.com Blog on April 13th, 2009.

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10 Things I Hate About Taxes: The Full Series

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Tags: economics, ethics, taxes, theology

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I think I’ve saved the best for last… I was linked by LewRockwell.com yesterday (thanks to Gil Guillory), I’m wondering if I should submit this as an article for tomorrow… Read it and let me know in the comments…

In the first installment of this series, I talked about how much effort is wasted just doing taxes. Compliance with the law results in a massive loss in productivity that could have been used elsewhere. In this article, I want to emphasize how much wealth is destroyed due to taxes, and how much better off we would be if we didn’t have them at all. This is the lost prosperity that we have missed.

Let’s crunch some numbers. The average U.S. economic growth in GDP from 1913 to 2005 has been roughly 3% year to year. The next figure displays this in terms of Year 2000 Dollars (this allows us to take inflation into account). Recall that 1913 is the year the Sixteenth Amendment was ratified, which instituted the income tax.

Upon inspection, one might say that this actually looks pretty good, 3% per year isn’t too shabby. However, substantial data that indicates that countries whose governments spend a greater percentage of wealth annually also experience diminished growth. I have scanned two graphs from Mary Ruwart’s Healing Our World (chapter 12) to help illustrate this. (Both are originally from Gwartney, Holcombe, and Lawson’s article entitled “The Scope of Government and the Wealth of Nations.”)

Note the trend in this first graph: the less a government spends its people’s wealth, the greater growth that nation will experience. This is correlated from hundreds of data points from various countries over time.

What is striking about this data is that as government spends ever less money, the rate of growth expands exponentially rather than linearly. In other words, a 10% reduction in government spending makes an even greater difference when moving from 25 to 15% total government spending (nearly 2% increase) than moving from 60% to 50% (about 0.25% increase).

So, does this relationship hold in specific cases? In fact, it does. This next graph shows how Ireland, New Zealand, and the United Kingdom realized greater growth when they reduced government spending (data spans the years 1960 to 1996, see the caption).

Each of these countries had governments that spent greater than 45% of their annual GDP. Thus, each country experienced low economic growth, between 1 and 4%. These are the only three developed countries that made significant reductions in government spending between 1960 and 1996. One can clearly see that when each country reduced spending, their economic growth shot up significantly. In the case of New Zealand, their growth rate expanded three times over! Less aggression expands wealth.

Think back to what you have learned in personal finance. Remember the concept of compound interest, that savings early on contributes to wealth expansion later? What is lost due to taxation is compounded over time. And when we consider what the United States government spends, the obvious conclusion is that we have missed an extraordinary opportunity. Over the last 100 years, the United States Federal Government has dramatically increased its consumption of annual GDP. You can readily see this in the next graph. Around 1915, the Feds spent only around 10%, and aside from the two gargantuan spikes (the World Wars), the general trend has been a steady increase to 35-40% of annual GDP. No wonder the economy is only growing at 3% in supposedly the most free nation on earth!

Now we are in the position to calculate the prosperity we have lost due to the income tax. It is actually a very simple calculation to make, if you make some simplifying assumptions.

In this case, I will assume no variation year to year in growth, and that the growth rate is 5% – only 2% above the current average rate. This is actually a conservative estimate when you think about it, because we would likely see upwards of 4-5% increase in annual growth if the income tax were eliminated as per the previously cited data. But for now, let’s call 5% the lower bound. Here’s what you get:

The difference between 3% and 5% growth is nothing short of startling. The conservative estimate is that we would likely be 8 to 10 times better off without the income tax, and that number would go up even further if the growth rate is greater. Can you imagine what could be done with this kind of prosperity? We are often amazed at what we can do and produce with modern science and technology and with the connectivity of the internet. But the difference we can anticipate with this much growth would likely dwarf what we see now. Most likely, by eliminating the aggression of taxation we would increase wealth creation somewhere between 3 and 18 times!

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. No one but the thief is made better off when coercion is exacted, and laws of nature do not change when the collector wears an IRS uniform and the spender is a government bureaucrat.

Those who argue that it is only through government that we will cure disease, help people out of poverty, and make this world a better place have not seen the data. Prosperity is what cleans up cities, gets people into jobs, and heals illness, and the government will always fail when it tries to intervene. Why? Because government only works by aggressing against its subjects, which unequivocally makes the subjects worse off.

How amazing that the world works in this way! We do not have to choose whether we will have either aggression and prosperity, or peace and poverty. Rather, peace and prosperity go hand in hand. Thank God, the created order is a win-win world.

For now, however, we have little choice in the matter of taxes. We do the best we can to avoid as many taxes as possible and live in peace, because otherwise the strong arm of the State is waiting. Let us keep pushing back the State through persuading our fellow man of the evils of the State, trading peacefully, and working for positive change in our communities.

And the fight goes on…

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10 Things I Hate About Taxes #10: Lost Prosperity

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Tags: economics, taxes

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