The public’s view on taxation over the last several centuries has changed very radically. Once upon a time, people viewed taxation as an invasion of private property and as an aggression against the individual. This can still be seen today with the slogan Taxation is Theft used by many libertarian groups, but this is a view held by a small proportion of the population. It is much more common these days for people to say that paying taxes are an act of compassion by contributing one’s fair share to society, and that many in society, especially the rich, need to pay more in taxes. Anyone who protests is simply heartless and evil.
To show how radical the shift of popular opinion has been, people once revolted when governments tried to enact higher taxes, but now a great portion of the public actively cheers for more taxation, as we saw with the Occupy Wall Street crowd. How did this come about?
First of all, we have to keep in mind that those who want higher taxes , most of them do not actually expect to pay the higher taxes. They want higher taxes, but they only want higher tax rates for those who make more money than them. Once the tax money is confiscated, the high tax crowd expects the funds to be redistributed to them and their friends. This is how those on the Left plan to fund their myriad of programs such as single payer healthcare and government funded education.
This policy of taxing the rich has a broad appeal for many reasons. There is of course the human emotion of envy, which Ludwig von Mises covered in depth in his The Anti Capitalistic Mentality. Of course many people believe they should have a better life, and they believe that taxation and redistribution is a good consequence free way to have a more prosperous life.
Then there are those who advocate high taxation on philosophical and economic grounds. The two largest groups in this category are the Marxists and the Keynesians. The Marxists believe that the rich have systematically oppressed the poor and therefore their wealth should be seized and redistributed to its rightful owners which is the poor, and the Keynesians believe that taxation helps to regulate the “excesses” of capitalism and can mitigate business cycles.
There is however one group of people, who may or may not be associated with the Marxists, who believe that taxation is a form of philanthropy. This group wants to use government welfare to either supplement or replace private charity. We may call them the misguided philanthropists. It is possible that their philanthropic sentiments is simply a cover for their envy to have another’s material goods, but we will take their claim at face value, and in this post demonstrate that taxation is anything but compassionate, and that private charity is more efficient than government welfare.
The main reason why taxes cannot be considered compassionate is because taxes are not voluntary payments. Despite the beliefs of many, taxes are not freely given; they are taken by force. What happens if one decides not to pay their taxes? Their assets will be seized, their bank accounts frozen, a ban is placed on their passport so they may not leave, and the person may even end up in jail. What person would support a charity which says, “Give us your money, or we will take it from you by seizing your assets!”? This is in effect what government does to the extent government can actually be considered a charity.
If we were to continue on with our private charity example, when the person being molested into giving money says “No, I will not give you my money. If I choose to support your charity it will be by voluntary means”, would it be appropriate for a hoard of voices to scream, “How can you be so heartless? We believe this charity may now take funds from you by force due to your lack of compassion for the plight of the poor, and we will shame you until you repent and join us.” This is the typical response of those who believe taxation is compassion, but if no charity may coerce funds from the public then why may the government coerce funds for supposedly charitable ends?
There are those who say the motto Taxation is Theft trivializes actual theft. This is not true because taxation really is theft violating individuals, and it is actually worse than petty theft because while theft by private persons is sporadic and condemned by almost everybody, taxation is systematic, constant, and has a plethora of defenders being accepted as valid almost universally. As stated above taxation is theft precisely because the individual has the choice to either pay the tax or be severely punished. What is the difference between that and being held up at gunpoint by a mugger? Sure the government provides me with roads and education, both of which can be provided for much more efficiently and justly on the free market, but would we really be content if, say, the mugger bought me a hamburger with the money he took from me and pocketed the rest?
Taxation actually retards the natural process by which the market allows people to express their compassion for those less fortunate. True compassion is shown by one giving to those less fortunate through their own free will. In order for someone to give to others they must have their own needs satisfied. The market allows for the greatest satiation of needs by being the most efficient production structure and producing the greatest number of goods. This allows for more of the product to be given as a gift to charities which can then help the poor. Taxation has a negative effect on the economy, and hinders people’s ability to give either goods in kind or money. This means less poor people can be helped, and those who are helped are helped in a less efficient way.
Government itself is not compassionate. Not only is the means it uses to fund itself theft and hurts people’s ability to help the poor on their own, but government is much less efficient than private charity in two ways. First, much of what the government collects for social welfare goes to the government in overhead costs. This number is close to 70% is eaten up by government bureaucracy. This is contrasted to only 25% by private charities.
Secondly, government gives a certain crowding out effect to local charity by taking over many of the duties that local communities used to preform. Since the federal government took over these duties it gives many people the idea that there is nothing more to do. “The government takes care of it why should I?”, the common man asks himself. Also when there is a charity collecting money for the unemployed many ask, “Don’t I pay taxes to help the man looking for work?”.
Finally, private charity has a more personal touch that government cannot. A local charity is going to understand the needs of the community and can tailor its approach to the problem. Government on the other hand, being far removed from the community and not knowing its local problems or history, must institute a one size fits all policy. The incentives for private charities and government welfare is also quite perverse. Governments have the incentive to keep people on the dole since handouts from the government equal votes. The more goodies you promise people the more votes and loyalty the government accrues, and since the government is funded through taxation there is no hurry to get people off the dole since there is no immediate need to worry about funds; they will simply be taken from productive population. Private charities on the other hand have to show results by getting people on their feet. What person would support a charity which does not actually show progress to some stated goal?
Private charities also make the important, although currently unpopular, distinction between the deserving and undeserving poor. Most people will agree there is a difference between the man who is down on his luck but is trying to get on his feet, and the man who just wants to live parasitically off his neighbors. Charities have an interest in supporting the former because these people, the deserving poor, because they are trying to better themselves, and they are trying to become productive members of society rather than living off others like the undeserving poor. Government, in practice at least, tends not to make a distinction, and it is not in the government’s best interest to make a distinction because of the above mentioned points e.g. voting.
In conclusion, taxation is theft not compassion. It is theft because payments to the government are extracted by force, under no stretch of the imagination can they be called voluntary contributions. Since taxation is not compassionate, the institution funded by taxation i.e. government cannot be compassionate. We have seen this in the fact that governments crowd out and replace local personalized charities who serve the poor more efficiently. Government replaces these local charities with one size fits all solutions and the stone cold touch of bureaucracy with all the inefficiencies that entails. There is nothing stopping the misguided philanthropist from paying more taxes to Uncle Sam, and better yet there is nothing stopping them from forming their own charities to help the poor in their communities. It is the propertarian notion of voluntary private charity, with its emphases on just property rights and by uplifting the poor instead of giving them handouts, which is truly compassionate.