Saturday, April 28, 2012

Taxation is not (necessarily) theft

This is based on a comment I made here. (It is a little bit of a work in progress, as I have updated it over the course of the day.)

That taxation is coercion does not mean that taxation is theft.  Taxes as a compulsory levy to enjoy more expansive use of one's property rights does not make much sense as a notion of theft if it leaves people better off. In other words, if it enhances one enjoyment of various rights, it is hardly a violation of them. Taxation is then part of a compulsory exchange (taxes for services, notably protection) rather than merely a taking. All those folk who are not anarcho-capitalists subscribe to some version of this view.

Of course, it is possible for taxation to be theft, if it is merely for the gain of a ruler and his or her agents without any commensurate benefits. But, while that may be true in part (and historically almost always was, in part), it is almost never true in whole because it is in the interests of a ruler to provide certain protections in order to both gain more revenue and enjoy more benefits from existing revenue. And the longer the time horizon of the ruler, the more true that tends to be. (Which is a benefit for hereditary rule over more uncertain forms of autocracy.)

Whenever there is collective action, there is politics in the weak sense. If one or more agents habitually defer to another, you have domination. But rulership proper rests on the existence of the compulsory exchange of taxation. If it is not an exchange, if it is merely a taking, then it is banditry; but see previous comments about ruler incentives. After all, the perception of some compensating benefit reduces enforcement costs.

Of course taxes can fund violation of rights. And interest politics is about makimising the returns of the compulsory exchange for you or some group you belong to. While normative politics is about maxismising the overall net benefits from the compulsory exchange. But if you do not understand that taxes are usually part of an exchange, for entirely rational reasons, however compulsory, you do not understand the nature of taxes.

We are stuck with the paradox of politics: we need the state to protect us against social predators but the state itself is the most dangerous of social predators. This is a paradox that can never be resolved (for reasons which I discuss here), only managed more or less well.


  1. Every government needs money to do its obligation and serve its citizens. The government needs money to maintain peace and order in its territory.

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  2. Some would argue that taxation of earnings from labor is not theft because the actions of the state, unlike those of a thief, are predictable and governed by law, the state’s powers to take income being limited and the citizen being fully aware of what is in store for him when he gets paid. - wage garnishment