Fourth in a four-part series on taxes.
“Taxes are theft!” judges one reader of this humble blog, and more than a few libertarians would agree with him. As near as I can tell, this judgment is based on a view of man as a completely autonomous individual, dependent on no one but himself, answerable to no one, and subject to compulsion by no one. Under this view, to the degree that taxes are compelled they cannot be just.
My problem with this view is that it does not describe any man or woman I have actually met. Every person of my acquaintance emerges not from autonomy, but from dependence. We are all called into being by the ready-made community of the family. Most of what we are comes not by an individual “consumer” choice but by gift. Along with the gift of family, there are the gifts of language, nationality, religion, community, city, state, and nation. Our values are socially formed by these gifts of social context and only after that formation do we find ourselves in a position to accept or reject these received values. What “freedom” we have consists mostly in decisions about how to use the gifts we are given; how to re-arrange them and pass them on. Our very being itself turns out to be already a “being-in-community” which mirrors in some fashion that ultimate community of persons that is at the root of all being, namely the Trinity. At their most basic level, humans are social beings, already formed by institutions “outside” themselves.
And since man is a social being he has social obligations; the gift demands a return if it is to survive to the next generation. Hence, each man has obligations which may, in certain circumstances, be compelled of him. Individual goods are themselves the product of social goods and are dependent upon such social goods; if there is a break-down in the social goods, no individual goods will survive. We are all dependent upon each other; the common good precedes any individual good. A philosophy of pure individualism contradicts the social nature of man. Clearly, there are common goods which no individual (or very few) could provide by themselves. The obvious example is the common defense, but there are others, and they are normally supported by taxation.
But if this rule of the common good gives us the ground for legitimate taxation, it also gives us the ground for judging when taxes are illegitimate. For if the legitimate purpose of taxes are to pay for those things necessary for the common good, then taxes are illegitimate when they purchase not the common good, but individual and particular goods. That is, when good money is taken from all to provide goodies for a few, goodies not connected with the common good, then they are illegitimate.
When we examine the actual expenditures of the modern state, we have ample grounds for questioning whether all of this money, or even most of it, goes to the common good, or are just private goods paid for by the commons. And while we should never (in my opinion) proclaim that “All taxes are theft!” we have more than ample grounds for shouting, “Most taxes are theft!” The one-word difference is crucial.
Of course, there can be different judgments on what constitutes the common good. But there can be no doubt that the system of special bills for special friends (“earmarks”) which burden every budget bill are nothing but theft. And even things that fall in the common good can be used in such a way that much of the money goes for other purposes. For example, we certainly do need an army for defense, but does our defense really require troops stationed in more than 130 countries? Certainly there are private contractors on whom the military is dependent, but do we really need the army of parasites and mercenaries provided by Halliburton and Blackwater? I tend to doubt it.
To take another random example, we can note farm subsidies. Now, a secure food supply is in the common good. As someone who likes to eat three or more times a day, I want to see secure and prosperous farmers, as my own security depends on them. Further, I have no objection (and much praise) for a fund which insures the farmer against the vicissitudes of the weather and the market, since the farmer himself cannot control these things. This fund ought to be largely supported and controlled by the farmers themselves, and it is not unjust if this fund receives a contribution from the general taxes, or at least, from those tax-payers who actually eat. But the current system is not an insurance program at all, but a subsidy, and one not so much to the “farmer” as to the giant “agri-businesses” such as Archer-Daniels-Midland and the like.
Further, we can note that not every common good needs to be paid for by general taxes. Take transportation, for example. Certainly it is a common good, and a prosperous people need a good transportation system. However, it turns out that most expenditures for particular forms of transportation constitute a subsidy for private persons. We build highways, but the only ones who can use them are those who can afford the high capital costs and operating expenses of an automobile. And when we invest so much public money in highways, we privilege one group of users over another, and force people to buy a car whether or not they want to, or whether or not it makes economic sense for them to do so. Now, its not that I think the government should get out of the transportation business; there are good arguments for public roads, since every particular route would have to be a monopoly anyway; you could not efficiently have two competing roads operating on the same route. However, these roads should be paid for by user fees (tolls) and not by general taxation. Indeed, subsidizing the roadways turns out to be both contradictory and self-defeating (see Free Markets, Free-ways, and Falling Bridges.)
We can also note areas where the free market has proven itself incompetent. Modern medicine is one of these areas. Indeed, so long as we are talking about a market that is so dependent on licenses and patents, there cannot be, even in principle, a free market at all (see Sicko-phancy!) We did have a free market in medicine, in the 19th and early 20th centuries, and it was a disaster. Hence, there is ample justification for a public system of health care. The specific taxes applied to this can certainly be debated. I will not here enter into that debate, but I will merely note that such a system ought to be supported by taxes dedicated to that purpose, such that if the costs rise, the public will have instant feedback via an increase in those specific taxes.
Our other big problem is retirement funds. Now, in days gone by, there were two sources of social security: have a lot of money or have a lot of children. We have made the latter unfashionable and the former damned near impossible (median wages haven't risen in 30 years). As a practical matter, we cannot do away with the system in any near term without causing social chaos (besides, the old folks vote.) Nevertheless, the system itself is not sustainable and in reality constitutes a surtax on labor incomes that is now used to support the general fund. In other words, it is just an additional income tax on one class of workers but not on others (see Social Insecurity.)
Looking over the budget as a whole, it is my unscientific judgment that at least one-third to one-half of the expenditures are for things that are mere subsidies, or that could be moved from the general taxes to special funds and user-fees. Hence taxes could be cut, conservatively speaking, by one-third to one-half, and could be done without harming, and indeed improving, things that really contribute to the common good. However, cutting taxes depends entirely on cutting expenditures. Candidates don't like to talk about cutting expenditures because each cut cuts into a constituency, either one that contributes a lot money or a lot of votes. We are left with vague promises of cutting “waste, fraud, and abuse” only to see all three increase. Or we get nonsense like Huckabee's “revenue neutral” plan, which on inspection turns out to be “all taxes on the rich are theft; everybody else pays 30%.” And all will end up continuing the program of borrowing to pay for “tax cuts” while spending like drunken sailors. Such “cuts” are not cuts at all, since borrowing is not tax-cutting but tax-shifting; taxes are shifted from the current generation to the next one. We are, quite literally, spending our children's money.
It is unfortunate that Ron Paul, the only actual Republican in the race, has taken the “all taxes are theft line.” It is not merely that it prevents him from getting elected (since most sensible people don't believe that), but more importantly it prevents him from speaking about the more important issue, namely, insisting one fiscal discipline. Spending only as much as you take in, and spending it only for the common good. That platform might actually win, if backed with sufficient funds for a credible campaign. But win or lose, it would certainly be a great moment of political education.