Taxation is a major part of the budget for any individual or business. Looking at this issue with clarity is essential to your financial well being.
(EUGENE, Ore.) - This is a companion piece to “Tax Policy: Measures 66 & 67.” While the article on Measures 66 & 67 deals entirely with practical analysis of the economic impacts of those measures, this article delves into the history and ethics of taxation.
The History of Taxation
Taxes are a source of perennial angst for most citizens. Most people believe that they are being taxed unfairly, and most of them are probably right. Historically, taxation has frequently been a source of injustice. In European history, the landless population, who were treated as slaves, paid taxes in the form of produce from the land to lords, monarchs, and the church. This system was kept in place through brutal repression, enforced illiteracy and cultural destruction. Conscription of the male population for various wars, which was another form of taxation, was a convenient way of culling the population and eliminating any potential resistance before it could start.
The system of slavery that existed in Europe for hundreds of years was born out of the Roman Empire. Roman armies conquered most of Western Europe, and established rule through vicious brutality. The Romans had a policy of promoting collaborators amongst the barbarians to positions of authority, and using them to control the local populations. As the Roman Empire began to decline, the Roman Catholic Church was created as a bureaucratic organization to administer Western Europe. The social hierarchy of monarchs and lords, which derived their power from and answered to the Church, evolved underneath this political scheme.
The Catholic Church declined in power over time, but the systems of slavery, social hierarchy, land ownership, and taxation that they created continued to be perpetuated by the self interest of the local elites that they had put into power. Much water and blood has flowed under the bridge, but the cultural detritus of the Roman Empire is still visible all around us. The fact that some of the founders of the U.S. Government viewed the Roman Empire as a shining example, to be emulated in the creation of their own government institutions, plays no small role in this.
The Ethics of Taxation
Modern taxation was born out of slavery. This is an indisputable historical fact. Taxation by definition requires coercion. Taxation is compulsory. You may consent to pay your tax, but the threat of violence is always present if you refuse.
It follows from the compulsory nature of taxation that the flow of tax revenue is always from the weak to the powerful. This is an inviolable law of taxation. The weak have no coercive force over the powerful, and thus it is impossible for the weak to tax the powerful. Wealth and power are typically synonymous, so in most cases tax revenue flows from the poor to the rich.
If your head is full of political propaganda that tells a different story, one of benevolent wealthy benefactors sacrificing their incomes to give hope and opportunity to the poor and ignorant masses, then I suggest you assess the objective facts of the matter.
The largest land owning entity in Oregon is the U.S. Federal Government. It owns just over half the total land mass or Oregon. The second largest land owning entity is the State government. The two largest land owning entities rely for their survival on taxing a population that by comparison owns little or nothing at all. If the State and Federal governments - owning more land than everyone else combined - cannot support themselves with that land, then how can those who own nothing be expected to support the State and Federal governments?
If you have ever felt that your taxes were unfair, but did not really understand why, now you know.
What is a fair tax? In theoretical terms, “fair tax” is an oxymoron. If we change the definition of tax from one of pure coercion to something more along the lines of a consensual contribution to social investment (i.e. a fantasy world we don't live in), then it is worth asking how these consensual contributions should be distributed amongst society.
By changing the concept of taxation from one of coercion to one of investment, you also completely change the relationship between the taxer and the taxed. The taxer becomes a servant of the taxed. The role of the taxer is to take the investment by the taxed and yield a return on that investment. This is the model of democratic government that we supposedly aspire to in this State. I will leave it to the reader to judge how faithfully our State government is adhering to this model.
Assuming that the government is a servant of the citizenry, then judging who should pay taxes is a simple matter of judging who receives the greatest returns on investment from the operations of government.
It may be tempting to look at schools, or roads, or some other piecemeal social service and assume that government exists to provide these services. This conception of government is almost entirely a product of political propaganda. The functions of government are defined by its constitution, not by the speeches of politicians. In fact, government has only one bedrock constitutional function, and that is to enforce private property rights.
If you read either the State or the Federal constitution, you will quickly see that both are almost entirely concerned with either rules for the administration of private property or rules for the administration of government itself. This constitutional structure directly reflects the fact that our governments were formed as compacts between large land owners. Individual rights, public safety, and the service oriented government that has developed over time are all secondary governmental functions that exist for the sole purpose of maintaining a level of social stability that is conducive to the primary government function, which is protecting claims to private property.
If the primary benefits from government flow to property holders, and in fact all other social benefits provided by government are only those necessary to maintain property rights, then who should pay the bills of government? If the costs of government are assigned to those who benefit from government, then clearly the costs should be assigned to property holders, whether they be holders of real property, stocks, bonds, patents, copyrights, or otherwise. It is to protect and maintain the value of this property that government exists, so why shouldn't the owners of this property pay to maintain government?
Income tax is inherently unjust, and could never be fair. On what basis could one person ever claim to justly seize the produce of another person's labor? Politicians offer the justification of government services being provided. Does the person paying the tax necessarily benefit from the service? Property rights, on the other hand, would not exist without government. Every person who owns property is a beneficiary of government, and they benefit in direct proportion to the value of the property they own. What could be fairer than taxing those who benefit from government in direct proportion to the benefit they receive?
Conclusion
Taxation is a complex subject. Politicians, commentators, economists, and everyday people have a thousand opinions and pronouncements to make on the subject. Taxes are the subject of continual propaganda put out by politicians, businesses, and governments. Floating in this minefield of lies, deceit, and obfuscation it is difficult to separate truth from fiction. At every turn you are buried under a mountain of meaningless statistics and numbers that only push you further away from a clear understanding of the real issues. The only hope of finding the truth is to ignore the propaganda and look at the objective facts.
Who owns what? Who makes policy? Who pays the bills? Who benefits? These are the essential objective questions that should be asked when analyzing tax policy.
Everyone agrees that social organization and social investment are essential, but as a citizen you should seriously consider whether or not these goals justify coercion. Couldn't they be accomplished without coercion? If investment is really beneficial, shouldn't it yield a return, which would make people willing to invest voluntarily?
Taxation is a major part of the budget for any individual or business. Looking at this issue with clarity is essential to your financial well being. Consider the history and ethics of taxation, and look at the present economic situation, and ask yourself: do you want higher taxes, lower taxes, or no taxes at all?
Salem-News.com Business/Economy Reporter Ersun Warncke is a native Oregonian. He has a degree in Economics from Portland State University and studied Law at University of Oregon. At a young age, his career spans a wide variety of fields, from fast food, to union labor, to computer programming. He has published works concerning economics, business, government, and media on blogs for several years. He currently works as an independent software designer specializing in web based applications, open source software, and peer-to-peer (P2P) applications.
Ersun describes his writing as being "in the language of the boardroom from the perspective of the shop floor." He adds that "he has no education in journalism other than reading Hunter S. Thompson." But along with life comes the real experience that indeed creates quality writers. Right now, every detail that can help the general public get ahead in life financially, is of paramount importance.
You can write to Ersun at: warncke@comcast.net
Tax Policy: History & Ethics of TaxationSalem-News.com