"All this argument, however, is a concession to the
obfuscation with which custom, law, and sophistry have covered up the
true character of taxation. There cannot be a good tax, or a just one;
therefore, every tax rests its case on political power. And the power
behind every levy fattens on its collections, while the power of the
individual is commensurately weakened. The ultimate of the progressive
process of taxation is the absorption of all production by the state --
which is the ideal of socialism."
Taxation Is Robbery
Socialism via Taxation
Frank Chodorov
This article first appeared in analysis
in three pans (February, March, and April 1946). It was the basis for
the Human Events pamphlet Chodorov
authored a year later, “Taxation Is Robbery.”
Whenever it declares itself on the subject of taxation, socialism
shows how well it knows its stuff. The Pharisees of that order have
pointed out how the bourgeois system of “forced dues and charges”as the
Encyclopedia Britannica describes taxescan well bring about the
abolition of private property. It is a device for both siphoning capital
out of citizens' pockets into the coffers of the state and discouraging
the accumulation of capital. In that they are eminently correct, even
though, characteristically, they avoid mentioning the greater peculation
of wages. But, since the end justifies the means, they are strong for
taxes, the bigger the better.
The scribes of what we call capitalism, neither as knowing nor as honest,
have gone about camouflaging taxation with theories, canons,
sanctimonious justifications, and, of course, a library of laws, until
its mask has become its true face. When you unmask it, by means of reason
and historical investigation, you see that taxation is highwaymanry made
respectable by custom, thievery made moral by law; there isn't a decent
thing to be said for it, as to origin, principle, or its effects on the
social order. Man's adjustment to this iniquity has permitted its force
to gain momentum like an unopposed crime wave; and the resulting social
devastation is what the socialists have long predicted and prayed
for.
The fact of taxation was known long before it was so named. If the thing
was referred to by any particular word, it must have been some
prehistoric counterpart of swag. The Danes who made periodic
collecting visits to their neighbors called Dannegeld. However, a
name and a theory are unimportant to the unsophisticated brigand who
takes what he likes; both become important only after the browbeaten
victim learns how to buy peace at a price, and the brigand finds it nice
to put himself on a par with the merchant. The path of skulduggery is
made easier with a coating of morality, which is aptly applied to an
established custom, by the lawyer and the professor of economics. And so,
the business of taking what does not belong to you has been well
obfuscated by a “philosophy” of taxation.
Our adjustment to taxation is so complete that these statements will
undoubtedly be put down as brash, incontinent, crackpot. One could call
upon modern practices to prove the point, for the ancient art of getting
something for nothing has not been lost, nor have we forgotten the habit
of making peace with iniquity. The “protection” tariff levied on
businessmen by racketeers is, in substance, taxation, although it cannot
be so dignified because it is not recognized in law; not yet, anyhow. On
the other hand, the recently legalized (and moralized) checkoff system by
which the laborer is compelled to pay the job monopolist for the
privilege of making a living is definitely a case in point. But, it is a
recognized principle of logic that analogies prove nothing; so, we must
apply ourselves to an analysis of the theory and practice of taxation to
prove that it is in fact the kind of thing above described.
PERMISSION-TO-LIVE PRICE
First, as to method of
collection, taxation has been divided into two kinds, direct and
indirect. Indirect taxes are so called because they reach the state by
way of private collectors, while direct taxes arrive without bypass. The
former levies are attached to goods and services before they reach the
consumer, while the latter, with the exception of stamp taxes, are
demands made upon previous accumulations of wealth.
It will be seen that indirect taxation is a permission-to-live price. You
cannot find in the marketplace a single satisfaction to which a number of
taxes are not attached, added to the price, and you are under compulsion
either to pay them or go without; since going without amounts to
depriving yourself of the meaning of life, or even of life itself, you
pay. The inevitability of this charge on existence is expressed in the
popular dichotomy, “death and taxes.” And it is this very characteristic
that commends indirect taxation to the state, so that when you examine
the load carried by the goods you live by you are astounded by the
disproportion in the price between the cost of production and the charge
for permission to live. Somebody has computed the number of different
taxes carried by a loaf of bread and has come to the figure 125, but the
computer admits the probability of unascertainable taxes. Whiskey is
perhaps the most notorious example of the way products have been
transmuted from satisfactions into tax gatherers. The manufacturing cost
of a gallon of whiskey, for which you pay around twenty dollars, is less
than a half-dollar; the spread is partly taken up by the cost of
distribution, but at least ninety percent of the money passed over the
counter goes to maintain city, county, state, and national
officials.
The hue and cry over the cost of living would make more sense if it were
aimed at taxation, the largest single item in the cost. And humanitarians
who are concerned with this matter would do well to consider this: the
incidence of indirect taxation falls most heavily on goods of the widest
use, so as to ensure the greatest return, and as the poor are the largest
segment of society and therefore the greatest consumers, it is on those
least able to support the state that the burden is put.
TAKING WHILE YOU'RE NOT LOOKING
It is not only the size
of the yield, or its certainty, which gives indirect taxation preeminence
in the state's scheme of appropriation. Its most commendable quality is
that of being surreptitious. It is taking while the victim is not
looking. Those who strain themselves to give taxation a moral character
are under obligation to explain the state's preoccupation with the hiding
of taxes in the price of goods. Is there not a confession of guilt in
that? In recent years, in its search for additional sources of revenue,
the state has been tinkering with a sales tax, an outright and
unequivocal permission-to-live price; wiser
solons recognize in this measure a political
danger and have therefore vigorously opposed it. Why? If the state serves
a good purpose, the producers will hardly object to paying its keep.
Merely as a matter of method, not with deliberate intent, indirect
taxation yields a profit of proportions to the private collectors, for
which reason they support the state in making such levies. To the
original payer of the tax it becomes a bookkeeping cost, and as such it
must be added to all the other costs of operation which go into price
making. As each processor and distributor computes his profits as a
percentage of the total costs of operation, the original tax is pyramided
from hand to hand, and what the consumer pays for the product is
considerably in excess of the amount delivered to the state. The most
notorious of indirect taxes are custom tariffs. Follow an importation of
raw material, say silk, from importer to cleaner, to spinner, to weaver,
to finisher, to manufacturer, to wholesaler, to retailer, each one adding
his markup to the price paid his predecessor, and you will see that in
the price paid by milady for the petticoat there is at least double the
toll collected at the customs office. It is because of these profits that
merchants and manufacturers cannot see the wrong in customs duties.
Support for this indirect method of robbing the worker comes from still
another source. The greater the tax load of an industry, the greater the
investment necessary for engaging in it, giving large accumulations of
capital a distinct competitive advantage. Any farmer can make whiskey,
and many of them do; but the investment in revenue stamps and the various
license fees that must be paid in advance make the opening of a
distillery and the organizing of distributive agencies a business only
for the affluent. It is the state which has turned the individually owned
and congenial grog shop into a palatial bar under mortgage to the brewery
or distillery which advanced the license fees. The manufacture of
cigarettes has likewise been concentrated into the hands of a few giant
corporations by the tax system; three-quarters of the price of a package
of cigarettes is an outlay in taxes which the manufacturer must be
prepared to meet. It would be strange indeed if these powerful interests
were to voice any opposition to indirect taxation, which they never do,
and the inarticulate, uninformed, and unorganized consumer is forced to
pay the higher prices resulting from limited competition.
SOAKING THE POOR RICH
Direct taxes differ from
indirect taxes not only in the manner of collection but also in the more
important fact that the former cannot be passed on. Those who pay them
cannot demand reimbursement from others. In the main, the incidence of
direct taxation falls on accumulations rather than on goods in the
process of exchange. Since under our monopoly system only a few can
accumulate any considerable amount of wealth, this method of
appropriation appeals to popular envy; it makes its way with a
soak-the-rich label. But the label turns out to be a false one, since the
principle involved permits the application of direct taxes to the most
modest incomes. There are more poor than rich, and therefore their income
in the aggregate is the largest mine to be tapped. So that every
soak-the-rich tax must become in time a soak-the-poor tax.
The clear-cut direct taxes are those levied on incomes, inheritances,
gifts, land values; included also are road tolls, licenses, and, since in
effect they are taxes, punitive fines. As for incomes, what started as a
modest imposition on those who would hardly feel it, has been widened
until it includes taxation on wages at the source. Employers are now
required to deduct and turn over to the authorities a percentage of the
worker's wage; the so-called social-security taxes are in fact levies of
the same kind. The sugarcoated fiction of a gratuity to the taxed wage
earner is maintained by requiring the employer to make an equal
contribution to the security fund, but since this contribution is added
to his cost of doing business and therefore to his prices, it will be
seen that the wage earner pays this part too when he buys the product. A
further dishonesty of the social-security tax is that the revenues thus
obtained are used to meet the general expenses of the state, while the
old-age pensions and unemployment benefits, for which the tax is
ostensibly levied, are met by new taxes on current production.
Direct taxation is the last resort of the state, being applied only when
indirect taxation has been stretched to the political breaking point, and
when the state has attained the necessary strength. In ordinary times the
opulent, to whom direct taxation is a threat, are able successfully to
oppose it; for the opulent are also articulate, resourceful, and
powerful. Yet, when war or mass poverty endangers the social and
political structure under which these elements of society prosper, their
opposition to direct taxation slackens; the mass fear which in such times
weakens social power gives strength to the political arm, which then
ruthlessly reaches out into every pocket in the country. Once the
“emergency” is passed, social power must reassert itself to gain any
amelioration in taxation, but its cause is a difficult one because the
precedent and the method remain. The history of every country in the
world is a record of progressive increase in taxation, culminating, as it
must, in a complete breakdown in the national economy.
Taxes, of all kinds, discourage production. It is a silly sophism, and
thoroughly indecent, to maintain that the state spends what it collects
and that therefore there is no lowering of purchasing power; thieves also
spend their loot, with more abandon than the rightful owners would have
spent it, and one could therefore make out a case for the social value of
thievery. Neither thieves nor officials produce a marketable good to
offset what they take; they contribute nothing to the purchasing power
because they contribute nothing to the general fund of wealth. Every
increase in the cost of living slows down me wheels of industry, while
every levy on savings discourages the accumulation of capital. Why work
when there is nothing in it? Men do not go into business to support
politicians.
YOU HAVE NO RIGHT TO PROPERTY
A word on the income tax
is in ordera book would be more appropriate. In principle this tax, as
the founders of the Constitution realized, is more vicious than any
other, for it is a direct attack on the sanctity of private property. By
its very surreptition indirect taxation is a
backhanded recognition of the right of the individual to his savings, and
the argument for all other taxes is the need for revenue; but the income
tax establishes the prior right of the state to the property of its
subjects. If you follow through on the principle involved you come to the
conclusion that the individual's right to property is a temporary and
revocable stewardship. The Jeffersonian ideal of inalienable rights is
liquidated, and substituted for it is the Marxist concept of state
supremacy. It is by this tax measure, rather than by violent revolution,
or an appeal to reason, or popular education, or any ineluctable historic
force, that the reality of socialism is forced on us. Notice how the
centralization advocated by Alexander Hamilton is accomplished by this
fiscal measure, and that the contemplated union of independent
commonwealths is effectively dissolved; not only are these states reduced
to parish status, but the individual is no longer a citizen of his state
but belongs to the nation.
A basic immorality becomes the center of a vortex of immoralities. When
the state invades the right of the individual to the products of his
labors, it appropriates an authority which is contrary to the nature of
things and therefore establishes an unethical pattern of behavior, for
itself and for those upon whom the authority is exerted. Thus, the income
tax has made the state a partner in the proceeds of crime; the law cannot
distinguish between incomes derived from production and incomes derived
from robbery; its concern is with income and not with its source.
Likewise this denial of the right of property arouses a resentment which,
under the circumstances, finds _expression_ in dishonesty and perjury. Men
who in their personal relations would hardly think of such methods, or
who would be socially ostracized for practicing them, are proud of, and
are complimented for, evasion of the income tax law. No other measure in
the history of our country has caused a comparable disregard of principle
in public affairs, or has had such a deteriorating effect on the morals
of the people.
Taxation has surrounded itself with doctrines of justification; it had
to; no miscreant can carry on without a supporting philosophy. Until
recent times this pilfering of private property sought to gain the
approval of its victims by protesting the need for maintaining social
services. The growing encroachment of the state upon property rights
necessarily brought about a lowering of the general economy, resulting in
disaffection, and now taxation is advocated as a means of alleviating
this condition; we are now being taxed into betterment. Whether for one
reason or the other, the yardstick for all levies is the ability to-pay
formula, suggesting a leveling-off process and quite appealing to our
instinct of envy. Let us look into these two postulates of taxation and
the supposedly ethical yardstick.
TAXATION FOR SOCIAL SERVICES
Taxation for social
services hints at an equitable trade. It suggests a quid pro
quo, a give-and-take, a relationship of
justice. But, the essential condition of trade, that it be carried on
willingly, is entirely absent from taxation; the very use of compulsion
which taxation must resort to removes it from the field of commerce, puts
it squarely in the field of politics. Taxes cannot be compared to dues
paid to a voluntary organization, for such services as one expects to
obtain from membership, because the choice of withdrawing does not exist.
In refusing to trade one may deny oneself of a profit, but the only
alternative to taxes is jail.
In respect to social services a community may be compared to a large
office building in which the occupants, following widely differing
businesses, cannot carry on without the aid of common services, such as
elevator transportation, heat, cleaning, window washing, and so on. Each
tenant might provide these conveniences for himself, as indeed is done in
smaller buildings, or when one tenant occupies the entire space. The more
tenants in the building the more important do these overall
specializations become to each one, and at a pro rata fee far less than
the cost of individual self-service the operators undertake to supply
them; the fee is included in the room rent. Each of the tenants is
enabled to carry on his business more effectively because he is relieved
of his share of the overall duties.
Just so are the citizens of a community better able to carry on their
several occupations because the streets are maintained, the fire
department is on guard, the police department provides protection to life
and property. Like all analogies, this one is not quite a synonym because
the tenant may avoid the fee by moving to a building which does not
provide the services, may build his own house, may go out of business;
the only way to avoid taxation is to die.
When a society is organizing, as in a frontier town, the need for these
services is met by volunteer labor. The road is kept open by
contributions of time and effort, there is a volunteer fire department,
the respected elder performs the services of a judge. As the town grows
these extracurricular jobs become too onerous and too complicated for
volunteers, whose private businesses suffer because of the increasing
demands of social services, and the necessity of hiring specialists
appears. At this point, also, compulsory taxation appears, and the
question is, why must the residents be compelled to pay for being
relieved of work which they formerly performed willingly? Why is coercion
a correlative of taxation?
WHY TAXATION NEEDS COMPULSION
The answer may be the
obvious one that men are inclined toward getting something for nothing.
Then again, it may be the realization that while these social services do
provide certain conveniences, these merely spell more chances to work but
no more returns per unit of labor. The barber, for instance, does earn
more than he did when population was sparse because he has more
customers, but his increased earnings arise from a greater exertion of
effort and not from the social services. The clothier cannot charge as
much as he did per suit when he sold only one suit a week, because he now
has competitors, but he does have a larger net profit because he sells
more suits. The printer has more jobs but he gets no more per hour. That
is to say, the population increase offers more opportunity to produce,
and it is to this greater effort that the increase in earnings must be
credited. The per-hour wage does not go up because of increased
population or the social services introduced.
The natural inclination is to hold on to one's wages, because the natural
inclination is to associate wages with oneself, as an inalienable right.
If I have a right to myself I have a right to what I produce, as against
all men, even if they are organized and possess political power. The
greater concentration of population does in fact enable me to produce
more, to work more intensely; but to take from me part of my product
seems to be a charge for the opportunity to live, and mat strikes me as
unfair, unjust. The natural inclination against taxation arises then from
an innate sense of its injustice. The practice of injustice necessitates
the use of force.
Trace an injustice to its cause and you will find another injustice. The
burgeoning community which necessitates better streets, a sanitation
department, traffic policemen, a park for the children, and so on, brings
about an economic betterment which, peculiarly enough, does not accrue to
the population as a whole. Where the bank building now stands there was
once a pigsty, and what was once the site of a barn now supports the
general store. The bank and the general store represent more intense
productivity, opportunities to render wider services to the community.
Competition between bankers and storekeepers for the use of these sites
has greatly enhanced their value. This value arises not from the services
rendered by these entrepreneurs but from the presence of the population
they serve, while, as we have seen, the presence of this population
necessitates the social services enjoyed by the community.
It would seem logical that this valuewhich we call land rentshould go
to defray the expenses of these common services. However, under our
prevailing land-tenure system this economic increment accrues to the
erstwhile farmer who holds title to the sites, or maybe to the banker who
holds a mortgage on them. The economic betterment which the community as
a whole creates is diverted to individuals who return nothing for it to
the general fund of wealth. This is the injustice which fosters the
injustice of taxation.
It is the landowner, then, who in truth owns the social services for
which the producers of the community are forced to pay. And he owns them
in the full sense of the word, for he collects the rent which follows
from them, and sells them when he disposes of his holding. He makes no
bones about it; when he puts his plot on the market, he proclaims the
advantages of the subway station, the neighborhood school, the efficient
fire and police protection given it, and he computes his price
accordingly; the buyer, likewise, acquires title to the social services
which center in that location. It's all open and aboveboard. What is not
advertised is that these social services have been paid for by compulsory
“dues and charges” levied on the producing part of the public. These folk
receive for their pains the vacuous pleasure of writing home to their
country cousins about the marvelous underground railway system, the
beautiful boulevards, the fabulous zoo and the other wonders of the great
city; also, they have the opportunity of working more intensely. And that
is all they get for their tax bill.
TAXATION AS A CURE-ALL
We come now to the modern
doctrine of taxation -- that its justification is the social purpose to
which the revenue is put. It is interesting to note that this doctrine
emerges from a general condition of poverty, and hence of social unrest,
and that the advocates advance it as a cure-all. It is quiescent during
the short interludes of relative prosperity which the country enjoys. It
is the humanitarian's prescription for the social malady of poverty
amidst plenty, the doctrinaire's method of leveling economic
inequalities, the charitarian's first-aid
treatment of apparent injustice. But, like all proposals which spring
from the goodness of heart, taxation for special purposes is an easy
top-surface treatment of a deep-rooted illness, and as such is likely to
do more harm than good.
In the first place, this doctrine denies the right of the individual to
his property. That is basic. Having tacitly or openly fixed on this
premise, it jumps to the conclusion that the needs of society are the end
of production, and offers the mechanism of taxation as the means for its
diffusion. In the fact that it concerns itself not with the control of
production, or with the means of acquiring property, but only with
distribution, it is, strictly speaking, not socialistic, and its
proponents are usually quick to deny that charge. Their purpose, they
assert, is reform, not revolution; even like boys whose innocent bonfire
inadvertently puts the forest ablaze.
The doctrine does not distinguish between property acquired through
privilege and property acquired through production. It cannot, must not,
do that, for if it did it would question the validity of taxation as a
whole. When we examine privileges we find that they are economic
advantages granted by the political power, and political power is born in
and thrives on taxation. If taxation were abolished, for instance, the
cost of maintaining the necessary social services of a community would
fall on rentthere is no third sourceand the privilege of collecting
rent would vanish. If taxation were abolished the sinecures of public
office would vanish, and these constitute a privilege which in the
aggregate bear heavily on production. If taxation were abolished, our
so-called protective system would go out and with it would go the
privilege of collecting higher prices from producers. Taxation for social
purposes has no intent of abolishing existing privilege, but really
creates new privileges for bureaucrats who will carry out the plan.
Therefore, it doesn't dare to make a distinction between the two kinds of
property.
Furthermore, the discouragement of production which must follow in the
wake of this distributive scheme further aggravates the condition it
hopes to correct. If Tom, Dick, and Harry are all engaged in producing
goods and services, the taking from one of them, even if what is taken is
given to the others, must lower the economy of the three. Tom's opulence,
in this case, is because he has rendered services to Dick and Harry which
they found desirable. He may be more industrious, or gifted with superior
capabilities, and as a result they have favored him with their trade;
although he has acquired an abundance, more than they have, he has not
done so at their expense; he has because they have. If the political
power deprives him of his possessions, he must cease to patronize Dick
and Harry, and they are to the extent of the tax levied on him without
employment. So that the dole handed out to Dick and Harry actually
impoverishes them. The economy of the community is improved not by the
distribution of what has already been produced but by an increase in the
abundance of things men live by. We live on current production. Any
measure, therefore, which discourages, restricts, or interferes with
production must lower the general economy, and taxation for social
purposes is distinctly such a measure.
TAXATION BREEDS POWER
Putting aside the
economics of the matter, the political implications are even more
damaging to the soundness of the idea. Never must it be forgotten that
taxes are compulsory “dues and charges.”
That being so, every increase in the limits of taxation automatically
extends the limits of compulsion and, consequently, decreases the power
of resistance. If the end to be achieved is the “social good,” the power
to take can conceivably extend to total production, for who shall say
where the “social good” terminates? At present the “social good” embraces
free schooling, free hospitalization and medical services, unemployment
insurance, old-age pensions, farm subsidies, aid to “infant industries,”
low-rent housing, free employment service, contributions to the merchant
marine, projects for advancement of the arts, and the distribution of
expensive literature on how to get well, keep well, and do well. We have
seen how, as the problems of poverty increase, the “social good” has
spilled over from one private matter to another, and now the definition
of this indeterminate term seems to include every human interest and
activity. The democratic right to be wrong, uninformed, misguided, or
even stupid is no restraint upon the imagination of those who undertake
to interpret this goal; and whither this goal goes, there goes the power
to enforce compliance.
The omnipotence to which taxation for social purposes leads rests on an
assumption of human omniscience. The infallibility of committees,
science, graphs, charts, and tables is accepted a priori, and any
questioning of the dicta of experts is frowned upon as presumptuous
heresy. Society as a whole is divided into those who know and those who
are incapable of knowing; upon the first devolves the duty of leading the
unfortunate. There may be something in the theory of superior people, in
the nature of things, but nature's failure to put upon them distinctive
indicia is a handicap which can be overcome only by the assumption of
political power. That power the self-anointed are never reluctant to
assume.
Taxation's final claim to rectitude is its ability-to-pay formula, and
this turns out to be a bit of too much protesting. It is in fact a
cruelly deceptive shibboleth. In the levies on consumption, from which
the state derives its largest revenues, it is impossible to apply the
formula. Whether your income is a thousand dollars a year or a thousand
dollars a day, the tax on the loaf of bread is the same; ability to pay
plays no part. Because of the taxes he pays on necessaries, the poor man
may have to deprive himself of some marginal satisfaction, say a pipe of
tobacco, while the rich man, who pays the same taxes on necessaries, will
hardly feel impelled to give up his cigar. After all, the rich man
consumes more than the poor man only in the matter of luxuries; he
probably eats less than the laborer, and no man can wear more than one
suit at a time; therefore, the permission-to-live price bothers him far
less than it does his less fortunate fellow man.
The formula is applicable only in levying taxes on incomes before they
are spent, and here again its claim to fairness is unfounded. Every tax
on wages, no matter how small, affects the worker's pattern of living,
while the heavy levy on the rich man, depending on his income, may affect
only his indulgences. Wage income, moreover, is easily ascertainable, and
avoidance of any part of the tax, legally or illegally, is negligible,
while income from the operation of a business or from investments can be
lost in the intricacies of accountancy, honestly or dishonestly, and
hence ability to pay loses its egalitarian meaning. The claim to equity,
which is implied in the formula, would be valid only if all above a
predetermined, uniform standard of living were confiscated by the state.
But then, of course, the equity of confiscation would have to be
established.
When we look to the intent behind ability to pay we see that it is an
unconscious confession of immorality. What is this but the highwayman's
code: take where the taking is good? Neither the highwayman nor the tax
collector gives any thought to the source of the victim's wealth, only to
the quantity. The state is not above taking what it can from the income
of known or suspected thieves, murderers, or prostitutes, and its
vigilance in this regard is so well established that the breakers of
other laws find it wise not to break the income tax law. Nevertheless,
ability to pay finds popular supportand this must be accounted the
reason for its promulgationbecause it assuages the sense of injustice
aroused by the inequities of our monopoly economy. It is an appeal to the
envy of the incompetent as well as to the disaffection of the mass
consigned by our system of privileges to involuntary poverty. It
satisfies the passions of avarice and of revenge. It embraces the promise
of retributive justice, the leveling-off ideal. It is Robin Hood.
TAKING WHAT THE STATE CREATES
Supporting the formula is
the argument that incomes are relative to the opportunities afforded by
the state, and that the amount taxed is merely payment for these
opportunities. Again the quid pro quo.
This is only partially true, and in a sense which is not intended by the
advocates of this fiscal formula. Where income is derived from a
privilegeand every privilege rests on the power of the state to support
itit is eminently fair that the state confiscate the proceeds, although
it would be fairer if the state did not create the privilege in the first
place. The monopoly rent of natural resources, for instance, is income
for which no service to society is rendered, and is collectible only
because the state makes it possible; a 100 percent tax on rent would
therefore be equitable. The profits garnered by “protected” industries
because of the embargo on foreign competition would be fair game for
taxation. A tax on all businesses which receive subsidies, to the full
amount of these subsidies, would make sense, although the granting of
subsidies would still require explanation. Bounties, bonuses, doles, the
“black market” profits made possible by political restrictions, the
profits on government contractsall income which would disappear if the
state withdrew its support from that particular business or occupation
ought properly to be taxed. The state should take what it is responsible
for.
But that is not what is meant by those who promulgate ability to pay.
They insist that the state is a contributing factor in production, and
that its services ought properly to be paid for; the measure of the value
of these services is the income of its citizens, and a graduated tax on
these incomes is only due compensation. If earnings reflect the services
of the state, then it follows that larger earnings result from more
services, and the logical conclusion is that the state is a better
servant of the rich than of the poor. That may be so, but it is doubtful
that the tax experts wish to convey that information; what they want us
to believe is that the state helps the individual to better his
circumstances. That idea gives rise to some provocative questions. For
the tax he pays, does the farmer enjoy more favorable growing weather?
The merchant a more active market? Is the skill of the mechanic improved
by anything the state does with that part of his production which is
taken from him? How can the state quicken the imagination of the creative
genius or add to the wisdom of the philosopher? Where the state receives
a cut from gambling, is the luck of the winner bettered? Are the earnings
of the prostitute increased because her trade is legalized and taxed?
Just what part does the state play in production that would warrant its
demand for a rake-off?
All this argument, however, is a concession to the obfuscation with which
custom, law, and sophistry have covered up the true character of
taxation. There cannot be a good tax, or a just one; therefore, every tax
rests its case on political power. And the power behind every levy
fattens on its collections, while the power of the individual is
commensurately weakened. The ultimate of the progressive process of
taxation is the absorption of all production by the state -- which is the
ideal of socialism.
--
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