The following essay is the second and final draft of my submission to the John Locke Essay Contest 2023, answering the third philosophy question: “Is Tax Theft?”. It was submitted on June 29th, 2023, and won a Commendation award.
Introduction
Benjamin Franklin once remarked that “… nothing can be said to be certain, except death and taxes” (NCC, 2022). More than 200 years later, the quote still holds up; taxes are a fundamental part of the way governments work and have been for a long time. Taxation is central to the state.
With the rise of libertarianism, however, comes the questioning of the ethics of taxation. Many libertarian thinkers, from Robert Nozick to Murray Rothbard, argue that tax is theft; Nozick notably said that “Taxation of earnings from labor is on a par with forced labor” (Nozick, 1974, p. 169). This idea isn’t a new one, but it certainly has gained prominence recently. And with the increase of libertarianism in the mainstream, this idea will likely gain further traction in days to come.
Before I begin, I will define two crucial terms: “tax” and “theft”. First, tax is defined as the imposition of compulsory levies on individuals or entities by democratically elected governments with the best interests of the people at heart. The first part of this definition is obvious; the second part, less so. Tax is only justified when levied by democracies because only they have the full consent of the people. This point will be further elaborated on later. For brevity’s sake, all uses of the word “tax” below will refer specifically to this kind of legitimate tax, unless specified otherwise.
Second, the Encyclopedia Britannica defines theft as “… the physical removal of an object … without the consent of the owner and with the intention of depriving the owner of it permanently” (Bernard & Thornton, 2023). This is the definition used below.
I argue that tax levied by democracies is not theft, for two reasons: firstly, because taxes in democracies are levied with the people’s consent; and secondly, because tax is meant to be used solely for the benefit of the people, without the intent of depriving citizens permanently.
Argument I: Tax isn’t theft because it’s consensual.
In all legitimate taxes, the people’s consent is crucial. After all, by our own definition, a government taking money from its citizens without their consent is robbery. Therefore, taxation can only be legitimate when taxpayers consent to give taxes and have a say in how their money is used. Only forms of government where leaders are elected by the people—that is, democracies—can tax legitimately. This is why taxes levied by dictatorships could not be considered legitimate; they tax regardless of the people’s will.
In the relationship between the people and their governments, taxation plays an especially vital role. Alex Cobham writes that “Paying tax is the glue in the social contract. When people pay tax, they are empowered to hold their governments to account for how their money is spent” (Cobham, 2022).
But what is the social contract? Britannica defines it as “ … an actual or hypothetical compact … between the ruled and their rulers, defining the rights and duties of each” (The Editors of Encyclopaedia Britannica, 2023). It’s a compact between the government and the governed, which lays out what each side can and should do. Democracies are therefore controlled by this treaty, and the citizenry is bound by it as well. Because of this, these countries are constrained by the people’s consent.
No one understood this better than John Locke, the father of the social contract. Locke wrote that “Men … have such a right to the goods … that no body hath a right to take their substance … from them, without their own consent: without this they have no property at all” (Locke, 1690, p. 44.). He argued that only democracies have the right to levy taxes:
This [tax as theft] is not much to be feared in governments where the legislative consists … in assemblies … but in governments, where the legislative is … in one man, as in absolute monarchies, there is danger still … it must be with his own consent, i.e. the consent of the majority … for if any one shall claim a power to lay and levy taxes on the people … without such consent … he thereby invades the fundamental law of property … (Locke, 1690, pp. 44-45)
Representation also matters because it determines how much one should pay. Adam Smith wrote that “The subjects of every state ought to contribute towards the support of government … in proportion to … revenue which they respectively enjoyed under the protection of the state” (Smith, 1776, p. 777).
So, tax in democracies is levied with the consent of the people; therefore, it doesn’t fulfill the first part of our definition of theft.
Argument II: Tax is used solely for the people’s benefit.
The second part of our definition, taking “… with the intention of depriving the owner … permanently” (Bernard & Thornton, 2023), is equally as important as consent. This intuitively makes sense. For instance, if your friend borrows $20 from you, promising that he will pay you back, but loses it, it would be strange to accuse him of theft because there was no intent to deprive you permanently.
Therefore, we must examine the intentions and effects of tax to determine if it inherently has the will to take from the people permanently. James John Jurinski writes that “The primary goal of taxation from biblical times … has been to raise revenue for the government … the government spends income tax revenues on ‘public’ goods and services …” (Jurinski, 2012, pp. 2-4).
The state taxes to raise revenue for itself, and uses it on public works and services. Clearly, public expenditure doesn’t harm but helps the public. Consider tax-funded law enforcement. What would happen if it were abolished? With no one left to enforce the law, an exponential increase in crime is likely. And profit itself could not be made without such uses of tax; without police, businesses wouldn’t be able to sustain themselves.
Tax itself upholds and protects profit; it gives back to the people more than it takes. Its intent isn’t to permanently take; rather, it’s to protect the people and to make sure they continue to profit from their labor.
For further information, we turn again to Locke, who demonstrated this relationship with an analogy: “… but yet we see, that neither the serjeant, that could command a soldier to march … where he is almost sure to perish, can command that soldier to give him one penny of his money…” (Locke, 1690, p. 45).
Locke shows that tax can only be spent for the good of the nation, not for personal enrichment. A sergeant can command his troops to certain death for the country, but he can’t take their money for himself; similarly, the state can tax for the good of its citizens, but not for the personal profit of the leaders themselves. Tax can only justly be used for public purposes, not for private ones.
Hence, governments are limited in levying tax by quantity, as Smith showed; procedure, as only democracies can justly tax, as Locke demonstrated; and purpose, as its purpose should be to better the nation’s citizens (Kimball, 2018). So tax carries both the consent of the people and the intent to give back to and protect them. It cannot be theft.
Counter-arguments
Many counter-arguments could be made against these two propositions. One is that there is no social contract. This is a common line of attack: Antony Davies and James R. Harrigan, for instance, write that “… there never has been a social contract … the social contract envisioned by modern progressives is precisely not an agreement at all … and the terms are in no way clearly spelled out” (Davies & Harrigan, 2019).
This can be refuted by observing the frameworks of modern democracies. Consider their constitutions, such as that of the United States. They lay out what the government can and cannot do; as these constitutions are the basis of these governments, the government’s side of the social contract exists.
And consider the fact that citizens themselves can modify this contract, such as by amendments. The very nature of this ability to change implies that the citizenry is a party to the contract. Therefore, the people’s side of the social contract exists. From these two observations, we conclude that the social contract is real and binds government and citizens alike.
Another argument is that there is no consent because citizens can only choose how much they pay, not if they should pay that all. If a robber lets you choose between him stealing $100 or $1000, both options would still be theft. But the premise that citizens cannot choose to give nothing is mistaken. One of the tenets of the social contract, after all, is that both sides must be bound by it. If one side violates the contract, the other side is no longer bound by it. If the state becomes tyrannical, the citizen has a right to revolution. Rebellion against taxation is permissible under the social contract if it strays from its duty of serving the people.
Others argue that taxation ends up harming the citizenry, and suggest the privatization of tax-funded services. This is mistaken, as Lake Larsen writes: “… privatizing schools has resulted in … some of the lowest literacy and mathematics levels in the country … Based off changes we’ve already seen … privatizing sectors of the government will only result in unhappy citizens …” (Larsen, 2019).
Another comes from citing examples of poor taxation, of which there are many. Opponents note unnecessary subsidies given to industries such as big agriculture and big oil, both of which are paid with taxpayer funds, or huge sums of tax seemingly wasted; for example, Axios shows that the US spent more on its military in the previous year than the next ten countries combined (Lawler, 2023). These examples certainly seem daunting.
However, it’s equally important to note examples of good taxation policies as well. Thanks to taxpayer funding, infrastructure like roads, bridges, railroads, and airports are free to use and well-maintained. Education, such as the K-12 system and state colleges, is funded by tax. Britain’s NHS, as well as US government-funded vaccine research during COVID-19, are examples of leaps being made in public health services stemming directly from taxpayer money.
Ultimately, the crux of the arguments of the anti-taxation thinkers comes down to libertarianism, a “… philosophy that takes individual liberty to be the primary political value” (Boaz, 2023). Libertarian ideals regarding the role of the state are in opposition to our current system of representation and to liberty itself.
Many libertarians have a deep-seated skepticism of government and its actions; a distrust of the state is one of its core tenets. Consequently, taxation, a system with the consent of the populace and the unique means to help them, becomes a dangerous example of theft. Their alternative is the privatization of tax-funded industries; the “expansion” of freedom through the choices of citizens replacing public services; and the encouragement of the free market’s purported efficiency. All of these lead to an argument that the people shouldn’t pay taxes at all.
These positions are incorrect. The state is the only body that can effectively protect and help its citizens. Privatization, as shown by Larsen, has not and will not lead to more efficiency or cost reduction.
Furthermore, the results of tax prove that benefits are clearly returned to citizens for their money. Effective public services, as well as the existence and efficacy of infrastructure, prove this. Likewise, police agencies and courts, both of which are funded by tax, uphold the safety and liberty of the people. Ironically, the libertarian ends up losing his liberty by choking out its funding.
Conclusion
The debate around the ethics of tax is old. From the evidence presented, I conclude that tax in democracies is not theft, because it inherently entails the consent of the people and because it does not take permanently from the people, but rather gives back in the form of safety, service, and liberty.
References
Bernard, T. J., & Thornton, W. E. (2023, May 19). Theft. Encyclopedia Britannica. Retrieved June 13, 2023, from https://www.britannica.com/topic/theft
Boaz, D. (2023, May 19). Libertarianism – Self-Ownership, Rule of Law, and Free Markets. Encyclopedia Britannica. Retrieved June 13, 2023, from https://www.britannica.com/topic/libertarianism-politics/Historical-origins
Cobham, A. (2022, March). Taxing for a New Social Contract. International Monetary Fund. Retrieved June 14, 2023, from https://www.imf.org/en/Publications/fandd/issues/2022/03/Taxing-for-a-new-social-contract-Cobham
Davies, A., & Harrigan, J. R. (2019, May 2). There Is No Such Thing as a Social Contract, but so What? Foundation for Economic Education. Retrieved June 15, 2023, from https://fee.org/articles/there-is-no-such-thing-as-a-social-contract-but-so-what/
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