Saying that taxes are the ultimate evil (political evil, that is) seems a bit harsh. After all, one could say that legalized slavery, mass murder, or the concentration of power in communist systems, is the ultimate evil.
But take black slavery, for example. Even though the early United States was a mostly free country, it was widely accepted at the time that black people were inferior beings (some even presumed, non-human) compared to white people, in sentience and capacities, much like women were considered in earlier times. It was not the result of political maneuvering as much as general human stupidity and cruelty. It is only after taxation had been made constitutional that the door was open for today’s mixed economy measures.
I contend, therefore, that the greatest threat to freedom – the main tool by which the erosion of freedom is precipitated – is taxation.
The catalyst
While tracing the decline in social and economical freedom in, say, the United States is a piece of work that is outside of the scope of this article, I will elaborate on the theoretical reasons why I consider taxes to be the ultimate evil.
My precondition of something to be a primary source of disaster is that it makes it possible to a great degree. This does not mean that the source is to be made directly guilty of the final state.
For example, you might say that a person who leaves his door unlocked was the primary source of theft at his house, but you cannot say that he was guilty of the theft. However, it is his careless action which started a chain of events which led to the final state. So while a court would justly sentence the thief and not the house owner, the house owner is also to be blamed for not taking an elementary precaution.
In the same manner, taxes – the forced taking of wealth to the profit of public administration – is what makes most political evils possible.
As Von Mises had surmised, being an economist, economical freedom meant also social freedom. Most actions which have any importance at all require property to effect them on. For example, freedom of speech is meaningless if all communication means are owned by the state. The right to start an industry is meaningless if the state controls or owns all natural resources. In the same manner, freedom of arms is meaningless if the government owns all the weapons. In the general perspective of rights, property is that which the right of action is applied to.
But it is also true to say that social freedom is a prerequisite for economical freedom. The right to own communication means is meaningless if the government uses blanket censorship, as it does today. The right to trade arms is meaningless if the use or possession of arms is illegal. Black markets may appear, but they are extraneous to the social order, and therefore irrelevant if we are to speak of freedom in a political sense. Once again, in the general perspective of rights, property is a consequence of man’s actions : if he is not free to pursue rational action, then property is forever taken away from him.
And of course, one freedom affects another. For example, the right to trade is meaningless if the state controls the money supply, as we see in the case of depressions.
This highlights the co-dependancy of property and action, and by extension the economical and social spheres, which is a result of all rights being sub-groups of self-ownership. They all come back to the principle that one owns oneself, or does not, to various extents. We distinguish them in a meaningful sense because they are relatively separate to our eyes, but they are really two sides of the same coin.
We observe this in antipodal systems of extreme-left and extreme-right, such as communism and fascism. Designing a system at the extremes of the middle scale seems within the realm of the possible, but really isn’t. Therefore we observe, for example, that Communist Russia could not do otherwise than have gun control, censorship, and other social restrictions, for the simple reason that it owned and controlled everything to its own ends. The same applies to fascist countries such as Mussolini’s Italy, which did not hold the rights of individuals but only the “rights of the nation”, and regulated labour. But one of course cannot discount the influence of the desire for freedom, as well as concentration of power ,in these examples, which are severe distortions.
The taxing game
Why, then, the emphasis on economical freedom ? One would suppose that taking away freedom in one way would be equivalent to any other way, and the only problem is to apply the brute political force necessary. And dictatorships do seem to require brute political force to a large extent, in the form of censorship, propaganda, and persecution. However, we observe that this is not always the case in democracies, and for good reason.
In any system working on the “leadership principle”, there is no place for the people to express itself. This is an advantage for rulers who do manage to gain power using brute force, but it also takes away an important part of politicking – the leader has no “purchase”, as one would say in mountain climbing.
For example, the popularity of Russian Communism had to be “helped” by constant surveillance and mass purges (and indeed we observe this phenomenon in most authoritarian systems). When Churchill in 1940 was mournfully saying that he had nothing to offer but “blood, toil, tears and sweat”, Hitler had to do anything he could to accomodate a population that did not believe in his war and did not want to make sacrifices.
Incidentally, war itself is an interesting point of discussion – or perhaps not as much war as the problems which accompanies them. Hitler got elected in the wake of a disastrous war burden and a failing economy. Mussolini didn’t have it so easy, and had to manufacture his own social unrest in order to take power. Lenin took profit from generalized poverty and civil wars which threatened to topple the nation. As in cults and religions, we find that acceptance is much easier when a person is in a position of weakness. This is what we should expect, as political parties work much like any other belief system.
War also serves an important role in a democracy’s taking of power. Many socialist measures such as income tax, debts, central banks, are the product of warfare. This, however, for another reason : mainly, that emergencies are the easiest pretense to impose drastic measures. This is repeated today by interventionism, wars against citizens (war against drugs, war against poverty, war against crimethought), and the “emergencies” provided by depressions.
At any rate, war is peripherial to our discussion – its main political role is to accelerate the process which we examine here, which is the erosion of freedom. I start from the premise, then, of an already-established system.
To come back to the subject of power-grabbing, democracies and dictatorships are differentiated in that respect by democratic processes, especially voting. The act of voting can fundamentally be described, as I like to say, as “two sheep with an Uzi and a wolf discussing who’s for dinner”. In a more formal way, we could describe it as the process by which the majority determines who to turn the gun of the state towards.
The value-judgements of a democratic system are based on an averaging of personal opinion. Logically, if people were perfectly rational, democracy would inevitably lead to a perfect system. However, both cases obviously are not the rule. It is a simple question of education and specialization. While people are somewhat capable of guiding their own lives, the area of politics eludes most of them, for much the same reason as quantuum physics or biology does. But since everyone must by definition have a point of view on politics, people tend to fall back on emotional reactions and pseudo-religious political systems. It is this weakness, then, that makes democracy undesirable.
By its very nature, democracy allows taxation to exist by numerical fiat. But in the same manner, taxation takes effect because of democracy – in a sense, they are two facets of the same process. The starting point of this process is the proposition that it is much easier to tax people than censor them, and much easier to get support for such measures. Once you gain the power of imposition, you are much freer in implementation than trying to censor society piecemail. It is much easier to institutionalize theft than thought-control. Note that income tax was added to the US Constitution in 1913, six years before the amendment on the alcohol prohibition.
Holding a potential control over all property is a tremendous power. By a play of thefts and gifts, a wise ruler can Machiavelically pit interest group against interest group, raising the ante without anyone paying attention to that fact, but rather to the struggle itself. Today we now observe that people do not fight against government intervention, but against each other – “customer” against “business”, “poor” against “rich”, in a game of interest groups, surveys, and protests. All of these fights take place, however, because there is a power that underlies it, as a seemingly substantial victory, that is, the power of imposing, and taking away, taxation.
People do not pay attention to this process because their subjective benefit/cost equation falls in favour of playing the game (as I will detail in a small model in a moment). This is a trivial proposition, of course. But it is true to say that while people are usually fit to rule themselves, they are hardly in a state to rule others, mostly because of modern specialization. We observe that people vote with pragmatic interest in mind, and therefore vote for the immediate reward which is offered by the government’s game. Of course, such a situation presumes an ethics-less society, which is what we presently have also.
As pointed out before, economical freedom is societal freedom. By this interplay of interests, every group of common interests hoping that their view of the world will prevail, a government can gain leverage over the flow of value, which then can be used to impose societal regulations. This is, in essence, all that is needed to plunge a society into totalitarianism.
Why do we not observe these totalitarist systems in real life ? Because most people, while desiring a more or less powerful state, do not desire a completely ordered state. There is a limit, mostly determined by the epistemic and educational context, to which people are ready to surrender their liberties. One can observe that, when we assisted to the emergence of reason and science in the Antiquity, we also saw the emergence of somewhat democratic systems. On the other hand, the plunge back into faith-based systems in the Dark Ages saw more authoritarian systems take hold. With the Renaissance of reason, monarchy gradually lost its power and permitted the emergence of modern democracy, and even one quasi-free society, the United States. Rare are the authoritarian systems which came to being without the circumstances I described earlier.
Of course, ignorance of what a libertarian system is, or false expectations given by politicians, also enters into it.
Factors of the taxing game
To classify these distinct categories of influences that we are talking about, let me put this in a simple context. Here is a simplified version of the cost-benefit table facing an average person in such a situation. Suppose that two groups are vying for the attention of a government. Posit D to be a general distribution of wealth which obtains from a free society.
| Percentage | Acceptance of the system | Rejection of the system | |
| 1 Desires D or close to D(minarchist) | X% | Hope that D will obtain = Y | P(D) = 1 |
| 2 Does not desire D (desires some non-D) | (1-X)% | Hope that some non-D will obtain = Z | P(some non-D) = 0 |
| Probability/hope that desired distribution obtains | XY+(1-X)Z | X |
This simple table gives a model with three variables, and therefore three types of factors, X, Y and Z. This overview is sufficient for our purposes. Note that this table is built around the concept of a distribution (part of D or non-D) which is seen as desirable. For example, a voter of the Green Party may desire to see minimum and maximum wages imposed, while someone from another party may favour a flat tax, or a libertarian may desire a distribution based on free trade. Of course, the economy is a dynamic system, and such distribution is not a state but a progression.
A survey of 822 voters helps us evaluate the approximate value of two out of these three values. X is equal to 0.15 and Y is equal to 0.7 – that is, 70% of libertarians think another party than the Libertarian Party will obtain D (Rasmussen Research, August 23, 2000). Data for Z is absent, but the value is probably close to 1 : I will use 1 for simplification. Note that I don’t take into account people who may desire a given state of affairs, but who do not vote.
If a government can make true XY+(1-X)Z>X (in short, the sum of all hopes), it will generally receive support and prosper. According to our numbers, XY+(1-X)Z = 0.955, while X = 0.15. This fulfills the criteria. What this means in clear is that people’s hopes that the current democratic system will obtain a desirable system, coupled with the low support for freedom, largely favours the system.
X is the percentage of people who are libertarian. Note that this is different from people who claim to be libertarian, or do not know what libertarianism is. Libertarians understand the importance of freedom and rights in the pursuit of life in society. Why are most people not libertarian ? Mainly because of misunderstandings about politics (no more than a minority can be expected to be experts in politics due to specialization, but basic ignorance on many subjects may be reinforced by public education teach and media feedback), and, as a replacement for this ignorance, the emotional resonance of many socialist concepts.
The factors of hope are different kinds of factors. Note that, contrarily to X, I did not designate Z as being (1-Y) – hope is not necessarily complementary. The higher Y and Z are, the easiest the game is. Of course, if Z = (1-Y), that is that hopes are complementary, XY+(1-X)Z=-2XZ+X+Z. This is a stricter mathematical condition, supposing mainly an influence on Y and Z, than the situation where hopes are not complementary. Therefore this is a key mathematical explanation of the game : it becomes advantageous for the government to become “many things to many people”.
Factors of hope, therefore, are primarily motivated by false expectations as well as the idea that the system will turn in one’s favour. For example, we observe this “many things to many people” phenomenon by noticing the speech of politicians talking to various interest groups. Inevitably they will clamour for the protection of an industry when speaking in a company in some domain, then talk about free trade to a group of economists, then about the necessity of enforcing environmental theories against corporations to a group of eco-nuts, and so on.
Politicians also use loaded terms and doublespeak in order to attract votes from all sides. While for informed people the words “freedom”, “rights” and “justice” have precise meanings, to most people this is not the case : therefore, it is relatively easy to load these terms with connotations that make them attractive to people. In this new cognitive world, “democracy” becomes the enemy of “totalitarism”, and people who kill doctors are “pro-life”. On that map, Bill Clinton can claim that “the era of big government is over”, not only to attract the libertarian vote, but as a self-evident truism, since “small government” becomes whatever system Clinton wills into existence.
While this game is going on, it is trivially easy to hide the cost of all these socialist measures, for two reasons. The first is that, not knowing what a free system would look like, indeed having few points of comparaison at all, one cannot calculate precisely all the waste in money, time and lives that big government is enforcing in the name of these “interests”. The second is that even the direct cost of these measures is hidden within the mass of taxes and impositions. Try to find out how your taxes are used, apart from scouring the budgets of every sphere that you are a part of.
In a libertarian system, there is no hope for various groups to use the instrument of power to bludgeon his fellows, only the protection of people’s rights. This is why the notion of hope becomes irrelevant in a rejection of the system. Besides, a libertarian communautarian system makes this calculation meaningless since the probability of one’s system in a communautarian society would be close to one. The government therefore becomes “all things to all people”, not by virtue of itself but by virtue of societal organization.