Walter In Denver

The Ethics of Taxation

I've known a few tax protestors here and there. I'm talking about people who do everything they can to avoid paying taxes, usually because they believe taxes, especially the income tax, is unethical, and paying the tax is unethical as well. This is different from some wealthy taxpayers who take advantage of every possible shelter in an attempt to legally pay little or no tax. The tax protestors I'm talking about are usually not wealthy, and are avoiding taxes by means the IRS says are illegal, such as simply not filing a tax return. These protestors often knowingly risk great personal hardship, including being dismissed as right-wing whackos. (Not unfairly, in some cases.)

I agree with them, that the income tax is unethical. However, I do pay income tax. Let me try to justify that.

Taxation is theft! would be the bumper-sticker length argument against the ethics of the income tax. But that is a gross oversimplification, and only partly true. Part of income tax revenue goes to public services which everyone uses, you know, the roads and bridges type stuff. People who use those services rightfully owe money - how much money is an open question. Most of the tax goes for other purposes, mainly income redistribution schemes and military spending. This is where the ethics of the tax break down. Forcing people to hand their money over for others to spend as they see fit is ethically indefensible, although volumes have been written in defense of the practice. You could add that the income redistribution programs are actually harmful to society and help create more poverty, but that's a separate question.

So how much tax does a person really owe, in an ethical sense? Pinning down a dollar amount is difficult, as so many services are paid through multiple taxes. If the gas tax and social security withholding and other things all get thrown into the general fund it becomes hard to track who is paying for what, exactly. To further complicate things, people avail themselves to government services at various levels, some constantly, some not at all. So, being unable to determine how much tax I really should pay, and agreeing that most of the tax is used for deleterious purposes, I pay the income tax. As little as legally possible, like most people.

Instead of trying to change an unethical system by refusing to pay taxes, a strategy unlikely to pay off, (as I explain here,) I try to convince others to change the system. An ethical system would look something like this.

1. Spin off all infrastructure functions of government to private or semi-private institutions. Technology is making some of these things possible, such as systems to allow drivers to pay for the roads they use by the mile. Not only is this more efficient and cheaper than the current system, it has the important feature of linking usage to payment. When people pay for exactly what they use, and have the option of not using the service at all, the ethical conflicts dissipate.

2. Fund the remaining government services through voluntary payments.

OK, at this point you're saying, Walter are you out of your mind? No one would pay the government voluntarily! But I firmly believe, that if the government requested a small part of everyone's paycheck, say 5%, that they would get 90% or more compliance. Wouldn't you pay that? If the gov embarked on some unpopular course of action, like a war, they might see a precipitous drop in income. There's something to be said for that.

I know this solution isn't politically likely. But I'm writing about ethics today, not current political realities.

Posted by Walter at October 31, 2003 07:11 AM