Death and Taxes
Tax is THEFT!! Or is it?
M. D. Kwak
THE CONCEPT OF TAXATION has been around for thousands of years in various forms. In Australia, among others, we have personal income tax, corporate tax, GST and payroll tax. Oh, the injustice! I, for one, dread the day I’ll have to turn over my hard-earned cash to the taxman.
A poster of a masked robber (symbolising the IRS). Source: SoundCloud
But what do our philosophers have to say about taxation?
For a utilitarian, the most important thing would be aiming for the greatest total happiness for the maximum number of people. In terms of taxation, all people having a modest amount of money would generate more satisfaction in total than if the same total amount of money is concentrated in the hands of a few people. Thus, utilitarians would argue that the redistribution of wealth that taxation serves provides a better outcome overall.
However, extreme rates of tax will reduce investment incentives, which makes it hard to generate sufficient total resources and ensure long-term growth. In other words, too much taxation and redistribution may lead to less utility. Therefore there must be a balance between the ethical side of things and the economic side of things. Here, utilitarianism merely lays down a computational rule. Utilitarians need experts from other disciplines to do the computations for them.
But utilitarianism isn’t the only way of thinking about the ethics of taxation. Rather than computing the amount of utility at the outcome, deontologists think of ethics as laying down absolute moral duties or rules. One common duty is to respect people’s right to property. This could be interpreted to mean that there should be no tax at all – as after all, tax is the forcible transfer of property away from taxpayers in the form of their income. Perhaps taxation is even the theft of one’s labour and time (and can be equated to slavery).
On the other hand, the duty to respect property rights can also be used to argue that people should pay for any social resource they use (e.g. roads, hospitals, the abstract sense of safety provided by a state…), even if one did not ask for those resources to be provided.
But is it realistic to ask people to opt out of using public roads if they don’t want to pay tax? How does one quantify all the tangible and intangible benefits provided by living in a communal society?
For example, in Anarchy, State, and Utopia (1974), Robert Nozick argued that imposed taxation is a violation of our rights. He argued that property is shared initially among people through a process of acquisitions and by exchanges since then. He went on to say that if the initial acquisitions and the subsequent exchanges were just and with consent, then the current distribution of property is just, and it would be unjust to interfere with that distribution by force and without consent. He also said that if people individually agree to pay for things like a police service, that’s fine, but the majority should not force the unwilling minority to contribute.
One such challenge to this idea was by Liam Murphy and Thomas Nagel in The Myth of Ownership: Taxes and Justice (2002). They argued that the state is what gives the stability that allows high incomes to be possible. In a world without government there would be no security of property, no system of enforceable contracts, and so on. Thus, taxation is a price for being able to live in a civil society where making and keeping money is possible. In their opinion, it wouldn’t be that the existing wealth would be distributed differently without a tax-levying state; that wealth would mostly not exist.
A picture metaphorically valorising property rights as the bastion of a futuristic utopia. Source: Google.
So, some level of tax is probably moral. But a more pertinent question is whether progressive tax is morally permissible or not. Most people have an intuitive feeling that it is justified to tax more from the rich, but what are some arguments they give?
If taxation ought to reflect one’s use of public services and facilities, progressive taxation wouldn’t make much sense. At best, wealthy people use public services to an equal extent and in fact, put less strain due to their use of private medical care, education and transport.
A utilitarian would point to the diminishing marginal return of utility that wealthy people derive from holding onto more of their income, and the necessity of lifting up the quality of life for the most vulnerable.
A photo of a city. Source: Google
Some see taxation as a means of accounting for luck and ensuring broadly agreeable outcomes like equality. Some may argue that the majority of wealthy people had an unfair advantage from the outset with access to wider opportunities. Perhaps taxation should be used to bridge the gap between that inequality by providing greater opportunities for the deprivileged (even if that comes at the expense of higher taxes for high-income earners).