10.6.19

COMPARE AND CONTRAST.

In what way does paying tribute to a warlord differ from paying protection money to a mobster or allocating taxes to the police department?  It's an important question to be able to answer, in light of a recent Jonathan Aldred essay suggesting a greater role for the taxing power in addressing wealth or income inequality.  "Among other things, we will need to accept that how much people earn in the market is often not what they deserve, and that the tax they pay is not taking from what is rightfully theirs."

I wish I had come up with this formulation while I was still teaching the survey of public policy class.
Somewhere, there is a sweet spot at which tax-funded social and physical capital becomes symbiotic with the social and commercial activity that people also engage in. To one side of that sweet spot, to the left, if you will, is the slough of despond in which government becomes parasitic on commerce, and destructive of, social and physical capital. To the other side, to the right, is the cesspool of sin in which the rent-seekers become parasitic on government, which destroys social and physical capital, albeit in a different way.
Mr Aldred sort of gets this.
As the top 1% grow richer, they have more incentive and more ability to enrich themselves further. They exert more and more influence on politics, from election-campaign funding to lobbying over particular rules and regulations. The result is a stream of policies that help them but are inefficient and wasteful.
That's the cesspool of sin, inhabited by rent-seeking parasites.  Those rent-seekers might spin taxation as theft, particularly when it's their tax preferences (including the ability to deduct state and local taxes from income subject to federal tax?) but that's not what Mr Aldred wants to address.
To begin with, you could never have ownership rights prior to, or independent from, taxation. Ownership is a legal right. Laws require various institutions, including police and a legal system, to function. These institutions are financed through taxation. The tax and the ownership rights are effectively created simultaneously. We cannot have one without the other.
What distinguishes the imposition of taxes from the extraction of tribute or the shaking down of protection money is that governments exist to secure the rights to ownership, derive their powers from the consent of the governed, and when a government becomes destructive, it is the right of the people to alter it.  Peaceful transfer of power and all that, rather than bigger catapults or more aggressive hit-men.

You'd think rhetorician Jennifer Mercieca would understand this, but no.  "[Mr Aldred's essay] was a good read. For these reasons I am pro-tax and pro-government. Government is not a curse. Government is a society's greatest good. We should all be willing to support it. Tax avoidance is theft against the body politic."  Ignore for a moment that howling non-sequitur of a last sentence.  Concentrate on voters consenting to modifications of the tax code, the way the Framers intended it, rather than on the flagrant unwillingness of the so-called resistance to support the outcomes of the most recent presidential election.  Show me a tax code that sufficiently many voters are willing to support, and I will live with it, but I reserve the right to propose improvements, or support the efforts of others to offer improvements.  Working backwards, consider all the incidences of government, from Hugo Chavez working backward to Tiberius Caesar and however many warlords came before.  Then tell me that either of those two sentences are categorically accurate.  A few years ago, Walter Hudson put it more precisely.  "Taxes may be theft in the purest sense of the term. But if taxpayer dollars are utilized to protect individual rights, the real-world effect will be a maximum amount of liberty and a minimum level of coercion. That's a worthy goal, and wholly attainable." I'll be more precise than that: if the taxing authority has received its powers from the consent of the government, it is probably not engaging in theft. You might even call it salesmanship.

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