Pursuit of Truthiness

my gut tells me I know economics

Taxation is Death

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Disclaimer- I hope this post does not get read widely, because it is a relatively controversial take on a peripheral part of what is mainly an open-and-shut case of police abuse. People of different political persuasions seem to actually be coming together on the main issue in this case- liberals seem furious about it even beyond the race angle, major conservatives are calling it a tragedy, and when was the last time Reason magazine celebrated the US Attorney General for prosecuting someone? But many others are saying those things well, so this was what remained on my mind unsaid.

Many anarcho-capitalists want to end all taxation because “taxation is theft”. I have always had a hard time getting worked up about this- sure, taxation does seem like a type of theft, but the practical benefits of a tax system seem to outweigh this abstract flaw.

Then they note that if you try to resist the theft by not paying, you could get thrown in prison, an even more serious violation of your rights. But in practice this happens so rarely; almost everyone just pays up, and never really even thinks about taxes as coercive measures backed by physical force. It seems like the tax system more or less works, and funds the government’s worthwhile endeavors. Sure, it has flaws, but consequentialists and economists like myself usually focus on flaws like how most taxes distort the incentives to save and invest- flaws that can be fixed without scrapping the idea of taxation.

But sometimes, events make the nature of the system hard to ignore. Government taxes and regulations really are backed by force- and sometimes, given a government staffed by imperfect humans, something as well-intentioned a tax on cigarettes can lead not only to people in jail, but to someone being killed.

The idea that taxation is theft, backed by force doesn’t mean we should eliminate all taxes. But it is one of many things worth keeping in mind when you propose a tax. It is something I should have been thinking of when I last taught microeconomics and enumerated to the class the benefits of Pigouvian taxes- I even used the example of a cigarette tax.

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Written by James Bailey

December 4, 2014 at 7:26 pm

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