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Taxation and the State
Monday, 07 July 2008
Written by Chris Reeve
Taxation is a moral issue and any discussion of it should be based upon true principles.
I see taxation as a moral problem: how much of my money is the state entitled to?
Does it all belong to the state? If so, then we throw property rights out the window (the ancient economic foundations of society), along with the market economy, one of the great bastions of human progress.
Does none of it belong to the state? If so, then an individual is entitled to keep all the wealth they have produced. Many would remark it is hard to fund a government on voluntary donations: taxation must be compulsory or the government would not get financed, and would struggle to fulfill its function (defending life, liberty, and property rights). Of course, this is another serious moral issue: if people are unwilling to pay for something, who determines whether they should be forced to pay for it? Who determines what they should be forced to pay for? There is a whole multitude of questions that should come up in the minds of us, the governed.
Most people accept compulsory taxation as a necessary evil, some even as a public good (thanks, Keynes). The result is that there is some popularly-accepted middle ground in most countries these days: the government is entitled to some amount of one’s wealth. Another question arises: what is this amount? How is this amount determined? How much is too little? How much is too much?
A co-worker once intimated to me that governments have no rights, except those they are given by the people they govern. According to this line of thinking, the people governed decide what the government is entitled to, as the government is not an independent entity (it is dependent on someone to govern).
Supposing the governed really are pulling the strings (a genuine historical rarity), there is a fundamental issue at stake: I may be allowed to determine how much of my income to concede to the government (it is mine, after all), but under what authority or right do I determine how much of my neighbor’s, friend’s, or enemy’s wealth is transferred to the government?
Delegating this responsibility is technically feasible, but unless the government funding mechanisms are kept incredibly simple and transparent and thus trackable by most of the populus, one would easily lose track of how much the government is appropriating in various circumstances and methods (this may sound eerily familiar to some).
Since power corrupts, and absolute power corrupts absolutely, as Lord Acton might say, or, as Joseph Smith taught in D&C 121:39, “It is the nature and disposition of all men, as soon as they get a little authority, as they suppose, they will immediately begin to exercise unrighteous dominion,” we can see how once transparency and simplicity are lost, the government leviathan has a tendency to grow large quickly, as there is no unified restraining force.
People ultimately rebel once the rate of tax increases surpass a certain point, but as long as the government operates marginally below this critical level, the government is safe from the populus.
How is this problem resolved? How can taxation be limited in its effects to tyranny and oppression? The Constitution was a brilliant and inspired solution to the problem of unchecked taxation.
How can taxation be limited in its effects to tyranny and oppression? The Constitution was a brilliant and inspired solution to the problem of unchecked taxation.
The Constitution, as written, was intended to limit the scope, size, and cost of government. The thirteen states had enough of King George III’s British tyranny. They wanted freedom, and so they were very cautious in making sure that the freedoms they had fought for during the Revolutionary War would be protected by the new Constitutional government.
The idea of a written constitution is not terribly British. The British constitution was the aggregate of all previous judicial and legislative (perhaps even including executive) decisions over British political history. This constituted the British constitution.
The American perspective was much different. Thomas Jefferson put it this way: “In questions of power, then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.”
The Ninth Amendment states:
The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.
The Tenth Amendment states:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
We see these critical ideas essentially flaunted, ignored, or declared anachronistic today. The Departments of Energy, Education, and Agriculture, for instance, are nowhere to be found in the Constitution. Nor FEMA, nor standing armies, nor the FCC, SEC, National Parks, nor the EPA, nor infinite regulatory power with the environment, workplace safety, the food we eat, cars we drive, and toys we play with, nearly ad infinitum.
This has expanded into our lives with greater intrusion than King George III would have ever dreamed. We have seen a second American Revolution, one towards statism and away from individual freedom.
The Constitution was written to bind down government, and hence severely limit its powers of taxation, but it has long since been twisted, distorted, and misinterpreted as to be far different than what it was originally intended to be.
How did this happen? There are three clauses which have been completely taken out of context: the interstate commerce clause, the general welfare clause, and the necessary and proper clause. Each one of these clauses have been linked to an abrogation of rights, to the scaling up of the state in power and influence and the scaling back of individual freedom and personal liberty.
This deterioration is an on-going process that affects many aspects of government. Examination of just one example will illustrate the general pattern of how these rights are compromised. In the 1970s, Congress passed the FISA act, which allowed the Fourth Amendment (opposing unlawful search and seizure) to be violated at the discretion of the President, so long as a secret federal court was notified within 72 hours after the spying event. Notice this was not a Constitutional Amendment, but merely a congressional act.
In recent years and in response to the 9-11 terrorist attacks, the Executive Branch (President Bush) has declared this to be inconvenient and not feasible: they is spying on American citizens without FISA approval. The implication is that either the FISA court will not support specific spying incidents, or that a FISA court would be unable to deal with the volume of spying incidents. Either implication is troubling.
Civil liberties advocates threatened to sue telecom companies which had complied with Executive Branch (Presidential) requests for information and assistance.
Democrats, in general, seemed upset at the prospect of deliberately disobeying the FISA Act. Both Democrats and Republicans, in general, express a concern about American security, and both parties support increasing government power to spy, monitor, arrest, etc., to keep America safe. Both parties, for instance, support the PATRIOT Act, or at least huge portions of it. (It should be noted that historically speaking, empowering the government usually does not go far towards keeping the citizens safe).
Just this week, another congressional majority passed a compromise, supposedly the best of both worlds: the government retained the right to have warrantless searches at the discretion of the Executive Branch, and the telecoms were protected from lawsuits. Peachy.
This is one example of how rights can and are taken away gradually, by degrees, rather than in a sudden manner such as in Nazi Germany or Soviet Russia.
With respect to taxation, this means that any act of government must be paid for by the citizens being governed, via compulsory means. Increases in government power and spending mean compromises in liberty and increases in taxation (direct, indirect, or hidden, as in inflation).
