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Taxation and debt

Taxation is theft. National debt is slavery. Well, that is what some anarchists say, anyway. Is it hyperbole? Let’s see. Taxation means forcing you to pay for whatever the government says you must. What if you disagree with spending money on something the government wants? What if you have something better to buy with it, like a house? What if you would rather give your money to the poor? What if you take the option of not paying taxes? Men with guns come to your home and send you to jail. If you refuse, they shoot you. Sounds like theft to me.

Of course, not all government spending is done by taxation. A lot comes from debt. Debt is like free money…until the collectors come to call, by which time you owe more than you did before. Politicians do not pay the debts; you do. Most Americans, depending how much they pay in taxes (and because of things like sales tax, import taxes and so on, all Americans pay taxes), spend three, four, maybe six months working so that they can pay their taxes. That means you have to work to pay the salaries and generous retirement packages of politicians, bureaucrats, soldiers, police, lobbyists, lobbyists’ clients, the executives of firms bailed out by the government, um, did I miss anyone? If you don’t pay…well, you know. Taxes and debt are therefore a kind of forced labour.

If we define taxation more broadly, there are more forms of it. Not only is it the money taken from paycheques. For those who believe the poor or people who do not pay income tax do not pay tax, think again. Everyone pays sales taxes. Everyone pays for corporate taxes, because that money has to come from someone, so it comes from employees’ pay, or in the form of higher prices. Everyone pays when the value of a currency is inflated away through printing money. Everyone who buys anything imported pays when free trade is restricted. Everyone pays higher prices due to regulatory barriers to competition in every industry. Everyone pays administrative fees to bureaucrats when they want something the other millions of dollars they have paid in tax should presumably already have paid for. And in the US, there is a tax for renouncing one’s citizenship, and a tax on all capital gains made by those who do. Government policies steal from us at every step.

And let us not be confused as to why the government is in debt. It is not because it does not raise enough taxes; government is in debt because it spends like a teenager with his dad’s credit card. After all, if I can get a group of people (a special interest group) to vote for me by spending a billion dollars of someone else’s money, why wouldn’t I? The billion-dollar handout occurs over and over again between elections. The people do not notice small-yet-never-ending increases in their tax burdens, just like they do not notice the small reductions in their freedom that happen with every law passed, like frogs in a pot on the stove. We now see why spending hardly ever decreases, unless it dips slightly due to campaign promises and public pressure, and then goes back up again later. If you cut spending, a group turns against you, stops voting for you and smears you in the press. So why stop spending? That kind of thing is known in politics as “bravery” and “leadership” and it barely ever happens.

Even the self-styled fiscal conservative governments increase spending. George W. Bush might be the most obvious example, but the same goes for Ronald Reagan, whose government fed the debt every year he was in the White House, and whose spending (or as politicians like to say, “investment”) on the War on Drugs, nuclear weapons and military interventions around the world sent deficits soaring; same with Brian Mulroney, who introduced Canada’s Goods and Services Tax, which 80% of Canadians opposed at the time but which exists to this day; same with Margaret Thatcher, under whom expenditures rose every year she was in power because the Iron Lady just couldn’t keep her hand out of the public cookie jar.

The US government debt right now stands at around $13t, and it is growing at about 10% a year. According to the US Treasury, the government took $414b of your money to service that debt in 2010, and we should probably take that as a minimum since it is the government’s own projection. After defense, social security and Medicare, interest payments are the largest government disbursement priority, and they are growing. About half of the interest paid on your debt goes outside the country. And as the US’s credit rating deteriorates, holders of US public debt will demand better interest rates. As a result, the Congressional Budget Office estimates that over the next decade, you will pay nearly $5t just on debt. Five trillion dollars. And that’s barring any wars on Iran, or Syria, or wherever the next target is. You don’t think people on the ground could find something better to spend that money on? Say, food, housing, clothing, that kind of thing? No, democrats, you don’t think that; because very few democrats are willing to forego the programs that fuel the debt.

Recently, Republicans and Democrats valiantly came together to reduce federal spending by $38b. That’s over one year, of course. The IRS costs $12b a year to run. Spending for the War in Afghanistan is about $66b a month. The deficit is still growing, which means the debt is still growing, which means you and your children will need to pay more and more over time. That is, unless the US government defaults on its debt, in which case I am sure everything will be fine.

Do you know how many hours it takes Americans to fill out their byzantine tax forms? 7.6b hours a year. Never mind the $12b in direct costs for the IRS; the costs of compliance with the tax code are $338b, a loss of more than $1000 for every man, woman and child.

By the way, a lot of the biggest corporations do not pay taxes. That’s because the people who make you pay taxes don’t make their friends pay. They don’t have to. They have the power, not you.

But let’s try raising taxes. Let’s take more of your money away. It’s not like you earned it. What happens when they raise taxes? Well, here’s an analogy. What happens when someone who cannot control their spending wins the lottery? At first they are flush with cash, so they buy a new house and a couple of classic cars, a cellar full of wine from a country they’ve never heard of and a big pile of cocaine. When the money dries up, sooner than they expected, they are actually deeper in debt than ever and now have a drug habit that is nearly impossible to kick. If every penny of the tax increase went to paying off the debt, or even education or something, then it might be worth it. But when a government finds itself flush with cash, it does what the lottery winners do and flushes it down the toilet. Come gather round, special interest groups, this one’s on the public!

Maybe we should just tax the rich, right? Those rich bastards, take their money and then they’ll just spend less on caviar, right? Is that how it works? First, most of those people got rich by providing goods and services people willingly paid for on the free market, which means they earned their wealth. Second, when you tax the rich, including entrepreneurs, venture capitalists, investors of all stripes, you reduce the amount of money that they have to invest in new businesses. These are the people who create the jobs and the wealth that the people on the bottom take for granted. You want to punish them? You will punish everyone with your ingratitude and jealousy. Third, taxation is theft, no matter who is subjected to it. Forcing other people to pay for you and your favourite programs is still force, however much you like your subsidised medications.

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Categories: Democracy, Taxation Tags: ,
  1. Abdelrahman Hassan
    December 28, 2011 at 2:29 pm

    Can you elaborate a bit on the corporations that don’t pay taxes?

    • December 29, 2011 at 1:18 am

      Hi Abdelrahman,

      The simple answer that perhaps I should have put in the text is at these links: https://www.google.com/search?aq=0&oq=corporations+don't+pa&ix=hea&sourceid=chrome&ie=UTF-8&q=corporations+don't+pay+taxes

      That said, to say that corporations even pay taxes is in a way incorrect. After all, a corporation is not a person. People pay corporate taxes, in part through higher prices and in part through lower wages. Like most business regulations and complicated tax codes that strangle small businesses, like central bank-induced inflation that lowers the value of the currency we hold, even things that are disguised as something else are taxes on us.

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