Myth: Taxes are theft.
Fact: Taxes are payments for the public goods and services you consume.
Taxes are part of an agreement that voters make with government,
a contract in which citizens agree to exchange their money for the government's
goods and services. To consume these goods and services without paying
for them is itself theft, and is rightly punished as breach of contract.
Some may object that they have not agreed to the contract, but if so, then
they must not consume the government's goods and services. Furthermore,
contract by majority rule is better than by minority rule, one-person rule
or anarchy (which results in kill-or-be-killed). Opponents of taxation
under democracy are therefore challenged to find an improvement on democracy.
Many conservatives and libertarians make the following populist
"If you don't pay your taxes, men with guns will come to your
house, arrest you, and seize your property."
The implication here is that you are being extorted to pay taxes, and
this theft amounts to a violation of your rights. Although the events described
are technically correct -- you should expect such a response from any crime
you commit -- the implication that the government is aggressing against
you is false, and not a little demagogic.
Taxes are part of a social contract, an agreement between voters and
government to exchange money for the government's goods and services. Even
libertarians agree that breach of contract legitimates a police response.
So the real question is not whether a crime should be met with "men
with guns," but whether or not the social contract is valid, especially
to those who don't agree with it or devote their allegiance to it.
Liberals have two lines of argument against those who reject the idea
of the social contract. The first is that if they reject it, they should
not consume the government's goods and services. How they can avoid this
when the very dollar bills that the economy runs on are printed by the
government is a good question. Try to imagine participating in the economy
without using public roads, publicly funded communication infrastructure,
publicly educated employees, publicly funded electricity, water, gas, and
other utilities, publicly funded information, technology, research and
development -- it's absolutely impossible. The only way to avoid public
goods and services is to move out of the country entirely, or at least
become such a hermit, living off the fruits of your own labor, that you
reduce your consumption of public goods and services to as little as possible.
Although these alternatives may seem unpalatable, they are the only consistent
ones in a person who truly wishes to reject the social contract. Any consumption
of public goods, no matter how begrudgingly, is implicit agreement of the
social contract, just as any consumption of food in a restaurant is implicit
agreement to pay the bill.
Many conservatives and libertarians concede the logic of this argument,
but point out that taxes do not go exclusively to public goods and services.
They also go for welfare payments to the poor who are allegedly doing nothing and
getting a free ride from the system. That, they claim, is theft.
But this argument fails too. Welfare is a form of social insurance. In the private
sector we freely accept the validity of life and property insurance. Obviously, the
same validity goes for social insurance like unemployment and welfare. The tax
money that goes to social insurance buys each one of us a private good: namely,
the comfort of being protected in times of adversity. And it buys us a
public good as well (although tax critics are loathe to admit this). If workers
were allowed to unnecessarily starve or die in otherwise temporary setbacks,
then our economy would be frequently disrupted. Social insurance allows
workers to tide over the rough times, and this establishes a smooth-running
economy that benefits us all.
We should also note that the program most popularly
known as "welfare" -- Aid to Families with Dependent Children -- takes up less than
1 percent of the combined federal and state budgets. (1) That tax critics would
raise such a big stink over such a paltry sum begs an explanation.
Their typical response to this is to expand the
definition of welfare. But suppose we include all programs that involve
one-way transfers of wealth with no expectation of immediate repayment or
return services. According to the Library of Congress, in 1992 such expenditures at
the federal, state and local level came to $289.9 billion, or
12 percent of their combined budgets of $2,487 billion. (2) It still seems
incredible that such fiery anti-tax rhetoric is reserved for 12 percent of
a person's taxes. But keep in mind that
this 12 percent includes such popular middle class programs as Medicaid,
student grants, school lunches, pensions for needy veterans, etc. Voters have
ultimately agreed that these programs provide not just social insurance, but social
investment. Certainly our society benefits by enabling
more young people to attend college. Some may dispute the need for such social insurance
and investment, but the majority of voters have (ultimately) agreed to put it
in our social contract.
And this brings us to the second line of liberal argument: the best form of
social contract is majority rule. It's not perfect,
but its better than minority rule and still better than one-person rule.
Government by unanimous consent is impractical, since it almost never happens,
and society by anarchy results in "kill or be killed." So what
do libertarians and conservatives propose in democracy's stead?
Of course, nearly all democracies have constraints on majority rule,
designed to protect the rights of individuals and minorities. In the U.S.,
these are embodied in our constitution. But to be legitimate, a constitution
must be a document of the people; hence it must be approved by the majority.
(In the U.S., a supermajority.) And the constitution of the United States
clearly allows taxation. Article I, Section 8, states:
"The Congress shall have power to lay and collect taxes, duties,
imposts and excises, to pay the debts and provide for the common defense
and general welfare of the United States."
And the 16th Amendment states:
"The Congress shall have power to lay and collect taxes on incomes,
from whatever source derived, without apportionment among the several States,
and without regard to any census or enumeration."
But should the constitution allow taxation? If conservatives
and libertarians feel that it should not, then it is up to them to describe
a constitutional or political system that would work better than majority rule. Do they prefer
minority rule? Or dictator rule? The only alternative to these historical
atrocities is self-rule -- but again, that's anarchy, kill-or-be-killed.
Of course, some may wish to keep the current political structure, and
simply convince the majority of voters to pass an anti-tax amendment. But
if they do, then they are legitimizing the social contract… which hardly
puts them in a position to call taxation "theft."
Understanding the above points allows you to see through common anti-tax
arguments. Here is a real example taken from the Internet:
The "How Many Men?" Argument (1)
Suppose that one man takes your car from you at gunpoint. Is this
right or wrong? Most people would say that the man who does this is a thief
who is violating your property rights.
Okay, now let's suppose that it's a gang of FIVE men that forcibly
takes your car from you. Still wrong? Still stealing? Yup.
Now suppose that it's ten men that stop you at gunpoint, and before
anything else they take a vote. You vote against them taking your
car, but the ten of them vote for it and you are outvoted, ten to one.
They take the car. Still stealing?
Let's add specialization of labor. Suppose it's twenty men and one
acts as negotiator for the group, one takes the vote, one oversees the
vote, two hold the guns, one drives. Does that make it okay? Is it still
Suppose it's one hundred men and after forcibly taking your car they
give you back a bicycle. That is, they do something nice for you. Is it
Suppose the gang is two hundred strong and they not only give you back
a bicycle but they buy a bicycle for a poor person as well. Is it still
wrong? Is it still stealing?
How about if the gang has a thousand people? ten thousand? A million?
How big does this gang have to be before it becomes okay for them to
vote to forcibly take your property away without your consent? When, exactly,
does the immorality of theft become the alleged morality of taxation?
This argument is based on a faulty premise of ownership. Suppose the gang of ten
men had helped you buy the car, pitching in with a loan that covered 29
percent of the sticker price (which is about the percentage of the GDP
devoted in the United States to taxes). And suppose they simply wanted
return payment. By not returning the favor, it is you who become the thief.
If you want a car that is 100 percent yours, simply pay the full price
of one. Of course, by accepting the loan from the gang of ten men, you
were able to buy a better car than you could afford in the first place…
Arguments like "taxation is theft" are extremely egoistic.
It's the equivalent of saying "Everything I make is by my own effort"
-- a patently false statement in an interdependent, specialized economy
where the free market is supported by public goods and services. People
who make arguments like this are big on taking these goods but short on
seeing why they need to pay for them. It doesn't matter that they believe
these public services should be privatized -- the point is that the government
is nonetheless producing them, and they need to be paid for. It doesn't
matter that any given individual doesn't agree with how the government
is spending their money -- many people don't agree with how corporations
pollute the environment, but they still pay for their merchandise. It doesn't
matter that any given individual thinks some government programs are wasteful
and inefficient -- so are many private bureaucracies, but their goods still
demand payment. If tax opponents argue that a person doesn't have to patronize
a company he disagrees with, then liberals can argue that a person doesn't
have to vote for a public official he disagrees with.
Ultimately, any argument against paying taxes should be compared to
its private sector equivalent, and the fallacy will become evident.
Return to Overview
1. Library of Congress, Congressional Research Service, "Cash and Noncash Benefits
for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data,
FY 1990-92," Report 93-832 EPW, and earlier reports; U.S. Bureau of the Census,
Government Finances, series GF, No. 5, 1992.
3. Glen Raphael,
A Non-Non-Libertarian FAQ: Responses to Mike Huben.