Letter to | the Editor

To the Editor:

I thought you might find this piece on taxation of interest. The author of most of this piece - from December of 1995 - is Alvin Sylvain, who is replying to statements by Rex Bennett.

Said Bennet, “Taxes are not stealing, but the costs of living in a particular society, expecially in a democratic society where the people can influence taxes by their votes.”

“Rather than regurgitate the debate as to whether the “legal” definition of “stealing” matches up with the de facto definition of “taxation,” let me just *assume* for purposes of discussion that Taxation Equals Theft. PARTICULARLY in a democratic society where the people can influence taxes by their votes.

“There are a number of dynamics which influence and are influenced by taxation. In a democratic society for example, people vote for benefits they believe someone else will pay for. This is de facto stealing, using government as the thief. Government loves this kind of taxation, because it’s much easier to get votes for. Not as many people vote for benefits they have to fund personally.

“Corporate taxes and taxes on the “Rich” are favorite political footballs. Since most of us don’t define ourselves as “Rich,” it’s easy to vote for politicos who advocate that. (Many define “Rich” as “Someone who makes more money than I do.” Clinton nicely defines “Rich” as “Someone who makes anything at all.”)

“But what happens when these taxes are implemented? The truly “Rich” shift their money around to their own best advantage. They cn “buy” favorable legislation (“loopholes”) from the same government the voters try to use for their stealing If necessary, they can ship their assets out of government’s reach.

“(One of the reasons the Swiss banking system has historically been so popular is that they have refused to succumb to demands from other nations to divulge information on personal accounts, unless the nation could prove a violation of *Swiss* law. Tax evasion isn’t against Swiss law. This is changing however, largely under bullying from the U.S., trying to catch more victims in our failed “Drug War.”)

“At any rate, the “Rich” became “Middle Class” on paper, so that the only way to really increase tax revenue is to get it from the Middle Class. (The Poor, naturally, don’t have any money.)

“What happens if you increase Corporate taxes? Prices go up. The tax is again, paid by the Middle Class.

“So all this rhetoric about “Taxing the Rich” is just that: rhetoric.

“The problem, returning to the “democratic society,” is that the majority voting block doesn’t seem to know this. It is still political suicide to promise anything other than lower taxes, increased spending AND a balanced budget.”

Bennett again, “Keep in mind that most people don’t mind paying taxes because they understand the neccesity of them.”

“Many more would not only “mind,” but they’d be seriously offended if they knew what really happens to a large chunk of their tax dollars. Just to pick one famous example, private charities, for the most part, get an average of 80 cents out of each donated dollar to the recipient, while (surprise surprise!) the ratio is reversed for government-sponsored “charities” (i.e., welfare). For another, there are subsidies for anti-smoking campaigns, and subsidies to tobacco farmers.

“People don’t mind small taxes. (People don’t mind annoying relatives at Christmas, so long as they’re gone well before New Year’s.) England once boasted having the highest rate of voluntary taxpayer compliance n all of Europe. At the time, their tax rate was incidentally also the lowest (about 5 percent).

“Today, however, the average American family pays over 40 percent of their gross income to taxes. Granted, there are other nations with higher tax rates. But few are the economic giants we are (were? How much of our *current* economic wealth is mere “coasting”?)

More Bennett, “There is no profit in any business that is not subsidized by society. Because it is such a complex interrelationship people all too easily overlook it.”

“Certainly it’s a complex interrelationship, but at the heart of it all is *INDIVIDUAL EFFORT*. Society may provide (or fail to provide) the opportunities and the groundwork, but the bottom line is that without business entrepreneurs, capital investors, and laborers (i.e., INDIVIDUALS), the work WILL NOT BE DONE. If the work isn’t done, society suffers. The best way to encourage people to do the work we need is to ALLOW the PROFIT MOTIVE. You get better results with a carrot than with a stick.

“Profit is society’s way of rewarding businesses that provide it with what it needs. It’s extremely complex and interrelated. There’s no computer model that can possibly handle all the variables. But at the heart is the fact that when a business can provide goods or services that society needs, society rewards that business with profit. When a business fails to provide something society needs, society punishes it with bankruptcy. Hence, people (i.e. INDIVIDUALS) are encouraged to provide things society truly needs.

“‘Society’ is a huge web of interacting individuals, with a possible two-way connection between any two. It does not exist outside the individuals who make up the nodes or the transactions that make up the threads. The larger the society, the more the potential links, increasing faster than exponentially. Each transaction in the web provides a profit for both ends (or it doesn’t happen). Some kinds of profit (e.g. money) can be accumulated to provide seeds whereby more transactions can take place, causing more profit.

“Two people deal with each other voluntarily because they each see a gain in the relationship. The stability in that relationship allows others to build more relationships. The web is so interdependent and so strong, it succeeds and prospers while governments come and go, although it succeeds much better when governments stay out of the way.

“When governments *don’t* stay out of the way, by restricting the threads (transactions) or the nodes (individuals) or by taxation (which takes a little from both), the web *is made weaker*.

“We truly stand on the shoulders of our predecessors, and they on that of theirs, but at each level, we stand only because we flex our own muscles. No one can exercise our own muscles for us, and none of us can exercise anyone else’s muscles for them. We don’t owe anyone the fruits of our labors, nor anyone owe use the fruit of theirs.

“When you take the fruits of someone’s labor by force (taxation) you weaken that person. When you weaken one of the nodes in the web of society, you weaken the web. The more nodes you weaken, the weaker the web becomes. It doesn’t matter if they get a little bit of it back in the form of “services”. It doesn’t matter if some of the people jump for joy at receiving some pittance in exchange. All that matters is that, if people were to choose their own course for their own resources, most would choose differently.

“People automatically choose a course *they* find to their benefit not to where some Government Expert thinks is their benefit. They spend their resources in ways they find personally strengthening. Spending someone’s resources by force in any other direction weakens them. If the people’s and the government’s ideas were identical, it wouldn’t be necessary to take the resources by force.

“Even in cases where people receive the exact benefits they’d want (police, defense, fire protection, etc.: you know, the things that used to take up a goodly fraction of government spending) it costs more than if they spent it themselves. The agents of spending have no real motivation to optimize the transactions, since there’s no real connection between those and themselves: they’re literally spending someone else’s money, and therefore hardly care. Again, *weakening* the original nodes, therefore *weakening* the web of society.

“I’m sorry, there are just no two ways around it. The only way you can make the claim that Taxation is NOT Theft is to use a dictionary definition: to wit (Merriam-Webster Collegiate, from memory), “theft: the UNLAWFUL taking of someone’s property without permission” (emphasis mine, of course). Taxation, unfortunately, is somewhat lawful.

“But, if you add the “immoral” or “unethical” taking to that definition, THEN you can call taxation theft.”

It should be noted tat today only about 52 percent of the people pay income taxes, most of which go to the 48 percent who don’t. Various government vote-buying programs (i.e. welfare, “entitlements,” block grants, etc.) make up well over 70 percent of all federal government spending, defense takes another 15 percent and interest on the national debt about 6 percent. That leaves less than 9 percent for all the rest of the government. Socialist Security is a huge vote-buying program but is separate - at least in theory - from other government spending (it should be noted that congress has stolen every dime contributed to the “Social Security Trust Fund” and blown it on their favorite vote-buying programs, replacing that money they took with IOUs (U.S. Treasury bonds) that the taxpayer is going to have to redeem).

While the American people on average pay about 40 percent of their incomes to the national government in income tax, that isn’t the whole story. Back in 1997 a friend of mine compared total incomes in the country with the stated incomes of the state and national governments and found that total government revenue (taxation) equalled about 67 percent of total individual incomes. I’m sure that percentage is higher today.

Bob Ackley

Emerson