If Taxation WERE Just Like Theft


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TRANSCRIPT OF CARTOON

This cartoon has six panels, with a caption underneath the bottom of the strip.

PANEL 1
Two women pull back in shock from a mugger holding a gun pointed at them. They are all on a sidewalk; there’s a cracked wall behind them, covered with graffiti. The mugger is dressed like a very stereotypical criminal: Black knit cap, dark sweatshirt, and even a domino mask.

MUGGER: Hand over your money!

PANEL 2
The mugger walks down a sidewalk, cheerfully talking to himself and holding a wad of cash. There’s some grassy hills and trees next to the sidewalk; it might be a park.

MUGGER: Phew! That was a long day of stealing! Now to go use this money!

PANEL 3
The mugger is handing a wad of cash to a workman; the workman is carrying a shovel and wearing a hardhat. They are on a city street, with a sidewalk and alleyway behind them; there are a few large potholes visible on the sidewalk. Both are smiling.

MUGGER: Here’s some money. So you’ll fill in these potholes?
WORKMAN: That’s the job!

PANEL 4
In a supermarket, a mom, pushing a nearly empty shopping cart, is talking to her son. The mugger is nearby, holding out a wad of money to her.

MOM: I don’t know how we’ll afford groceries this month, sweetie.
MUGGER: Pardon me, I’m your mugger. Here’s some money for food.

PANEL 5
The mugger and a businessman in a suit are in a boardroom type place. The mugger is leaning forward on the table to look intently at a big diagram of a missile; there’s also a stack of papers on the table next to him. The businessman is speaking, with a slightly predatory smile on his face, raising a forefinger as if making a point. Both mugger and businessman are seating in plush chairs. There’s a huge window behind them, with a view of the cityscape beyond.

BUSINESSMAN: We have drone missiles that can flatten a city block from half a world away.
MUGGER: Impressive. I’ll buy ten thousand.

PANEL 6
The mugger (still wearing his domino mask, as he has been the entire strip) is standing on A little stage platform in a park. Next to him is a man wearing a hoodie and a ski mask. Both are speaking into microphones; a little crowd is listening to them. The ski mask guy is holding out a hand dramatically; the mugger is holding a hand to his chest in an “I’m just a regular guy” sort of gesture.

SKI MASK DUDE: I’ve got the experience to be your next mugger!
MUGGER: Which mugger would you rather have a beer with? Me!

Below the entire strip is a caption. The caption says: IF TAXATION WERE JUST LIKE THEFT.

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20 Responses to If Taxation WERE Just Like Theft

  1. 1
    desipis says:

    I like this one. I think it’d fit more with the theme if the first panel the mugger said “Hand over only some of your money!”

  2. 2
    RonF says:

    I’ve always viewed the comparison of theft and taxation as bogus.

  3. 3
    David Simon says:

    Does the graffiti in the left side of the first panel just say “background”?

  4. 4
    Ampersand says:

    Does the graffiti in the left side of the first panel just say “background”?

    I was wondering if anyone would notice that. :-p

  5. 5
    dreadfullyawry says:

    So I gotta ask – is the woman buying groceries the same woman with dark hair who’s mugged in panel one? If so, the “I’m your mugger” line is even funnier.

  6. 6
    Douglas Scheinberg says:

    The “taxation is theft” comparison reminds me of the “property is theft” comparison… if you own a vacation house you’re leaving empty for long periods of time, and I pick the lock and go inside to get out of the rain, why does a piece of paper saying you own it give you the right to have me thrown out by force? (There are indeed good reasons, but there are also good reasons for taxation.)

    See also: The Worst Argument in the World

  7. 7
    nobody.really says:

    1. I love the cartoon. I’ve already noted it in arguments.

    2. That said, I also like the “taxation is theft” argument. Amp depicts a pleasant world of taxation—but clearly, that is not the only kind. We also have the world in which the Sheriff of Nottingham come to collect taxes on behalf of King John, or where Southern blacks are expected to contribute taxes that pay for schools accessible only to white kids. Taxation finances good government AND bad government alike.

    The archetypical gang member might extort funds from local businesses to in exchange for “protection.” But is the protection entirely fictional? A gang that cares about its revenues would want to ensure that rival gangs don’t also shake down the same businesses, potentially bankrupting them. Thus, each gang would care to define its own turf, and keep out rival gangs—that is, provide “protection” against the claims of rival gangs. Likewise, one of the principle functions of any government is to displace rival (and potentially worse) governments.

    In short, I regard the “taxation as theft” argument as an antidote to people who make excessively rosy statements about democracy and “the consent of the governed.” Let’s be clear-eyed: Taxation means extorting funds via threat of force, and thus has many adverse consequences. Only people who appreciate this fact can appreciate the challenge (and fun!) of public finance—that is, finding optimal ways to pay for public goods and services.

    3. Also,

    The “taxation is theft” comparison reminds me of the “property is theft” comparison… if you own a vacation house you’re leaving empty for long periods of time, and I pick the lock and go inside to get out of the rain, why does a piece of paper saying you own it give you the right to have me thrown out by force? (There are indeed good reasons….)

    Similarly, I like this argument—especially as applied to land.

    Legal theory distinguishes between contractual rights and property rights. Contractual rights do not presume to bind anyone who has not consented to be bound. In contrast, property rights are presumed to bind everyone in the entire world, for all eternity (with the possible exception of government—and even then, government must compensate the property owner). By what authority can anyone claim property rights? The traditional basis to claim a right is property is to say, “I bought it from someone else who had a claim.” So how did THAT person acquire a claim? You end up in an infinite regress.

    (Or not quite infinite. There’s an old joke about a lawyer who is tasked with evaluating the quality of someone’s title to land—and keeps being told to look back further. He eventually concludes by saying, “X bought it from Y, who bought it from Z, who received it by grant from the Spanish Crown, who claimed the land in the name of God. And God created the land, so now we can claim property by right of creation.”)

    Philosophers have argued about this since forever. John Locke famously offered this rationale:

    Nor was this appropriation of any parcel of land, by improving it, any prejudice to any other man, since there was still enough and as good left, and more than the yet unprovided could use. So that, in effect, there was never the less left for others because of his enclosure for himself. For he that leaves as much as another can make use of, does as good as take nothing at all. Nobody could think himself injured by the drinking of another man, though he took a good draught, who had a whole river of the same water left him to quench his thirst. And the case of land and water, where there is enough of both, is perfectly the same.

    John Locke, Second Treatise of Government (1689), Book I, Chapter V, paragraph 33.

    This strikes me as a bizarre argument: Who could argue that there is an infinite supply on land, all equally desirable? Moreover, Locke wrote just at the end of England’s Enclosure Movement, wherein the “commons” were increasingly being walled off and claimed by private landowners, leaving former peasant farmers to migrate to Dickensian cities to fuel the Industrial Revolution. The absurd lengths to which Locke was willing to go to justify private land claims illustrates the difficulty of the challenge.

  8. 8
    desipis says:

    In contrast, property rights are presumed to bind everyone in the entire world, for all eternity (with the possible exception of government—and even then, government must compensate the property owner). By what authority can anyone claim property rights?

    This is why I like the idea of wealth based taxes. They are essentially paying a fee to the government (aka “everyone”) for the protection of the property rights that constitute the wealth. This makes property rights a system that everyone can benefit from, and this everyone would presumably consent to.

    So how did THAT person acquire a claim? You end up in an infinite regress.

    And this is why progressive wealth redistribution also makes sense. Yes, it’s taking with force, but that which is taken was ultimately built on a foundation that at some point was taken from someone else through force. Obviously the origins of wealth aren’t all illegitimate, so it’s necessary to find a balance within that uncertainty when considering the rate of redistribution.

  9. 9
    LimitsOfLanguage says:

    desipis,

    An issue with wealth taxes is that it strongly discourages high capital, low return businesses. Agriculture for example. The land is often quite costly and the returns quite low.

    In general, universal wealth taxes hit people who inherited and want to continue family businesses very hard.

    As this is generally considered undesired, not in the least because the impact on the economy of driving high capital, low return companies out of business, there are typically exceptions for such taxes. However, this then in turn allows wealth tax evasion, aside from the other possibilities to avoid wealth taxes.

    In practice, it seems that wealth taxes are typically evaded quite successfully by the rich and instead paid by the middle class, who are already under pressure.

    That middle class already has fairly low returns on their savings compared to the rich, so they then get hammered from both ends. Their savings grow less than the savings of the rich and the wealth tax takes more out of it than of the savings of the rich.

    Aside from that, wealth taxes also punish the frugal and benefit the financially irresponsible. With the aforementioned hammering of the middle class, this can create a trap for people, where they can never accumulate enough wealth to make certain investments, especially if they are the kind of people to whom the banks are reluctant to give (semi-)large loans.

    So this especially hurts black people, ex-cons, people from certain neighborhoods, etc.

    In general, it can counter-intuitively strengthen the gap between workers who live from pay check to pay check, who rent, etc and those who save, invest, buy homes, etc.

    A third issue is that it hurts those with little income and high wealth. For example, retirees, but also people who gotten hurt by negligence or such and who got a large settlement to pay for their healthcare costs and living expenses. A wealth tax can screw these people over immensely, turning their ‘enough to live frugally until retirement’ into ‘living under the bridge.’

    This makes property rights a system that everyone can benefit from, and this everyone would presumably consent to.

    If you propose a system that is not already implemented, then claiming that everyone will benefit and everyone will consent should really give you pause. It probably means that you are missing something. Wouldn’t it be already implemented if there was no downside?

    Very, very few policies have no downsides anyway.

  10. 10
    desipis says:

    LimitsOfLanguage:

    There are issues with all forms of taxes. The fact that there are issues doesn’t mean we shouldn’t have taxes, it just means we need to be careful how we construct them.

    An issue with wealth taxes is that it strongly discourages high capital, low return businesses. Agriculture for example. The land is often quite costly and the returns quite low.

    The demand for food isn’t going anywhere. Either the land prices will fall or food prices will (slightly) increase. The later would be offset by a reduction in income taxes.

    That middle class…

    The middle class already pays a lot in income taxes. Any wealth tax would be offset by a decrease in income tax.

    That middle class already has fairly low returns on their savings compared to the rich,

    The middle class won’t be paying a higher wealth tax rate than the rich, they’ll be paying a lower one.

    this can create a trap for people, where they can never accumulate enough wealth to make certain investments, especially if they are the kind of people to whom the banks are reluctant to give (semi-)large loans.

    So this especially hurts black people, ex-cons, people from certain neighborhoods, etc.

    Any wealth tax would have a minimum threshold covering these sorts of issues. For example, a family home would be one thing that should be excluded from the tax (capped at median house price for the region).

    A wealth tax can screw these people over immensely, turning their ‘enough to live frugally until retirement’ into ‘living under the bridge.’

    The minimum threshold would be lower enough to prevent anyone living under a bridge. Anyone with only enough capital that they are ‘living frugally’ would not be affected.

    You seem to be making an assumption for a naive, worst-case implementation of a wealth tax. That makes it difficult to have a meaningful discussion.

  11. 11
    Gracchus says:

    ” Amp depicts a pleasant world of taxation”

    Amp shows the mugger buying attack drones. I think he’s pretty clear-eyed about the fact that our taxes are not always put to good use.

  12. 12
    LimitsOfLanguage says:

    desipis,

    The demand for food isn’t going anywhere. Either the land prices will fall or food prices will (slightly) increase. The later would be offset by a reduction in income taxes.

    Sure, food will still be produced. However, the food may be produced by large conglomerates whose capital is not taxed or not as much, rather than by ‘rich’ family farms.

    It doesn’t really matter whether you care about this, as your claim that I take issue with is that everyone would benefit and that everyone would consent. Family farmers would not benefit and would not consent. Various polities, like the EU and Japan have made rules to protect family farms, so in those places a majority do not consent.

    You shouldn’t shift the goal posts to the question whether food would still be produced, as your original claim was a lot stronger than that.

    The middle class already pays a lot in income taxes. Any wealth tax would be offset by a decrease in income tax.

    That’s possible, but not a given. It depends heavily on what the laws actually are, the opportunity to evade taxes and the tendency to do so.

    The middle class won’t be paying a higher wealth tax rate than the rich, they’ll be paying a lower one.

    Yeah, just like the rich pay higher income taxes than the middle class…in theory.

    But not in practice.

    When we already have such examples, you can’t merely claim that your tax proposal will necessarily result in higher taxes for the rich just because you make the tax progressive.

    For example, a family home would be one thing that should be excluded from the tax (capped at median house price for the region).

    This will harm the middle and lower class who live in places with higher living expenses and higher salaries. In other words, it will increase gentrification.

    Many people do not seem to like gentrification at all and feel themselves harmed by it, again showing that your claim that everyone will benefit and everyone will consent is far from self-evident.

    The minimum threshold would be lower enough to prevent anyone living under a bridge. Anyone with only enough capital that they are ‘living frugally’ would not be affected.

    I think that you didn’t understand my point.

    Imagine Mary. Mary is only 25 and got hurt by negligence of her employer. She now cannot work and needs permanent care at a cost of $200k a year, including the current taxes. The judge awarded her 40 * $200k = $8 million so she can pay for her care until retirement. She now seems to be extremely rich, but that is offset by her very high costs and non-existing income. This large nest egg is her only income for the next 40 years.

    If you set your minimum threshold above $8 million, very many rich people who are able to work and don’t have these huge care costs will now be exempted from paying your wealth tax, so that doesn’t work. Yet if you set the minimum threshold much lower, Mary will suddenly have to pay a lot of taxes and won’t have enough money for care at the end of her life.

    You seem to be making an assumption for a naive, worst-case implementation of a wealth tax. That makes it difficult to have a meaningful discussion.

    The issue where people with a large settlement after an accident are impacted severely is not theoretical. I heard about cases like this in a country that implemented a wealth tax (although that country has better healthcare for those with little money, so the situation would be even worse in the US).

    You may believe that an actually implemented law will have good provisions for all those who are negatively impacted, but I see that as blind optimism and a very dangerous form of ‘the grass is greener.’ If you just assume that any proposed law will be perfect, then of course that proposed law will be better than what we have now. However, I’ve never seen such a ‘perfect’ law stay perfect when actually implemented.

    Perfection is not possible in reality.

  13. 13
    RonF says:

    Me, @1

    I’ve always viewed the comparison of theft and taxation as bogus.

    nobody.really, @7:

    We also have the world in which the Sheriff of Nottingham come to collect taxes on behalf of King John, or where Southern blacks are expected to contribute taxes that pay for schools accessible only to white kids. Taxation finances good government AND bad government alike.

    Me, now: As a resident of the State of Illinois and of Cook County (also colloquially known as “Crook County”) I am rethinking my position.

    Amp, I may well bring this cartoon to the attention of someone at the Chicago Tribune, as that last panel is not a bad summary of the election for Mayor of Chicago that’s coming up next week.

  14. 14
    desipis says:

    LimitsOfLanguage:

    your claim that I take issue with is that everyone would benefit and that everyone would consent.

    You seem to be misinterpreting my claim. My original claim was that everyone would benefit relative to there being no property rights at all. The point was that the existing property rights (no wealth tax) system could arguably be of no practical benefit to those at the bottom, thus they may not consent to such a system. I wasn’t claiming there would be no loser relative to the existing system.

    The issue where people with a large settlement after an accident are impacted severely is not theoretical.

    It might not be theoretical, but it is very much an edge case and not the sort of thing that should dictate broad tax policies. A tax system could easily grandfather in tax exemptions in for personal injury (or other) damages awards with the implication that future awards should include the consequential tax burdens as part of the damages.

    Mary would already be paying income taxes on interest/dividends, sales taxes on things she buys, etc. It’s not as if she would be living a tax free life without a wealth tax.

    If you just assume that any proposed law will be perfect, then of course that proposed law will be better than what we have now.

    I’m not assuming it will be perfect. I’m assuming the same level of sophistication as existing laws with established and obvious solutions to problem to be a part of the system.

  15. 15
    LimitsOfLanguage says:

    desipis,

    My original claim was that everyone would benefit relative to there being no property rights at all.

    OK. I didn’t interpret it that way because that is not the actual choice at hand.

    We already have property rights pretty much everywhere in the world, wealth tax or not.

    It might not be theoretical, but it is very much an edge case and not the sort of thing that should dictate broad tax policies.

    Add up all the edge cases, including the other examples I gave and you do get a substantial number of people impacted.

    My point is not that such a tax is risky for having one issue, but rather that all the issues put together (including tax evasion issues) make it risky and of questionable benefit.

    Mary would already be paying income taxes on interest/dividends, sales taxes on things she buys, etc. It’s not as if she would be living a tax free life without a wealth tax.

    True, but the current taxes are factored into the compensation she got.

    I’m assuming the same level of sophistication as existing laws with established and obvious solutions to problem to be a part of the system.

    That bad, huh?

    ;)

    Seriously though, an issue is that some laws are effectively unfixable, because any possible fix introduces new issues. For this law, a big issue is that any exception you make runs a large risk of becoming a tax evasion opportunity.

  16. 16
    Kate says:

    If you set your minimum threshold above $8 million, very many rich people who are able to work and don’t have these huge care costs will now be exempted from paying your wealth tax, so that doesn’t work.

    Why doesn’t it work? Warren’s proposed wealth tax starts at 2% for assets over $50 million and 3% for assets over $1 billion. This wouldn’t touch people with disability settlements, retirement accounts, family farms and small businesses. The thresholds being proposed are far too high for that to be an issue. Most of us have no beef with garden variety millionaires. They aren’t the ones sucking up all the oxgygen. Its the people hoarding tens of millions who are causing the problems.
    That being said, aside from the fact that I trust Elizabeth Warren’s judgement on these issues more than my own (she’s currently my first choice in the Democratic field), I’m not convinced a wealth tax is the way to go yet.

    In practice, it seems that wealth taxes are typically evaded quite successfully by the rich and instead paid by the middle class, who are already under pressure.

    And there’s the rub. Enforcement. There would need to be a whole parallel IRS infrastructure to deal with investigation and enforcement (which, to be fair, Warren budgets for). Nonetheles, we might be better off radically simplifying the income tax system by stripping loopholes and raising top marginal rates and capturing exorbinent wealth through inheritance taxes. In any case, I’m going to be looking very carefully at what the nominees have to say about enforcement of their tax plans.

  17. 17
    LimitsOfLanguage says:

    Kate,

    An issue with setting the threshold so high is that you are actually only targeting fairly few people, which means that the actual tax income is low, while the bureaucratic cost is high.

    With so little tax income from a wealth tax, you can’t meaningfully reduce taxes elsewhere, so you can’t actually meaningfully reduce or eliminate other taxes.

    I think that this criticism of her plan is quite sensible.

  18. 18
    desipis says:

    LimitsOfLanguage:

    An issue with setting the threshold so high is that you are actually only targeting fairly few people, which means that the actual tax income is low, while the bureaucratic cost is high.

    This isn’t a problem if one of your goals is to push back against the concentration of wealth into the hands of “fairly few people”. You’re also making a baseless assumption that the “bureaucratic cost is high”.

  19. 19
    LimitsOfLanguage says:

    Warren herself has said that more IRS agents would need to be hired. I see that as a recognition by her that her plan has high bureaucratic costs.

  20. 20
    Kate says:

    Warren herself has said that more IRS agents would need to be hired. I see that as a recognition by her that her plan has high bureaucratic costs.

    Moving from, will need to hire some more IRS agents, to “high bureaucratic costs” is quite a leap.
    Warren estimates her plan would raise $2.75 trillion over ten years (or $275 billion/year). The average salary of an IRS agent is $51,420. You could hire over 250,000 agents and still have salary costs below 5%. Only 75,000 families are expected to be paying this tax. That’s more than three agents working full time on each family.

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