Wednesday, 29 February 2012

Taxation: What's the worst thing it can be called?

Hi guys, welcome to Orygyn!

As promised, here's the follow-up to my most recent and most controversial video ever: "Taxation Is Not Theft". The libertarian/anarcho-capitalist community on YouTube has come down like a tsunami on this video so there's a lot to address here. Let's get to it.

The first thing I want to say is that in that video, I was not espousing any opinions on the greater issue of the merits of taxation. Most people assumed I disagreed with them on that greater position. I deliberately didn't want to get into that because then the arguments would be off-topic. I wanted the issue of the video to be addressed. Despite these assumptions, I was, for the most part, successful. All discussions were mostly on topic.

A lot of people, it seems to me anyway, failed to understand my argument. Not all, but enough to warrant a restatement and a closer look so let's do that now.

I'm going to go through a specific type of tax. We'll start with VAT (value added tax, or sales tax in America). Aside from the government, there are 2 relevant perspectives to look at: that of the customer and the business owner.

Customer: I walk into a supermarket. I scour the shelves for my weekly produce and when I'm finished I take it to the counter or self-service checkout. Now, VAT is not paid on all items but let's assume that in this example, everything I've bought is tax-deductible. At the checkout, I have 2 options:

Option 1: Pay for my items. At this point I will be handing over the money including the cost of the VAT. I can't choose not to pay the VAT.

Option 2: I take my items back, and walk out without having bought anything or paid any tax.

So what's happened here? Well, I had the option to pay for my items and hand over the money myself, some of which will go to the government, or to leave and not part with any of my money. No-one took any money from me against my will in either case, and no-one forced me to hand it over under threat of violence. Now let's look at a dictionary definition of theft. Specifically Merriam-Webster.


a: the act of stealing; specifically: the felonious taking and removing of personal property with intent to deprive the rightful owner of it b: an unlawful taking (as by embezzlement or burglary) of property
obsolete: something stolen
: a stolen base in baseball 

In the above case nothing was stolen. This means that none of the conditions in the aforementioned definition have been met. The only possible avenue to argue against the above is by disputing this definition of theft. However, there is a problem with doing this. Language has no objective basis. In other words, any statement saying "theft is <insert definition here>" can neither be true or false. Ultimately, then, any argument of that sort is really a contest for the most popular definition of theft, and in either case, the argument "taxation is theft" or "taxation is not theft", by extension, can never be true or false. It too becomes the focus of a popularity contest.

Now what about the business owner?

Business owner: I want to set up a supermarket. Having at least the essential minimum amount of knowledge of what is expected of me, I know that I will have to give a certain amount of money from each sale to the government as tax. This time, I have 3 options.

Option 1: Set up the business in full accordance with the law. This might mean having to declare yourself self-employed, signing certain pieces of paperwork etc. In the end, I have a supermarket where people come in to buy items, I keep most of the money minus running costs, wages etc. and the rest is VAT.

Option 2: Set up the business. Avoid declaring yourself self-employed, signing all relevant paperwork etc. I pay no tax of any sort, and I'm operating outside the law. The chance of being caught for tax evasion is very high.

Option 3: Don't set up the business. No money is earned, nothing is paid in tax.

Options 1 and 3 are similar enough to the customer scenario that the same conclusions can be drawn. Where the "taxation is theft" camp have their strongest point, however, is option 2. In option 1, you've explicitly expressed your consent to the government in multiple forms. You might not like their terms, but you've agreed to comply with them. Nothing can be said to have been stolen from you there. Option 2, however, is different. You've not, explicitly at least, agreed to anything. You've set up your business, the government has got wind of your tax evasion, and they are now acting. How they act is location specific but you could be fined, you could have letters sent to you asking you to comply or you will have to be taken to court, or you may just be arrested right there and then.

Many people in my comment section have, in some form or another, pointed to this specific case as an example of the government committing theft. What the government deprives you of is location specific but it could be your money (fine), and is always your business premises, unless you comply with the terms they set to bring your business operations into the realm of being legal. Back to the definition.

The government have taken your premises (and perhaps money) off of you without your permission. This would certainly then seem to be an example of theft. However, I would argue that in this case, there is an overriding factor.

The government rules the country. What this means is that they get to set the rules for what goes on in the country. Another way of saying this is that the government has control over the land within the country's boundaries. There are other types of property besides private property: public and state. State property can be said to be "owned" by the government: zoos, libraries, legislative buildings, museums etc. Public property is everything else. In the case of all 3 types of property, their existence is predicated on the existence of the claim that the government has over the country's land.

At this point I'd like to bring up the "legitimacy" argument which proponents of the "tax is theft" argument left in my comment section:

"The only thing that matters is whether the government has a legitimate rule over the country. If they do not, taxation is inarguably theft."

The problem with this argument stems from the word "legitimate". By what set of criteria can a government be judged to be legitimate? It can't simply be your personal opinion otherwise all I need to do to refute your argument is disagree with you. It again boils down to a popularity contest over the most popular set of criteria. No, an objective basis is once again necessary. So what could that objective basis be? Democracy? No, that would mean anyone could vote out the owner of anyone's property. The Constitution? Where does it get its legitimacy from? The Founding Fathers? Same problem. 1 person suggested that we start with the idea that you own your own body and progress from there: you own the products of your labo(u)r, you own what you trade from those products. While this is probably the strongest basis, it is still not objective. Why do I own my own body? Because I control it? Because it's part of what makes up me? No, it is me. If ownership is synonymous with identity or having control of something, the product of your labo(u)r doesn't fit this description. Even if someone were to hack one of your limbs off and run away with that, you no longer have control over that limb and since it's no longer a part of your body, it's no longer a part of you. All I have to do is ask why you own your body and any possible argument ultimately leads nowhere or leads back to the premise and is therefore circular.

Without an objective basis for having a legitimate claim over the country, no property is legitimate. The idea of property rights itself is no longer possible and by extension, theft is impossible.By asserting that taxation is theft, you are asserting that property rights do exist, and so someone must have a legitimate claim over the country. Without this claim and some rule the claimant has made as to how property rights function in the country, there is no rule so there is no basis for attaining property or asserting that you have it. The fundamental axiom of property rights then is that someone must have a claim over the land in order for property to exist at all. There is no such thing as inalienable rights, the ruling government determines the terms and conditions of these rights. Any counterargument which involves the Supreme Court or the Constitution is inapplicable because the government ultimately decides whether to follow the edicts or rules of either. Democratic and Republican governments alike have ignored both on multiple occasions with no more consequence than public outrage, if even that.

Back to the business owner's option 2 in the VAT scenario. He hasn't explicitly agreed to pay any tax, but by setting up a business at all, he has attained private property on which to build his supermarket. Whoever previously owned the property (or who still does in the case of a lease) is irrelevant, the existence of those property rights at all is contingent on the government's claim over the country. When the government gets wind of the rogue business owner's activities, if any action they take involves confiscating the business owner's property, what they are doing then is enforcing the terms and conditions of those rights. The government has now deemed the business owner unworthy of those rights for failing to comply with the terms and conditions they were granted under. In other words, something is only your property in so far as you agree to comply with the terms and conditions of the property rights.

I must emphasise that I am simply arguing here that the government is not committing theft, I am not passing a moral judgement on what they are doing. You are still free to condemn the government for their actions, it is just inaccurate to specifically call it theft.

Now another question? If taxation can't be called theft, what's the worst that it can be called? Blackmail? Extortion? Let's have some Merriam Webster definitions for both.


: a tribute anciently exacted on the Scottish border by plundering chiefs in exchange for immunity from pillage
a: extortion or coercion by threats especially of public exposure or criminal prosecution


: the act or practice of extorting especially money or other property; especially: the offense committed by an official engaging in such practice
: something extorted; especially: a gross overcharge

These definitions lead to some very interesting conclusions. For example, every law ever made fits the second definition of blackmail as long as it's enforced. Anarcho-capitalists could certainly use this, but to call taxation blackmail under such circumstances would then be fairly hollow. If your ultimate aim is to argue that taxation is morally bankrupt, this broad definition devalues that effort. Since blackmail is defined to be a special case of extortion, I think we can leave it there.

There were 3 main arguments raised in response to my video. 1 was the legitimacy argument, which I've addressed. The other 2 are analogies.

Mafia analogy

"It is not theft then if you set up a business in a mafia controlled area of a town, and the mafia visit your business to demand protection money."

In the Mafia analogy there are again 3 options but some are different:

Option 1: Set up the business in the mafia controlled part of town.
Option 2: Set up the business elsewhere.
Option 3: Don't set up a business at all.

Only out of ignorance or outright support for the mafia would someone even consider choosing option 1. Let's assume they do though, as the other 2 options avoid the situation altogether. There are a number of differences in this scenario.

- The mafia's route to violence is more direct. It is highly likely they will kill you right there and then if you don't pay up. The government could issue fines, give you a court date, or at worst arrest you. If they did kill you, firstly, it could only happen in a country with armed police, and then it would be for 1 of 2 reasons. Police brutality (a separate issue) or because you threatened them with deadly force. From a morality perspective, this alone, in my opinion, would make the mafia worse. It doesn't however address the issue of theft.

- Unless the mafia own a certain percentage of your business, and were there telling you their rules when you set it up, they have no claim over the land on which your property is situated. If they were there in the beginning, you agreed to their terms. If they departed from their terms, it certainly would be theft. If they didn't, what action they took might fit the legal definition of theft, but "taxation is theft" necessarily addresses a non-legal one. Nonetheless it is still theft because they did not grant the initial property rights and have no claim over the business' land. In the case of the mafia not being there in the set-up stage, it is certainly theft. Because the government controls the terms and conditions of property rights, however, it is not theft in that case.

"Gunman in a country" analogy

"I tell you now: “If you choose to walk in North America I will require that you give me $100 every time I ask you for some money. If you refuse I will use violence against you to seize it from you against your will.” Now imagine that at some time in the future I meet you walking along in North America. I say to you, “Hi there, may I have some money?” You reply, “Sorry, I don’t have any money that I want to give you right now.” I reply, “Well that’s too bad. Either give me your money or else I will use violence against you to seize it from you against your will like I said I would before.” You reply, “What are you, insane? I thought you were only joking in that article that time.” (Or maybe if you were smart you would claim that you did not remember the article in order to persuade me that what I was doing to you was theft =P ). “Maybe I am insane, but I want your money,” I reply. I pull out a loaded gun and aim it at you. “Give me your money,” I say. Scared to death, you take out your wallet and hand me the $100 that I demanded. “Here, take it, you immoral *******!” you exclaim. “Don’t you mean, ‘you thief’?” I reply."

This analogy comes from the following blogpost:

This analogy represents a far better understanding of my video's initial argument than the mafia one. The victim knows what will happen if he enters North America. Knowing the terms and conditions, which the gunman has set out, this person chooses to enter North America anyway. He claims to not have the money upon meeting the gunman and so the gunman persuades the victim, by means of his gun, to hand over the money, which he does. This analogy would be perfect if 2 changes were made.

1. The gunman applied his edict to everyone.
2. The gunman was the ruler of the country.

The first change is not an essential one, the outcome would still be theft. The second is the one that makes all the difference. As ruler, you determine property law for the country, including the terms under which property rights are granted. If the gunman is not this ruler, this person has no claim over any property in the country and so would be committing theft.

There is a complicating factor in this analogy. The money is coming in from another country. The victim acquired the money under a different ruler's jurisdiction and so under a different set of property rights. If the 2 changes were made to the analogy the gunman/ruler would be acquiring property given to the victim outside of their jurisdiction. If a currency conversion took place, this issue would be avoided since it would have been converted to US or Canadian Dollars, created within the jurisdiction of the USA or Canada, but if it was the victim's home country's currency, this could legitimately be called theft even if the gunman was ruler.

In conclusion, I'll say something which is absolutely true. Whatever your position on whether taxation is theft, neither of us is right or wrong. It depends on how you define theft and language always changes according to popular usage. Ultimately, your position is "taxation is bad". This is a far more constructive argument to have, what was happening on my last video was an argument over semantics. I should also mention that if there is any conflict between this post and my video, this post is to be taken as the most true representative of my opinion. That or I've written something mistakenly here.


  1. As a staunch libertarian, I can actually tell you that you're mostly correct, but you err on two points - one is in your understanding of what we mean when we say "taxation is theft" and the other is in your assessment of theft being essentially okay if you define its rules beforehand. Let me address each.

  2. (cont.)
    When we say "taxation is theft" we essentially mean income/capital gains tax. That money is the direct product of your labor, which you own. If you don't wish to surrender any part of it, then forcing you to do so is theft. We don't have to get into complicated hypotheticals - the nice thing about principles is they apply in all scenarios. Property and sales taxes are not the same thing, and are often touted by libertarians as the proper way for a government to collect the minimum amount of taxes required for the limited duties government needs to carry out, such as national defense and a civil system. Taxation on property is fine because a.) it's avoidable (you can go your whole life without owning land if you'd like, and many people do), and b.) there's an implicit understanding that part of your rights to that land stem from the government defending the country it's in from invaders, and thus you rightly should contribute to said defense. The same can be said of sales tax - as long as core essentials such as food and water, etc. are not taxed, then any other sales tax is fine because it's a.) avoidable (i.e. you don't have to purchase anything other than essentials if you're opposed to paying the tax), and b.) the system that allows that sale (a monetary system, a civil system to address wrongdoings within the sale, etc.) is supported by the government and therefore you contribute a small percentage to its workings.

  3. (cont.)
    The upshot of all that is that since you CAN avoid those taxes without harm to yourself (note that inconvenience is NOT harm - you're entitled to your liberty, you're not necessarily entitled to an iPod), they aren't theft. You're correct when you point this out in your grocery store scenario. The only mistake you make is that assuming that educated libertarians claim that sales tax is theft. We don't.

    We DO claim that income tax (and its sister, capital gains tax) is theft, and let me address why your crazed gunman scenario doesn't defeat that claim.

    If I tell you that I will come into your house on July 18th, 2020, and that I will rob you if you're there, and I do so, the claim "Well I warned you I would be here, you had plenty of option to leave!" is not sufficient to justify my aggression, for obvious reasons. As a result, it is not sufficient for someone to say "Well, you knew the rules in this country, so you had plenty of option to leave!" You're still using coercion on me. Offering me the choice between two coercive harms (i.e. making me surrender money I don't want to, or making me leave property that isn't yours if I don't want to) does not negate the coercion. If I say "Give me money or I shoot you!" I've technically offered you a choice - loss of money or bodily harm - but since the choice is between two coercive acts, it can not be said that I didn't coerce you.

  4. (cont.)
    To better illustrate the idea that income taxation is theft, let me present a scenario. Let's assume you're in a tax bracket that has a 10% tax rate. So you have to pay a tenth of your income to the government. But let's put that a different way, with the same result. Let's say you don't have to pay any amount of your money in taxes, but every tenth day, you have to work for no pay at all for the government. You receive no compensation for this workday, and if you don't do it you'll be fined, arrested, or harmed. Every tenth day you are a slave.

    Note that those two scenarios are exactly the same. In both scenarios a tenth of your labor belongs to someone else, and you have, unlike the sales or property taxes, no means to avoid this (unless of course, you have no income of any kind, which is neither the aim of a productive society nor something that is reasonable to be able to accomplish). It does not matter that the system was well explained to you before hand; it's still coercion - and the removal of money by coercion is theft.

    The "if you don't like it, you can leave" argument does not hold water. The victim of coercion is not at fault for being coerced.

    It doesn't matter that the act of coercion was well-established beforehand, therefore. It should still be stopped, regardless of what precedent for it there might be.

    I hope I've been able to shed some light on what I find are very common misconceptions of the "taxation is theft" discussion. Most disagreements I've encountered have not been as a result of differences in opinion, but rather misinformation. Hopefully I've gotten us all a step closer to understanding each other better!

    - John Roccia

    1. Thank you very much for your response, John. I'll try to keep my response to the point.

      You say that I've misunderstood the "taxation is theft" argument, but my discussions on YouTube and the subsequent response that was this blog post were in response to people who genuinely believed that taxation in general was theft. Maybe not all tax, but most of it. No-one I dealt with expressed your position on the issue, which is far more reasonable and nuanced. So if my post addressed an argument that was foreign to you, that is why.

      Part of the premise of my argument, although it might never have been phrased as explicitly as this, is that ALL taxes can be avoided without harm coming to you. The alternative, being a hermit, is certainly a huge inconvenience, but no-one is causing harm to you by taking that option.

      Knowing the rules in advance wasn't the point I was getting at, it's knowing the rules and having the choice to avoid the coercion in the first place.

      Finally, in your 2 income tax scenarios, I don't agree. The 2nd scenario is less reasonable because you're being asked to work for free every 10th day, but in the 1st, when you initially accept the job offer, and accept its accompanying terms and conditions in so doing, it essentially means the tax that is being given to the government was never technically yours to begin with.

  5. Orygyn, your views are so completely different than mine that it would take several hours for me to address all of the issues I have with your post. So instead I will just point out a couple of things to try to make more productive use of our time.

    You responded to my random “gunman in a country” analogy saying that “This analogy represents a far better understanding of my video's initial argument than the mafia one.”

    I completely disagree. I could have used the mafia as an example and it would not have made a difference. I consider the gunman’s theft, the mafia’s theft, and the government’s theft (taxation) all as equivalent. They are all violations of libertarian property rights. Whether all the gunmen get together and call themselves a mafia, or whether they write down some stuff on a piece of paper and declare themselves a state and then persuade a majority of the population that what they are doing is good, makes no difference at all. It is still theft whether done by the gunman, the mafia, or the state. Further, it makes no difference whether the state, mafia, or gunman gives forewarning (as in Scenario C compared to Scenario A in my post on this subject: about their acts of theft. Regardless, their acts are still theft. Further, note that the alleged difference that you point out in your above blog post between the mafia analogy and a government’s imposition of a sales tax or other tax is in error.

    Your mafia analogy could be worded as:

    “Option 1: Set up the business in full accordance with the mafia’s rules. This might mean having to declare yourself self-employed, signing certain pieces of paperwork, paying off the mafia, etc. In the end, I have a supermarket where people come in to buy items, I keep most of the money minus running costs, wages etc. and the rest is money I give to the mafia.

    Option 2: Set up the business. Avoid declaring yourself self-employed, signing all relevant paperwork etc. I pay no money to the mafia at all and I'm operating outside the law. The chance of being caught by the mafia for not giving in to their rules is very high.

    Option 3: Don't set up the business. No money is earned, nothing is given to the mafia.”

    Your original government taxation analogy could similarly be compared to your mafia analogy by stating it as follows:

    “Option 1: Set up the business in the government controlled part of town (the part of town where the government says it will collect taxes from you for operating your business).
    Option 2: Set up the business elsewhere.
    Option 3: Don't set up a business at all.”

    There is no difference between what the mafia does and what the government does. Governments tend to have better public relations than mafias and often achieve this by pretending to be nice and giving forewarning to the people that they are threatening with violence to collect money from, but these difference are completely irrelevant as to the discussion of the alleged legitimacy of governments and is completely irrelevant to whether the government or mafia’s actions are theft.

  6. Orygyn: “This analogy would be perfect if… The gunman was the ruler of the country…. [This] makes all the difference. As ruler, you determine property law for the country, including the terms under which property rights are granted. If the gunman is not this ruler, this person has no claim over any property in the country and so would be committing theft.”

    That is complete and utter nonsense (no offense) in my view and explains why you (erroneously, from a libertarian perspective,) believe that taxation is not theft.

    There are no “rulers” who get to determine “property law” for “countries.” “Countries” do not exist. There are just individuals with property rights in scare resources. Any “property laws” created by governments, mafias, or anyone else mean nothing. It does not make a difference whether a government creates a “property law” and enforces it or whether I create a “property law” and enforce it. Regardless it is an act of theft—a violation of property rights. It does not matter whether a government is imposing a sales tax on someone or whether I am imposing a sales tax on someone. In both cases the tax is an act of theft. Saying that some people (“rulers”) magically have the right to commit theft without it being theft is nonsense.

    Your argument that taxation is not theft boils down to the following:

    1. “Rulers” of “countries” determine what property rights people have.
    2. Therefore, when “rulers” coerce people in “their countries” to take their money from them against their will (i.e. collect (sales, income, etc) taxes from them) they are actually just exercising their property rights (that they came up with) rather than committing theft.

    Your argument is not universalizable and is completely immoral by and decent standard of morality. It should thus be disregarded without a further thought. I do not accept your absurd premise (1) and thus reject your view that taxation is not theft.

    (Note: For some reason I was unable to comment with my WordPress account so I used this Google Blogspot name to comment. This is me, however. )

    1. Since rulers determining property rights is where we disagree, I'll clarify my statements there further. I agree with your statement that countries don't exist but only in the same way that property rights cannot exist. In both cases, there is no possible way in which they can exist without some form of ruling force. When a ruler or rulers is/are established, the country is a manifestation of the boundaries of the rulers' jurisdiction, and property rights are granted throughout that jurisdiction in accordance with the rulers' terms. Hypothetically, if the ruler of a country gave up his position and no-one followed him, meaning there wouldn't be any rulers, there would be no-one to enforce property rights. At that point, I could arbitrarily claim anything in the country as mine and claim that it is theft if anyone tried to steal it, but the only recourse I could have against such theft is my own ability to defend it from theft. At this point, ownership becomes a massive game of "king of the hill", and the only thing stopping anyone from stealing anything arbitrarily claimed by the owner as property is the owner him/herself. Unless this issue can be resolved, and a better foundation of property rights can be put forward, the ruler owning everything in the country but granting a lower-level degree of ownership as private property to anyone who complies with the ruler's terms is the only practical foundation for property rights I can see. I never said it was moral, just that any alternative I could think of would be worse.

      In the paragraph where you specifically argue against this view, you posit an alternative whereby you create and enforce your property rights. The problem is that if you create the terms of your own property rights, this again leads to the situation where you could lay claim to anything you like unless people collectively agree on the same property rights and terms of those rights. Still, it only takes 1 powerful enough group with different ideas on property rights to shatter that unity.

      It seems we just have different perspectives. As with our discussion on your blog it seems like 1 of those situations where neither of us is right or wrong. It boils down, again, to which is the most preferable option.