Taxation, Theft and Pragmatism

As any right-thinking anarcho-libertarian will tell you; taxation is theft, or to be more accurate, robbery. This kind of straight talk tends to make the minarchists and classical liberals wince. They may concede the point on the blandly rational grounds that it is correct, but they find it a little tactless to point it out too stridently, especially as their aim is not to abolish the state entirely, but rather to cut it down to a more manageable size.

Nevertheless, there is no reason for the various strands of libertarianism to fall out. I would say the time for that would be when the ‘night-watchman’, minimal state has been achieved, and until that time, the disputes amongst us are largely academic. We are lumbered with the status quo, and that includes a big state and heavy taxation. But, by accepting the fundamental injustice of taxation, it does at least free us from seeking after the will o’ the wisp of a ‘fair’ system, a ‘neutral’ system, and instead lets us focus the mind on reducing taxation in general and the very heart of the matter; government spending.

Whatever the theoretical destination may be, the only way to get there is by little steps, just as long as they’re steps in the right direction. Bringing in new taxes, even with the intention that they will replace other ones would seem to be a mistake, with the risk that we’ll wind up with the old ones and the new ones. Better to freeze the system as is, and then start chipping away at it, piece by piece.

Some taxes seem more pernicious than others. An example, in my view is Inheritance Tax, or Death Tax, as it should be known. Not only does it visit injustice upon the heads of the bereaved, it causes sub-optimal decisions to be taken by the individual while still alive, in order to minimise the bill. Nevertheless, an attempt to abolish it will provoke political opposition with the accusations that it is helping the rich – the implication being that anything which does so, harms the poor. This brings us to the issue of political expediency.

If the possibility arises to cut taxes, it would seem sensible to ‘spread the joy’ as widely as possible. I would target VAT on fuel, alcohol and cigarettes. The justification for this would be that each of these is already subject to a separate duty. A reduction of the cost of fuel would benefit everyone, either directly or indirectly. Not only this, it would be visible. Other targets could be the aforementioned Death Tax and Employer NI. This latter seems a singularly foolish levy on employment, and its abolition could only improve the jobs market. No doubt the left would demand the saving be passed on to workers (a quick way to nullify the point of the change), but it should not be difficult to make a convincing political case for ending Employer NI.

Reducing the size (not to say sheer weight) of the tax code must also be a priority. I suggest setting a target that it should be no bigger than ‘War and Peace’ would be a good place to start.

In summary, a libertarian programme of tax-cutting, whether premised on the inherent criminality of tax or a more moderate position, should avoid attempts to find ‘fairer’ means to provide loot to the government (such as ‘shifting the burden’ onto the rich), but should rather seek to freeze the system as it is, and then proceed to dismantle it little by little, through across-the-board reductions or when possible the abolition of particular taxes. There should be no new taxes (with one possible exception: cannabis!), and an overtly populist tone should be struck, with the stress on giving the people back their money.

(Cross-posted at Libertarian Home, where you can read my responses to someone advocating a large increase to the income tax threshold, rather than across-the-board tax reductions).