Taxes

[mike]

I notice that every time the Libertarians refer to taxes, they use the word "confiscatory." Do Libertarians agree that taxation is the price we pay for civilization? I think everyone would agree that some taxation is necessary--roads, armies, police, a "reasonable" welfare safety net, etc. What is the Lib perspective on taxation?

[Mik]

Although somewhat difficult to define, generally confiscatory taxes are thought of as those which go beyond revenue generation to carry out a specific, limited purpose of government. Often such taxes are to achieve some social outcome, such as a graduated income tax to try to redistribute income, or "sin" taxes to discourage things like drinking alcohol or smoking cigarettes.

There are other taxes which would be more in line with the concept of user fees, like liquid fuels taxes to pay for road construction and maintenance. These can become confiscatory as well if they become excessive. If fuel tax rates are too high because of overbuilding of road infrastructure, then fuel consumption will be depressed and maintenance of the infrastructure will be difficult.

There are several discussions related to taxes in the Political Discussion board, perhaps check out some of those. The libertarian idea is that any taxation necessary should be minimal, and related to a legitimate function of government. There are many different ways to go about reaching this goal, however.

[mark.d.crowley]

I can see one kind of tax that could be argued as confiscatory – inflation. 

Inflation is an increase in the money supply, but an increase that’s not backed by a corresponding wealth increase in the economy.  This kind of “tax” hits everyone and is collected even if you don’t spend anything.  It might be the most confiscatory of all.  And when it goes wild, it’s a pretty high price for civilization to pay.  (Hmmm.  Do taxes pay for civilization, or does civilization pay for taxes?)

While we discuss all the different kinds of taxes and fees as ways to pay for legitimate functions of government, the largest tax of inflation is probably overwhelming them.  Our discussions about taxes might become largely academic if this continues.

[vern]

I notice that every time the Libertarians refer to taxes, they use the word "confiscatory." Do Libertarians agree that taxation is the price we pay for civilization? I think everyone would agree that some taxation is necessary--roads, armies, police, a "reasonable" welfare safety net, etc. What is the Lib perspective on taxation?

Mike.  "Libertarians" don't have one set position on public policy.  The only thing we actually agree on is the basic principles, that people have rights and that government should protect those rights.  "The" Lib perspective on taxation doesn't really exist.

You are right that you hear the word "confiscatory" a lot regarding taxation.  I agree that's inflammatory.  I've used it myself.  It's mostly the anarchist-wing of the LP that uses that language.

There are reasonable arguments as to what should form the basis of government finance, and what mechanism might be a more fair and just system.  My personal view, which is not shared strongly here in the LPPa, is to a flat, single tax with a large, single deduction per individual.  However, I strongly favor the Land Value Tax idea as well.  Many others argue that a "consumption tax" is more fair and just.  You decide.

[Dan Sullivan]

"Confiscatory" has a legal meaning, but I think most libertarians use the word for effect, without actually knowing the legal meaning. It's a lot like lefties in the sixties who called everyone they disagreed with "fascist."

Mik was close to the legal meaning. As I understand it, a confiscatory tax is one designed to prevent a behavior and not just collect revenue. Thus a very high tax on tobacco is intended to at least approach being a confiscatory tax.

Libertarians tend to refer to any tax as confiscatory, in that the revenue is taken under force or the threat of force, but such an interpretation renders the word "confiscatory" redundant and meaningless, and something that is said just for effect. Unfortunately, the effect on non-libertarians is to make them roll their eyes and find someone else to talk to.

Traditionally, many libertarians have favored land value taxes (real estate taxes with the buildings and improvements exempted), but that became something of a minority view after US libertarianism shifted to the right in reaction to the evils of socialism. Basically everything a socialist advocated was automatically rejected.

Anyhow, classical libertarians saw land value tax as a user fee paid by those who enjoyed exclusive possession to what had been an open commons.

-ds

[Mik]

I think there are three legs that sound and fair taxation would rest on, and those are all related to privilege. They are a land value tax, for the privilege of monopoly use; a non-renewable natural resource extraction tax, which would be for the privilege of permanently removing natural resources from the common store for exclusive benefit; and a tax on the pollution of the natural environment, for the privilege to alter the common resources that people could otherwise use in a natural state.

There are other side applications if you consider land to be that provided by nature which is used but not altered by its use. This could include things like the electromagnetic spectrum. There are also fair ways to address specific problems, like congestion of roadways through the implementation of tolls. Otherwise, common areas like roadways and open land should be free for access by all.

I think that would go a long way toward eliminating the idea that all taxes are confiscatory or coercive, which is the other word libertarians like to associate with taxes.

[vmays]

Quite apart from all that has been said, the concept of taxes, to me, is a huge problem because politicians see how much each of us has and then they decide they want it.  It doesn't really matter if the NEED it - they will find a way to spend it anyway, most likely to trample on our liberty.  Greed is a good word for taxes as they exist today.  That's not to say that some form of income for the legitimate function of governmnet is not necessary but there are better and more efficient ways of getting it than taxing the income of every hardworking person in the United States.  THAT gives the government to much power.  I would among the first ones to vote for abolishing the 16th amendment.

[Mik]

This is why the concept of limited government is also important. There are certain things authorized by the people for government to do. This is what a constitution should describe. The primary purpose of government is to secure individual rights, and any additional authority to act should be clearly delineated.

As the US Supreme Court has established, the 16th amendment gives no additional powers to the federal government, so I'm not sure what difference its repeal would make on the power to tax. The problem with the federal constitution is that it is unclear on the delineation of some powers. I think a better approach to the problems of federal authority is to bring that decision-making authority to the state and local governments, and to the extent possible to maximize individual liberty, to the individual.