Dogma Premise # 26

 Government is theft, because taxation is involuntary, whereas market interactions with business are voluntary

The idea that taxation is involuntary is very confused.  Democracies and Republics are fundamentally voluntary forms of government.  And even the most minimal governments require some resources to support them, and those resources are raised by taxation.  Therefore, taxation is an essential element of even the most voluntary, non-coercive form of government. As Oliver Wendall Holmes famously wrote in 1927, "Taxes are what we pay for civilized society."

To maintain that taxation is involuntary requires Capitalists to commit, like Anarchists, to embracing no government at all, or to be willing to leave the country entirely for a tax-free world, taking no advantage of the roads, schools, or services paid for with tax dollars, and instead practicing capitalism in a place that does not impose taxes.

I have yet to meet  a Capitalist who would pass on all forms of government; they seem universally to favor at least a police force that will protect their accumulated wealth from predation by the worse-off.

Nor have I met a Capitalist who would abandon society for a desert isle to avoid taxation.  Capitalism is utterly dependent upon a working society to function.  There is no way to accumulate wealth for investment -- capital -- without at least some of the basic social norms made possible by government, such as legal enforcement mechanisms around property, contracts, banking, and dispute resolution. Capitalists banished to an island with unenforceable certificates of wealth would be able to accomplish nothing.

Therefore, all capitalists, unlike anarchists, must embrace some government and some funding mechanism. Capitalists express their assent to government, capitalist institutions, and taxation by enjoying the fruits of our collective expenditures on government, including  roads, fire protection, safety regulations, and the various institutions that make capitalism possible.

It will no doubt be objected that a tax is only voluntary if each person individually and affirmatively assents to a particular tax and its associated expenditure; else it be involuntary.  This kind of arrangement is properly called a “donation,” not a “tax,” and the reason it is not employed is because it does not work either to raise funds or to allocate a budget.  There is no reason to suppose that voluntary contributions would be adequate or reliable in the face of free riders.

Or, if only wealthy donors determined the available government institutions and programs, the resulting government would be plutocratic, not  democratic, and would therefore involve elements far more coercive than democratically determined tax levies.  In other words, if you want to have any sort of government, and you want to minimize coercion, then you want to have taxes, because taxes represent the least coercive option for enabling government.

The reason we have democracy is so that we can collectively decide how much to raise, from what sources, and to spend on what, in a way that involves everyone equally (fairness), and prevents cheating by free riders (justice).

If that still seems involuntary then you do not like democracy, which, indeed, is the position of many capitalists.  It would be easier and more profitable for capitalists to operate in an autocracy controlled by capital than in an unpredictable democracy in which the citizens might challenge the economic power that is wielded over them.

It is not the goal here to show that capitalists ought to like democracy, but only to show that taxation isn't particularly coercive, compared to other methods of funding a government.

Note that democracy is not necessary for capitalism to work, only some form of government is required. However, that government, whatever be its form will nonetheless have to deploy coercive measures to fund itself, or at least to enforce its rules. So there is nothing peculiarly coercive about taxation as opposed to other arrangements that result in a functioning government. Indeed, the assessment and allocation of taxes in a democracy may be the least coercive and the least involuntary form of government.

So the idea that taxes are involuntary can be disposed of pretty easily.  Taxes are involuntary in the same way that the rules governing elections are involuntary, and the rules requiring that cars stop at a red light are involuntary.  They are mandatory legal requirements, but they are ones we must collectively assent to and help draft, if we are to have elections and roads and capitalism. There is no less coercive option.

The second part of the argument is that market interactions with business are always voluntary.  We saw this question touched on in Dogma Premise #17, involving the nature of exchange.

As we have said, the idealized model of market interactions that capitalists present as true does involve only voluntary exchanges.  However, the reality of market exchanges is that they are filled with subtle and not-so-subtle forms of coercion.  Producers routinely attempt to limit buyers’ choices (e.g., through exclusive dealerships and market entry barriers), and may even obtain a monopoly position which creates a situation that is the exact opposite of voluntary.

Without reviewing every type of deceptive type of marketing, every attempt to provide incomplete information, every type of customer lock-in, let us say that market transaction may be formally voluntary but in reality contain some coercive elements in the exact same way that regimes of taxation are formally voluntary but contain some coercive elements.

The suggestion that taxation is involuntary and market exchanges are voluntary misrepresents the situation entirely.

Dogma Premise 27

All Dogma Premises