In a previous article, I made an issue with how a (thankfully) small group of libertarians make outlandish claims about taxation. However, I hope I made it clear in my article that I am certainly not in favor of the concept of taxation by any stretch of the imagination. I simply think that the philosophy of libertarianism provides more tactful and reasonable methods of critiquing it. Hopefully, this viewpoint will be more palatable to supporters of government and less offensive or edgy.

To begin, I pose a thought experiment. I will ask a series of questions, and I want you as the reader to carefully consider each one before hearing my reasoning and proceeding to the next line.

Let’s say you have a car, and a man runs up to you and steals your car at gunpoint. Is that morally wrong?

I’m sure we can all agree that this is wrong. You spent a lot time saving the money to buy that car, and it isn’t right for someone to take it from you and threaten violence against you if you don’t comply. At this point in the experiment, I hope I didn’t lose anybody, we should be able to agree on this.

Now, let’s say five people with guns come and steal your car. Is that morally wrong?

I doubt that the number of people stealing the car makes a difference, it’s still robbery, and you’re still losing your car and being threatened with violence. Not much of a difference.

What if ten people with guns come up to you, proposing that they take your car away, but before they take any action, they hold a vote? You get to vote on whether or not they steal your car. You could vote against them, sure, but if six or more of the aggressors vote to steal your car, it looks like they will do just that!

Although there is a system in which people can voice their troubles and even have some say in what action is taken, it’s still very possible and likely, given the circumstances of those involved in the vote, that you will lose your car.

What if one hundred people with guns hold a vote on whether or not to steal your car, and after taking your car they give a poor person a bicycle. Maybe they give you a bicycle too! Is it morally right then for them to vote to steal your car, if even if helps someone else?

What if this gang of robbers grows to the size of a thousand, a million, ten million, and so on? What if you get to vote for a delegate, who is sent to a central meeting point, who you trust to vote on your behalf on whether or not your car is taken from you? What if this is all determined before you are born, because people from the past held a vote and said it was OK to take your car? Maybe they would say you owe them, because taking cars from people like you provided all the bicycles you see around you!

Think to yourself, if you were in this situation, where would the line be drawn for you? I don’t know about you, but at no point did I support having my car taken from me! Regardless of whether I could vote for people to look out for my interests, no matter what, I want to have sovereignty over my car. That is my line in the sand.

This is the line of thinking which lead to the historical proclamation that Taxation is Theft. Of course this is a thought experiment and a hypothetical question, but it yields some interesting perspectives on not just taxation as a form of theft, but also of property, violence, voluntary interaction, and the democratic republican style of government. It is not a car we are talking about, but our money and property in general. This is not just a gang of armed criminals, but the Nation-State (which is basically a more polite gang of armed criminals).

The idea of taxation relies upon the idea of Social Contract Theory. SCT is the idea that, explicitly or tacitly, we submit some of our freedoms to the government in return for them protecting our remaining freedoms. The gang (government) must take your car (some of your money, land, property) to provide the bikes (national defense, borders, social programs) that keep society running, or biking in this case. And if you don’t give up your car, you’ll have to deal with the armed thugs (police, justice system, prison, the IRS) who will lock you away, or even shoot you if you try to resist further, and still take your car!

Whatever the outcome of this situation, you are relieved of your car. I bet you think you know what’s best to do with your own car, right? The same goes for your money, your property, and everything you justly acquire. There is nothing special about the gang with guns that they know best what to do with your possessions, so why should you be in any situation where they can take your car in the first place?.

Now, I’d like to propose some modifications to the way taxes are managed in the world today, and also some systems which avoid the concept of taxation entirely. I hope that at least one of them can appeal to conservatives and liberals and those beyond those labels as better ways to meet society’s wants without the use of coercion and violence.

The Negative Tax

I’m going to start off small, with a proposed policy that is still a tax. However, of all the taxes that could be enforced by government, this one isn’t so bad! Right now, we have sales taxes, gasoline taxes, poll taxes, food taxes (yes, they tax what you need to survive), sin taxes (cigarettes, alcohol, gambling), “fat taxes” (taxes on unhealthy foods), housing taxes, Social Security taxes, payroll taxes, and income taxes...taxes galore! All of the taxes I mentioned besides the income tax are referred to as regressive taxes by economists. These are tax policies that proportionately harm the poor more than they do the rich. The poor spend a much higher percentage of their income on buying simple commodities, gas, a roof over their heads, food on their table, and a tax on hourly wages only affects poorer workers, not CEO's who write their own checks and drop a few million on a house without having to get a mortgage.

Then we have the income tax, which is a progressive tax, a tax which affects the rich more than the poor. I don’t see that as bad as a regressive tax, since the rich are still going to have much more money if you tax them at 40 percent than a poor person taxed at 10 percent. However, in America, individuals who make less than about $10,000 per year are still taxed at 10 percent! Think about that: you’re living at half of the poverty line, spending more money on taxed food and clothes and probably unable to rent the smallest apartment, and the government STILL takes some money from you! Ridiculous, and horrible for the poor!

The Negative Tax is a reformation of the tax brackets that involves a cutoff point where at a certain income you pay no taxes, and those below that income get money back from the government. Let’s say if you are in the 30th percentile of income, you pay no taxes, but someone at the 25th percentile gets a few thousand dollars each year, someone at the 10th gets $10,000, and a person with no income gets maybe $15,000. Then people who are in the 40th, 50th, and higher percentiles will pay taxes increasing as the income gets higher. The numbers might not work out quite like that, but that’s the idea.

This alone would be revolutionary for the poor and working class! Coupled with a removal of all regressive taxes, it would be even better. Instead of using hundreds of billions of dollars to fund programs like SNAP food stamps and Social Security and Medicaid, those who would be in need of those programs would probably just be able to afford most of what they need anyway! People would be able to get the things they need to survive, except they would be spending their own money in whichever way they choose. We wouldn’t need to spend massive amounts of money from the population of people who are taxed to fund huge bureaucratic programs, and instead the demand for all goods would skyrocket as people now have free money to put into the market.

Voluntary, Line Item Tax

Another system which still uses taxes! Liberals generally like to use taxation primarily to fund social programs or subsidize environmentalism, whereas conservatives tend to use taxation to fund military endeavors and help larger businesses. Most of the conflict between the two parties in Washington are on how to use these tax dollars for how they think will best benefit society.

But liberals are less likely to support the endless war mongering in the Middle East, and conservatives may not want to give handouts to the poor. Depending on which party is in power, one of these groups are going to lose out while the other gets extra power to do as they wish. When you come out on top, it’s great for you, but the losers aren’t going to be happy. It’s a zero sum game.

So what if everyone could choose which programs they want to fund, how much to put in, and then the government works with whatever funds come in from the people? Most of our tax dollars are spent on the military and two major welfare programs, Social Security and Medicare, and most people have a problem with one of these uses of taxes. What if all the liberals banded together and put all their tax dollars into funding a food ration for every hungry person in America? What if all the conservatives worked together to fund a program which would incentivize businesses to bring production to America? What if all the Green Party supporters funded a program to create solar power farms? What if the Libertarian Party could fund a program which would set up private charter schools nationwide? Essentially, everything would be run like a non-profit organization! Allowing people to pick and choose what they want to fund will more directly match the desires of the American public, and people could convince others to change their minds and fund other projects if they see problems with the programs currently in place.

A Completely Free Market, Libertarian Capitalism

This may take an expansion of one’s comfort zone for a liberal or conservative. However, let’s think about this in the same way as the voluntary tax.

With no government and no taxes, people often claim it would be difficult or even impossible to fund such programs as infrastructure, military defense, and social safety nets. However, in a society with no taxes, no barriers to entry into industries, no government to provide financial support to predator monopolies and corrupt capitalists, people would create businesses to provide all of these services, and people with their tax-free incomes would spend their money at the businesses they want the product of, similarly to the voluntary tax. People could band together and form non-profit organizations which seek out donations to perform these functions in the private sector. I don’t think this is the ideal way things should work, to be honest. However, I still think it would be better than the system we have now, which funnels money upwards to use mostly on killing people and other countries and directly paying out to the rich. Speaking of capitalism…

A Proletarian Revolution, Libertarian Socialism

Bit of a leap, I know. Before I continue, a quick word about libertarian socialism. When I say socialism, I am using a different meaning of the word than is used in most political discussion nowadays, where the term is used to describe basically anything the government does. This definition obviously conflicts with the concept of libertarianism or a tax-free society. Historically, and from the writings of socialist economists and philosophers, socialism is defined as an economic system in which productive capital, factories, farms, stores, etc., are owned and run by the workers who contribute labor to the firm, not by investors who contribute no labor but profit from the labor of the workers.

This transformation of the production process into worker cooperatives allows the common worker to have as much say in how they work, what is done with that they produce, and how the they should be compensated for their work as their fellow workers instead of leaving it up to a higher-up businessperson. This would fix the problem of the hierarchy of capitalism even if the market is still how goods are distributed, and in its place we would have a true, direct democracy built upon voluntary association, not forced, representative democracy. Individual worker cooperatives, or even community-wide cooperatives of interconnected worker-run firms, could get together and discuss how to manage their production to meet their community’s needs.

People usually talk about socialism only working “on paper,” but there are many organizations which are run in a socialist fashion all around the world, and are very successful! For example, the Mondragon Corporation, a federation of 257 worker cooperatives in Spain, is one of the largest and most successful businesses in Europe, comprising over 74,000 workers, each with an equal share of ownership of the corporation. The workers all also have an equal say in what is done with the profits of their enterprise and what kinds of benefits they provide the workers and their families, like paid sick and maternal leave and other social services. Even though mixed market crony capitalism is the norm across the globe, people can still practice socialism and get the benefits that taxes should (but don’t) provide!

There are other ideas about how to manage society without compulsory government or taxation, and I encourage anyone who is interested in the subject to look into others. In a libertarian society, it would be up to people in each locale to decide what works best for them instead of being subject to a rigid form of government which they can’t change, and without compulsory taxation they would have the freedom and resources to do so. Whichever model you like best and whatever societal ideals you want to advance, I doubt you’ll be able to do it when Uncle Sam takes 35 percent of your income to spend on jets that don’t fly and welfare programs that barely help people survive.