Perhaps the trendiest electoral strategy for populists in North America in the last decade or so is the appeal to “Taxpayer Rights.” The idea is that you, payer of taxes, supporter of society and civilization, are not getting your money’s worth under the current (and past) administration. The populist, the champion of the rights of taxpayers, will change all of that. There will be new levels of accountability, efficiency and transparency if you elect the populist (and their party, where applicable).
However, there are numerous problems with this appeal to the “rights” of the taxpayer above and beyond other considerations in an election. The most glaring of these being that this is an extremely simplistic view of a complex phenomenon – Government is not one monolithic thing, as much as we like to think that it is – and the simplistic solution to a problem is rarely, if ever, the best solution, or even a passable one. (The simplistic situation, in this case being that the only way to solve problems is by lowering spend and tax rates.)
Why is it that now, at a time when human society has experienced the greatest technological progress and its greatest dominance of the physical world – which correspond to a material abundance never seen before in history – do we have people complaining that they are not getting their fair share?
It’s certainly natural that there are complaints at a time of abundance. Everyone thinks they deserve more of the pie than anyone else. Moreover, one could quite rightly argue that our technological progress and abundance has not been matched by an appropriate accompanying material abundance – real wages have declined in North America over the last few decades, for example, so it’s possible that we’re past a particular peak (at least in North America and maybe Europe) and so people are complaining because they are aware of that. But I don’t buy it.
One of the more curious aspects of the rise of Taxpayer Rights populism is who they are essentially advocating for: the rich. In fact, you get a lot of lower middle class advocacy on the part of policies that benefit the rich almost exclusively (if not entirely).
- A taxpayer “bill of rights” would benefit the rich more than the poor.
- A flat tax benefits the rich.
- Some people deciding to withdraw their money from the collective tax pool wouldn’t necessarily benefit the rich (though it certainly wouldn’t hurt them if they were the ones deciding on withdrawing their taxes), but it wouldn’t help the poor or lower middle class.
- A taxes-for-services regime would benefit the rich (because either services would be priced so high so that only the rich can afford them, or they would have to pay so little to society that services would deteriorate and the rich could buy private services to supplement or replace the public ones).
- A completely free market – were it possible – would benefit those who already have money more so than those who do not yet have money.
- A taxless society – or a society with lower income taxes for all – would benefit the rich.
And yet, many of the people who support taxpayer rights candidates and groups in North America are not rich and the majority of them are not even what you might call “middle class” in the traditional sense of the term. Rather, the vast majority are middle class or lower middle class, and there are even have people who might be classified as “poor” supporting these policies. Why?
In my previous article on this site, I discussed the Just World Fallacy. I believe it offers insight into these groups just about as well as any other explanation.
The Just World Fallacy theory is a social psychology theory; in essence it is the theory that most if not all people (in the West) believe the world is fair, to one degree or another, and when this idea of fairness is upset, they blame others, specifically victims, for it. Victims are blameworthy because they have failed to follow the rules of our Just World. They are being punished because they did something that violated the rules (in this case, not working hard enough, or what have you). They are therefore responsible for the current state of injustice.
- The fallacy of a tax-less or extremely low-tax society is based on a belief in a just world.
- The fallacy of a market mechanism that exists outside of humanity, directing people for the better, is based on a belief in a fair world.
- The idea that you could pay only for the services you receive is based on the idea of a just world.
- The social contract – which underlies our ideas of the “fairness” of taxation – is a legacy of thinkers who believed in a just world.
- A flat tax could only ever have been conceived by someone who believes in a fair world.
- The idea that taxpayers have rights separate from the citizen is based on the belief in a just world.
I want to examine these in detail.
The Fallacy of the Taxpayer and his Rights
Putting aside all the “economic” arguments of the taxpayer rights groups (see below), the fundamental myth of these groups is that there are not citizens who have rights – well, there might be, but we taxpayers don’t care – but there are taxpayers who do have rights, and these people form a distinct group in society.
So, first off…Taxpayers do not have rights that are different from the rights of citizens. There is no clause in the Charter of Rights and Freedoms in Canada or the in Bill of Rights in the United States that guarantees taxpayer rights. Taxpayer rights do not exist. That’s it. There’s no argument here. I guess you could argue that we should change our rights framework to create taxpayer rights – which is a terrible idea – but until that happens, taxpayers and whoever these elusive non-taxpayers are, have the exact same rights. The appeal to taxpayer rights is purely an emotional one as it is not based in fact or tradition.
Second, and perhaps just as important: the idea of a distinct group of taxpayers within society, within the citizenry, is a second emotional appeal to fiction. Yes, there are undoubtedly some people who do not pay their taxes. Every single society throughout history has had people who avoid their duties either consciously (through fraud and deception) or through ignorance, or through laziness. However, this is not a large group of people. And it’s also not primarily who the taxpayer rights groups think they are. It’s the super rich that are evading their share taxes. That’s the problem. Even if every single person below the poverty line failed to pay their taxes – which is not what happens – this would still have less of an impact on the public purse than rich tax evasion because we subsidize the poor – they get much of that money back. 1
The taxpayer rights people want us to believe that there are two types of citizens:
- non-taxpayers, these include:
- the poor (who, under the horribly progressive tax system, are incentivized to be lazy through entitlements)
- the bureaucrats (who spend all our money without our input and without our consent!)
- the politicians (who lie and who get the bureaucrats to spend even more money and defend their laziness, and who take advantage of all these free perks, and vote themselves raises and oh my god it goes on like this!).
There is a problem here: all three of the groups of people who the taxpayers suggest (never officially state, beyond the politicians) don’t pay taxes actually pay taxes.
- The poor pay taxes but get much of their income taxes back, as they should. The really poor – the unemployed – do not pay income taxes. However, if they ever spend money – is it possible to never spend money? – they pay sales tax. 2
- Bureaucrats of all three levels of government do not have some kind of special clause where they don’t have to pay income taxes because of their positions (nor do they have squander all our money by being lazy). Most, if not all, high-level bureaucrats are in Canada’s highest tax bracket.
- The same is true for politicians. In fact, politicians make lots of money – Canadian federal politicians are in our highest tax bracket.
Again, this is just a lie. There’s no merit to the claim that there is some core group of society that pays their taxes and everyone else is shirking it.
At least with the economic claims (see below), there is some attempt to make an argument. But the idea of a taxpayer separate from other, less productive members of society, is just a lie. That’s all it is.
So it’s a worthwhile question to ask, why is the lie so easy to believe? Why is it that all these fanciful ideas about the economy and society are so appealing to so many people? (Especially now, at a time when we arguably know much more about people and economics than we have at any other time in history.)
The idea that the people who pay taxes – or, rather the people who pay more taxes than The Other – should have rights is also an idea founded on a belief in a just world.
Individual rights are an invention. They are an extremely important invention but they are an invention. Taxpayer rights would be another invention. But why do we need them? What is it about the taxpayer that separates himself from the citizen? Why are his needs different? Why are they in need of additional protection from the state? Protections not already outlined in the Charter of Rights and Freedoms or Bill of Rights?
The taxpayer rights proponent believes that he is not getting a fair deal. (At some point in the past he was getting a fair deal, but he is no longer.) Government spends and spends and doesn’t spend “well” or “correctly.” And this is his money. His hard-earned money.
Government is to blame, of course. As are corrupt politicians. Politicians vote themselves raises and perks. Bureaucrats are lazy and overpaid. They all have cushy, easy jobs but can’t appreciate how lucky they have it. Instead they take it out on our wallets.
It’s easy to see the “ought” in the above paragraphs. The taxpayer rights proponent, like any critic of government, thinks things can and should be done better. But the unwillingness to compromise – the belief that the only thing that needs to be done to restore the world to its rightful order is to cut spending and tax rates – is a true sign of a belief in a Just World. Spending cuts nearly always come from things that can’t afford the cuts. Simplistic solutions work in a world that is (or should be) fair. However, they don’t often work in our world.
But the real proof in the belief in a just world is the regard for how the poor are truly responsible for high taxes. The worst aspect of the belief in a just world is victim blaming. And though that belief that the less well off are responsible underlies every myth we’ve discussed in this article 3 it’s most apparent here. The reason taxpayer rights groups exist is not just because everyone is selfish and wants more take-home pay, it’s because they believe in a just world, and in a just world the poor must be doing something wrong to be poor (whether that be laziness or some deeper moral failure). The system is currently unfair because the poor didn’t follow the rules of our Just World, and now the system has been corrupted because of them.
People who join taxpayer rights groups or who support taxpayer rights candidates believe that they have followed the rules of society but, for some reason (usually laziness and corruption), society has not rewarded them in the appropriate way. They pay what they feel is a disproportionate share – they take on more of the burden than is just.
And why is this happening? Well, it’s happening because some people haven’t followed the rules. You can divide those people into two groups: those who exploit the rules by running for office (or by getting a cushy, unionized job with the government where they are paid to be lazy), and those people who take advantage of kind, decent people like the Taxpayer to live off the dimes of others.
It’s the poor, really, who are to blame for this imbalance in society. They don’t work hard, they have no self-discipline, they have figured out how to exploit a system that was already set up to let them exploit it. The poor are poor because they want to be and/or because they are allowed to be. And that is why the world needs to be set aright. The greedy politicians and lazy bureaucrats are only taking advantage of this imbalance – they’re doing what anyone would do in a position of power except me, the noble taxpayer. I have followed the rules. I have paid my taxes. I have been an upstanding citizen. I am a good, moral person that has done everything I can. But I’ve been taken advantage of by the leeches. And now it’s time to set things aright.
The Fallacy of Less Taxes in the past
For what I gather are rather complicated reasons, there appears to be a core group of “conservatives” in both the United States and (to a lesser extent) Canada who strongly, sincerely believe that it is possible to live in society with little taxation, perhaps even no taxation. Some sincerely believe that societies can function with far less government than we currently have (certainly a historical truth, if not one applicable to the present) and that the money that is given in taxes is mostly wasted. (Many of these people believe that this money is taken unfairly, see below.)
In the United States, many trace the problem of modern taxation back to the introduction of the permanent federal income tax in 1913 as if, prior to its introduction, citizens paid a more reasonable amount of taxes, or government was somehow less involved in the lives of citizens, or both.
The problem is that “taxes are the price we pay for civilization” (a phrase usually attributed to Oliver Wendell Holmes). There’s a reason why we all know the cliche about the two certainties in life being death and taxes. Though federal income tax only existed in the United States sporadically prior to 1913, incomes were taxed both by the federal government in the United States (normally during wars but also, for a time, during peacetime), and by other levels of government in the United States. More broadly, incomes have been taxed (albeit in different forms) throughout the world throughout history. Prior to the standardization of money, taxes were paid in other ways – tenant farmers had to give a percentage of their harvest away to the landowner, to pick just one example. Just because a permanent income tax was introduced in 1913 in the US doesn’t mean that, prior to this, the world was somehow free of the oppression of income taxes.
Moreover, other forms of taxes – not tied to income, the ones that are supposedly more fair – have also existed, sometimes in way higher proportions than we have today. Income taxes are an easier way for national governments to fund themselves than other forms of taxation and are, for example, more trade-friendly than tariffs. National governments are bigger than they used to be and more money goes directly to them than used to (given both the relative recency of the nation state – 1648 – and the relative difficulty of a national government having complete control over its territory prior to modern communications).
There is no society in history where people didn’t have to pay some kind of price for membership. That price has been steeper or cheaper throughout history but the idea that one doesn’t have to pay that price, or that price could be made cheaper at a time when governments are as large as they have ever been is patently absurd. 4
We should separate the fallacy of a taxless society or a society with fewer taxes into its component parts: it’s easy to dismiss the myth of a taxless society as just wishful thinking of a hardcore libertarian/anarchist fringe; pipe dreaming that at least some portion of the population will always be prone to. Someone is always going to espouse utopian ideas and most of those utopian ideas are going to be inherently unrealistic. Much utopian literature of the past focuses on human beings getting stuff for free or for less and the idea that human beings do not have to pay for things will likely always appeal to lots of people.
But the ideal of a society with specifically fewer taxes – an ideal which appeals to a mythologized past where government was smaller, government was more efficient, government was better – is an idea that is not so easily dismissed. Sure, a look at the history of human civilization will show that taxes of some form are a certainty, but that doesn’t necessarily lead to our current system being acceptable. What if government could be more efficient? What if government could and should be smaller than it is? (I mean, governments have never been larger in human history.) What if the welfare state isn’t just some historical accident but rather a nefarious plot to enslave us?
There’s nothing wrong with criticizing how our money is spent. We should do that as much as we are able. But it’s the tone, tenor and substance of this criticism that is often the problem. Instead of wanting government to spend our money better, we want government to spend less of our money and, therefore, take less of it, as if it’s as easy as just saying “Spend less!” We know, from history and from institutional creep that this is easier said than done. And yet most of us cannot accept the size of government as a reality (as historical contingency) and believe we can waive a wand and things will be back to “normal.”
We believe there is an underlying “right way” to run government – usually the way private businesses are imagined to be run 5 – and that this is not the way that our government is doing it. Sometimes this criticism crosses party lines. But in North America, particularly in recent decades, we have seen this criticism leveled far more against parties on the “left,” which spend the money on people, rather than parties on the “right,” which spend the money on the military (in the U.S). and on crime. The money spent on security seems to get a pass for some reason that has always eluded me.
Anyway, this view arises from the belief that there is “right” way to spend money and that this right way existed at some point in the distant or near past. A “right” way to spend money means there is a moral or just way to use the public purse. But there is not. There is only human beings attempting to do what they think is right. And given that government is a reality – an unfortunate reality for those of us who wish we could live in a completely “free society” – it’s more important to criticize how money is spent than that money is spent at all.
Criticisms about government spending need to be focused on excess, on misspending, on inefficacy, not on the some fanciful idea of fairness about a correct tax rate (see below). Solutions that are completely focused on “spending less” are never going to solve actual problems.
The Fallacy of the Effectiveness of the Market Mechanism
There is an unfortunate deification of the “market mechanism” in The West, particularly in the United States. The idea is that there is indeed an “invisible hand” that causes the chaos of individual actions within a free market to add up to greater good for everyone. It follows that only private enterprises can efficiently provide services; government is incapable of doing so.
In my view this stems from a simple misunderstanding of Adam Smith’s “invisible hand” that has been passed down through history. Adam Smith used the term as a simile and metaphor but many people in our modern capitalist economy view the “invisible hand” as something that is an actual thing, something that is unchangeable and not context dependent. This religious belief in The Market leads to the unfortunate view that a free market solves all problems.
One of the grave misunderstandings here is that people who believe that the free exchange of goods solves our problems – that services can be better provided by private enterprise – confuse efficiency with effectiveness. Efficiency is usually seen as cost-effectiveness. Effectiveness is mere effectiveness, regardless of cost. (What determines effectiveness, then, is the aim; what determines efficiency is usually the amount of bang per buck.)
Private enterprise is absolutely better than public enterprise at many things, not the least of which is innovation. (For historical proof of this idea, just compare the histories of China and Christendom. It is the society that relented and allowed free enterprise that came to dominate the world.)
But private enterprise is not always superior. Even since I gave up my own libertarian ideals, I have always wondered how exactly libertarians believe roads could be constructed in a society where government is only focused on external defence. For example, toll roads in our modern societies are almost always public enterprises. In 2011, there was a legendary proof of the foolhardiness of private enterprise providing all services, when a fire department in Texas allowed a house to burn down because of a failure to pay a bill. How can private enterprise promise effective services for all when, by definition, the services are only available to those who pay for them?
When the goal is profit more often than not, profit-driven enterprises cannot do as good a job of meeting that goal. And there are numerous public services that need to be effective not just efficient (or where efficiency isn’t even a virtue). Few would argue that a country needs a military, but why is it that some people feel as though we do not need public infrastructure or emergency services and that these could better provided by private enterprise?
It is important to constantly debate the scope of government and the relative effectiveness of private, public and mixed infrastructure and services, but that is a fundamentally different conversation to the untenable and rather laughable idea that everything must be provided by private enterprise in an entirely free market. Not only is that a circumstance that has never existed in history – there has never been a society of a free individuals contracting for each and every thing between each other, if indeed that would even meet a definition of ‘society’ 7 – attempts at marketizing services often lead to awful absurdity, such as that fire incident in Texas.
The idea that a completely free market operates to an end which is beneficial for all (or nearly all) is an idea that could have only originated in protestant Europe. It is an idea that reeks of a benevolent, disinterested god – a deist god. And it is completely, totally baseless.
The invisible hand does not exist. It does not exist because what Adam Smith was figuratively describing was not actually a completely free market – there were human-made laws governing the economy even then! – because Adam Smith was using figurative language to express a phenomenon he was observing in a very particular place and time, and because, for the invisible hand to exist in the way that so many people seem to think it does, it requires the existence of something extra-human, such as God.
But economics isn’t extra-human or pre-human by definition. Economic interaction only exists because humans do. Whatever patterns we humans create only exist because we humans exist and interact with each other. These patterns are not necessarily universal; they may be, but nobody – certainly not Adam Smith and certainly not any number of other economists since then – has established that any particular economic pattern is universal through all time, space and circumstance. 8
Only in a just world could an invisible hand actually guide the actions of all people towards the greater good. The belief in the existence of an invisible hand in the free market – or even the belief that “invisible hand” is a good description for the results of the sum of all actions within the free market – rests completely on an irrational assumption that the world is fair. How else could we explain the belief that a bunch of uncoordinated actions – essentially small historical accidents – must always add up to something that is a net positive for society?
The Fallacy of the Taxes-for-Services 1-to-1 Ratio
There are people who believe that taxes are (or should be) service fees: you pay for what you get. Aside from the problem that we all live in societies that use progressive income taxation – i.e. societies have pretty much uniformly decided progressive taxation is fairer than a flat tax (see below) so that the rich should carry a bigger burden than others for the cost of services – a bigger problem is that service fee-based systems of taxation have never sustained societies. As with the above fallacy that taxes were always lower until the welfare state came into existence, this view just has no historical support – some people have always “paid” more and some have paid less.
In modern capitalist society, when the rich are richer than the rest of us numerous times over, service fees make a lot of sense as a supplement to other sources of government income, but they cannot provide effective services for the rest of society. How does a homeless person pay for a food bank, for example? You might say that we live in the period in human history when a pay-for-what-you-get model makes perhaps the least sense it ever has: never before in post-industrial society has the concentration of wealth in the hands of the few been so extreme. A pay-for-use tax model here and now would defund government by destroying the tax base or it would render services way too expensive for the majority; either way, most of us would be fucked.
It’s also worth noting that if we did live in a service fee-only society, they’d likely be a lot higher than we think they should be, because we’d be paying not just for that service but for the infrastructure underlying the service. Things cost money. There’s no reason to suppose that a small business owner would be less out of pocket if he had to pay specifically for the water he uses at free market rates, the electricity he uses at free market rates (for problems with “free market” utilities see, for example, The Smartest Guys in the Room), the use of the sidewalk in front of the business, the parking spaces and the road in front of the business, and all the other things that do not actually belong to business, but which the business uses. (And we’re not even dealing with the emergency service issue, see above.) I mean, maybe the business would save money eventually, once the giant SNAFU of ending property taxes has finally been paid for, but I don’t know how anyone can say that’s a certainty. Rather, I think people will be just as unhappy about paying for things then as they are now. Because even though things cost money, nobody likes paying for things. (Well, really rich people like paying for really expensive things they don’t need, but that’s about it.) This is just the current manifestation of the pipe dream of a free lunch.
Service fees are useful and are something that governments need to implement to a greater degree. For example, toll roads that cover similar territory to non-toll roads but promise less traffic or better conditions or what have you – that’s a fine idea (one that has been implemented more in the US than elsewhere). Charging differing fees based on distance of travel on public transportation when it is not the only means of travel – another fine idea. Charging higher rates for usage of utilities well in excess of the average consumption – sure. But providing everything on a usage basis is both unrealistic and unfair. There are more people than you would think who cannot afford to pay for some of the utilities and services that they need, and others can help subsidize the less fortunate as, you know, the cost of being part of civilization.
This is the most obvious case of the Just World Fallacy applying to these arguments. The idea that you pay for what you get presupposes fairness. Sure, one might say that this is what happens in the marketplace, but that is absolutely not true.
Rather, we pay what we pay for things based on a host of complicated emotional and economic reasons. Sometimes we get a good deal – we get more value or more perceived value for less money – and sometimes we are forced to pay more for what we view as less. Few if any of us pay “fair” prices every transaction of every day. We pay what the market will bear and we pay prices that make us feel better about ourselves (at least as often as we can). That’s not the same thing as paying a fair price. We need to believe we pay a fair price most of the time, but it doesn’t make that price fair in any extra-human sense.
As I noted above, user fees for those who can afford them can be a very useful tool in generating additional revenue for the state. But it is an archaic and frankly cruel version of “fairness” to think that the only fair way to provide services is to those who can pay for them. That defeats the whole point of having social services in the first place. (Of course, the libertarian would say we don’t need social services.) And utilities don’t just magically arrive at your doorstep. They need infrastructure.
Fairness is a construct. We can debate about which version of that construct we should apply to our interactions with each other and government. But the belief that fairness equals a monetary transaction is naive, impractical and based on an assumption that the world is a place where everyone gets a fair deal. Nobody gets a fair deal unless all parties involved in the deal view it as fair (i.e. they believe it is fair, because it is not fair or unfair in and of itself). Because fairness is a social construct. It doesn’t exist outside of humanity. Taxes for services used is fair only in the eyes of those who have more money than other people. The feeling that this must be considered fair for everyone – including people who are not rich – is a symptom of the fallacy that the world is just.
The taxes for services argument is a symptom of the Just World Fallacy because people believe the poor are poor by choice or by moral failing. The poor could truly pay for their own services if they had to. But because of entitlements, they don’t, and so the rich are exploited by our current taxation system, that charges the rich more money than what they receive in services rendered, while allowing the poor to pay less and exploit the rest of us.
The Fallacy of the Fairness of a Flat Tax
Part and parcel of many of the above claims is that progressive taxation is unfair and that only a “flat” income tax – a tax that each individual pays at the exact same rate – is truly fair. If there is one idea that taxpayer rights advocates support that is emblematic of their delusion that the world is fair, it is this flat tax, one of the most preposterous ideas ever proposed for tax reform. The flax tax proponent assumes that everyone in a society – 36 plus million in Canada, for example – is equal, which is so obviously untrue it’s laughable. The flat tax versus progressive tax debate rests on a disagreement about the nature of fairness.
On the one hand, we have the concept of fairness as neutrality: Everyone is equal under the law. (If everyone is equal under the law, why do we have progressive taxation?!?! Argh!) This is a vision of fairness that is as old as philosophy itself, but it’s also a vision of fairness that is hilariously out of touch with reality. Only a civilization that decided that ideas predated humans could have conceived of a world in which humans could be neutral to each other. But it’s an idea that has been extraordinarily influential and much of that influence has been positive. The myth of the “neutral state” is possibly one of the few great Noble Lies.
On the other hand, we have what we might call the Aristotelian idea of fairness, which is that fairness is to recognize difference and to acknowledge difference in order to be fair. For example: Say a non-English speaking person is charged with murder in an English-speaking jurisdiction. This person only speaks Mandarin. What is just? Is it just to charge the Mandarin-speaker with murder even though she has no idea what’s going on, and to proceed with the trial why she sits there confused and disturbed? Or is it just to provide her with a translator so that she can at least be aware of what is happening? 9
But if the Mandarin woman gets a translator, why I should get one too, right? It’s only fair…
Differences exist. We can pretend they don’t but all we’re doing is lying to ourselves. There will never be a completely fair tax system. Fairness is a human ideal imposed on a world that is not ideal, it just is. But we can make things fairer, and a progressive tax system is fairer simply because it recognizes aspects of reality that a flat tax does not. A flat tax would be either horribly unfair to the rich, or horribly unfair to the poor, or unfair to both but fair for some group in the middle. It would not actually be fair for everyone. We don’t live in a world where everyone is the same. And in our current society, where there are extraordinarily rich people, it’s hard to understand what a flat tax is supposed to do, beyond make the rich even richer (and allow the poor to starve).
But from a practical perspective, it’s worth noting that a flat tax would cripple the public purse, unless it was insanely high (and then it would be unpayable for a huge portion of society). Do you like all the nice things we have? Because it’s hard to see how we’d keep them if we defunded our governments through a flat tax. The demand for a flat tax relies on the same idealistic dreaming that a service-fee only society is based on.
The belief that we are all equal has long been an important part of liberal and socialist ideas (not conservative, at least until very recently). But it is a religious idea with its roots in Christianity. It is also a useful myth for defending individual rights, for promoting social change and for criticizing government abuse of power. But it’s still a myth. We may be all equal in our humanness – and, we might claim, in something vague and insubstantial such as human dignity – but we are not the same in any material way. Treating us that way doesn’t actually help.
It is a balance our societies try to strike: treat people as equally as possible in the eyes of the law, for example. But it is impossible to treat everyone exactly the same and such practices easily lead to absurdity.
Ever since societies existed, there have been powerful and less powerful people. Ever since money existed, there have been rich and poor people. Even societies which have tried to force income equality on everyone have had rich and poor – in every single communist society there were still haves and have nots. It’s reality. To ignore this fact is to ignore reality and to actively punish those with less money. I don’t see how that fits an idea of fairness, however we want to construct it.
The belief that a flat tax is fair is a symptom of the belief in a Just World because it is the belief in a Just World (and a world made fair by a “free” market) that demonizes the poor as lazy and exploitative. A flat tax is fair if everyone is equal in their abilities and opportunities, which is something we believe in if we believe the world is fair. But the world isn’t fair. And the poor are not poor by choice.
The Fallacy of the Social Contract
The most extreme form of attack on the reality of taxes comes from those who believe that they can opt out of the system by choice, which is an idea that comes from the fundamental philosophical basis for modern western societies, the social contract.
Our liberal democratic society is built on the unfortunate foundation of contract theory – the idea that societies are agreements between free members, where we have all accepted some degree of restrictions on freedom (and coercion) for our own self-interest. This theory dates back to Thomas Hobbes (or earlier) and has been famously articulated by John Locke and Jean-Jacques Rousseau. Despite the fact that it’s a complete fabrication, it’s still compelling to many if not most of us to this day.
The social contract was a necessary myth: Hobbes needed something to explain why free human beings would voluntarily submit to omnipotent authority and, at the time, history was not what it is today (they didn’t know that this didn’t happen). Besides, a historical explanation of how people have moved from living as nomads to living in cities over thousands of years is not necessarily an argument for the idea of inalienable rights.
Inalienable rights are one of the great legacies of the Enlightenment, but the myth used to initially defend them is just not true: at no time in history did people decide to join together and relinquish their inalienable rights in order to preserve their lives. It just didn’t happen like that. Inalienable rights were invented by human beings thousands of years – tens of thousands of years – after people began living together in permanent communities.
It follows that you don’t actually have a right to secede from society just because a couple of guys used a silly thought experiment to defend what could not be defended in other ways. We didn’t have enforceable bills of rights in 1651 or 1689 or 1762. These men had to come up with a reason why we should have them. Now we know from experience that individual rights are good. So we don’t need the thought experiment any more.
But what we do need is people to stop claiming they have a right to stop paying their part for society because they say they never consented. Just because Thoreau going to jail for the Mexican-American War is appealing to you when you’re 18 and angry doesn’t mean this is a reasonable position for an adult to take. Taxes are the price we pay for civilization. If you don’t want to pay taxes, you don’t want civilization.
Social contract theory is a myth. It’s a theory in the popular sense of the word, something imagined to explain something, not in the scientific sense of the word. It was an extremely useful myth for humankind, allowing people to argue, demonstrate and fight for defensible individual rights at a time when such things probably seemed impossible. These rights are one of the great legacies of the enlightenment. But these rights are made up – we decided we should have them. It turns out, they work very well for us. All of us in countries that respect most of our individual rights enjoy these rights, even if, much of the time, we wish other people wouldn’t get to use them as we do.
Social contract theory is a myth. But the underlying idea that we humans collectively got together to decide what powers to give to government is a myth we have no need of any more. It’s a myth that has literally zero historical basis in reality – humans are social animals, not individual animals that one day just decided to be social – and it’s a myth that relies on all sorts of incorrect beliefs about the nature of the world, particularly that the world is just.
Only in a just or fair world could free-thinking, rational individuals sit down to negotiate a contract between themselves and the appointed leader. The theory of the social contract assumes that pre-society humans were literate, that they were rational (oops), that they knew what contracts were and could draw them up in a fair manner, that they understood the differences between living apart and living in common, that they could rationally assess the pluses and minuses of those differences and that, rationally, they decided to choose civilization in a fair deal between future ruler and future ruled. Aside from the fact that none of those things could have possibly been true of humans prior to civilization, this myth assumes that individuals were all equally capable (i.e. that the distribution of talents was fair) and that they were able to come to a rational agreement (i.e. that it is possible to come up with a fair deal).
Only the Enlightenment protestants could have ever come up with such a utopian vision of the past. And only the spoiled products of our historically super rich society could ever imagine that this was some kind of bargain that they have the inalienable right to opt out of whenever they feel like it.
The focus on the so-called rights of the taxpayer and the reduction of taxes as the sole goal of policy is a simplistic, problematic and potentially harmful electoral strategy. The lowering of tax rates in and of itself will not solve any problems but will, rather, create additional problems.
But the rise of this phenomenon illuminates a far deeper problem in western society, one that is currently producing a heretofore unimaginable candidate for American president, for example. There is a crisis in the West, a crisis of belief and of maturity. Despite all evidence to the contrary, we believe the world is fair (albeit fair towards us). We believe we deserve things other parts of the world do not. We believe it’s our right or our destiny. Taxpayer rights groups as just one aspect of this phenomenon. Those who want taxes lowered above all other things believe that their rights have been violated by the growth of the welfare state. That the welfare state, in its attempt to care for all, is violating the sacred contract of the just world. And the result of these fallacious beliefs is the demonizing of the poor that we see so often with taxpayer rights groups, and from anyone who is mad about “entitlements.” If the poor had only kept their part of the bargain, things will be different.
The world is not fair. This fact is something we need to understand and recognize to be considered mature human beings. Instead, we behave like children, complaining that people less well off than us are somehow getting more than we are, despite all evidence to the contrary. The demand for lower taxes (or a taxpayer bill of rights) is a childish reaction to actual problems that need actual solutions. We need to recognize when our deeply held beliefs cause us to act in childish and unreasonable ways. We need to understand that the world is a complex place that has existed before us and will continue to exist after us. We need to understand that our belief that the world owes us something is a product entirely of our society and our nurturing, and does not actually reflect the reality of the world. We need to grow up.
- When I used to live below the poverty line, I got a big cheque every May. It was big relative to my income, it wasn’t big. It was a couple of thousand dollars in a good year. A couple of thousand dollars. If I hadn’t paid my taxes nor had I field them, I would have kept this money and the government never would have had it. But there’s only about 10% of the population in this state. If every single one of them evaded their taxes – which would be a huge problem in and of itself, if 10% of the population, regardless of wealth, didn’t pay their taxes – we’re talking about half of the federal budget. If the richest 1% didn’t pay their taxes, we’re talking about a 6th of the budget – at the current Canadian tax rates. The point is that tax evasion by the rich (be it the richest 1% or the richest 10% or the richest 50%) has a far greater impact on the public purse than tax evasion by the poor, at least in our current progressive system. ↩
- In Canada, the poor get some of their HST/GST back throughout the year, however. ↩
- a flat tax is necessary because progressive taxation allows the poor to be lazy, I have a right to withdraw from society because others have violated the social contract, taxes-for-services is necessary because the poor leech off the system, the poor’s reliance on the state causes government to intervene in the market in unnatural ways, I only have to pay taxes because people are lazy ↩
- Attempting to make government smaller may be a reasonable goal but it is not the exact same goal as lowering taxes and it is a challenge that will come up against all sorts of problems. The problem of the ever-increasing size of government is a problem of institutional creep – institutions grow as a way of demonstrating they are relevant – and decreasing the size of government is not solely a matter of defunding government. Selectively defunding government – as most “small government” politicians only take funds away from only specific parts of government, not government as a whole – has not made government smaller, government still increases in size. So shrinking government is not a mere matter of promising to cut taxes. ↩
- Just because we might believe private companies run efficiently does not mean they run efficiently, they are run by people after all. ↩
- One suggestion is that we should have publicly funded private services. I have seen both effective and ineffective versions of these myself and I think there are merits to both sides of the argument, depending on the service. ↩
- Would contract law be abandoned too in a free market? Isn’t contract law necessary for a successful market economy? ↩
- This is not to deny the existence of some semblance business cycle in the industrialized West for the last 150 years, but rather to point out that this cycle is 150 years old, whereas human interactions with each other are 200,000 years old, or older, so a 150 year old cycle particular to part of the planet during that period is not universal through time, space and circumstances, no matter what an economist might tell us. ↩
- I stole this idea from somebody, but I don’t remember who. If you know, please leave a comment below so I can correctly attribute the source. ↩
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