Taxation, Forced Labor, and Theft.

• Author: FESER, EDWARD

The injustice of taxation--of taxation per se, not merely of this or that particular tax policy or of especially high levels of taxation--is a familiar theme of popular libertarian rhetoric. Curiously, it is less evident in the more sophisticated statements of libertarianism emanating from libertarian political philosophers and economists, who tend to base their arguments on appeals to more abstruse considerations of utility maximization, rights theory, and the like. To be sure, a critique of current tax policies, perhaps even of most taxation as such, may often follow from some of those more fundamental considerations; but even so, the connection often has the appearance of an afterthought, something to be passed over quickly on the way to treating more pressing matters. One simply does not find many libertarian intellectuals--certainly not many libertarian academics--insisting that the institution of taxation that sustains the Leviathan state they oppose is clearly and fundamentally illegitimate: illegitimate not merely as currently administered, nor only for reasons that are inconclusive and in any case highly derivative from other considerations only slightly less inconclusive; but illegitimate for reasons that do not require a great deal of argumentation and are difficult in good faith to avoid recognizing--illegitimate for the same sorts of reasons that slavery is illegitimate.

Two important scholars who have insisted on this illegitimacy, however, are Robert Nozick and Murray Rothbard, who presented in their paradigmatic forms the main libertarian arguments against taxation. Strangely, however, those arguments have not been widely discussed even by other libertarian intellectuals. Whatever the reason for that neglect, it has nothing to do with the quality of their arguments. These arguments can be defended against the objections made against them by the (relatively) few critics of libertarianism who have paid them any attention, and they themselves provide a powerful prima facie case for libertarianism.

Nozick on Taxation, Forced Labor, and Self-Ownership

Nozick famously defended the claim that no state more extensive than a minimal state--one that protects individuals from force, fraud, and theft, and that enforces contracts but does little or nothing else--can be morally justified, but he also argued that at least such a state can be justified. In line with this argument, his rejection of taxation is not absolute. He allows for whatever taxation is required in order to fund the activities of the minimal state. He does, however, intend to show that taxation of one's earnings from labor for any purpose beyond that of funding the minimal state--taxation to fund welfare programs, social insurance, the arts, scientific research, and so forth--is morally illegitimate. Therefore, his arguments, if they succeed, carry us far toward a general critique of taxation as such. (As shown later, Rothbard's arguments--and perhaps even Nozick's arguments, if carried through consistently--get us the rest of the way.)(1)

Nozick minces no words in introducing his discussion of taxation: "Taxation of earnings from labor is on a par with forced labor" (1974, 169). This argument is Nozick's best-known objection to taxation and the one he stresses most; he also has a second related but different and philosophically more fundamental objection that such taxation is inconsistent with self-ownership.

Taxation and Forced Labor

Nozick's first argument (1974, 169-71) can be summarized as follows: when you are forced to pay in taxes a percentage of what you earn from laboring, you are in effect forced to labor for someone else because the fruit of part of your labor is taken from you against your will and used for someone else's purposes. Of course, the taxpayer is not forced to perform a specific kind of labor and, in fact, is more or less allowed to perform any kind of labor he likes, but that is not relevant: despite the fact that you may love pumping gas, if you pump gas for three hours for someone else's purposes and do so involuntarily, your labor has been forced. A slave told by his master that he can choose between chopping wood, breaking rocks, painting the house, or even painting a picture, but that he must do one or the other of these chores, would not be any less a slave. Nor is it relevant that someone could (unlike a typical slave) choose not to work at all, or at least not to work beyond what is required to meet his basic needs, and is taxed only on the income produced beyond that point. The basic condition remains: if you work at all, or at least if you work beyond the point required to meet your basic needs, you will be forced to work part of the time for someone else. The part of your labor that generates the money paid as taxes is labor you would not have performed voluntarily. If the taxes on eight hours of labor amount to three hours worth of wages, then for those three hours you worked involuntarily for another's purposes. By working only five hours, you could not have avoided paying the taxes and thus have avoided working for another's purposes, for then the state would simply have taken instead the same percentage of the earnings from five hours labor and likewise for any lesser number of hours.

It is important to understand how this argument differs from other libertarian arguments against taxation. It is not quite the same as the general claim that taxation interferes with individual liberty insofar as its enforcement is intrusive and it prevents one from doing what he wants with a portion of his income,(2) for there are many who would find such infringements of liberty acceptable but nevertheless consider uncomfortable the notion that taxation also amounts to forcing people to work. The argument also differs from the objection that taxation amounts to theft in that forcing someone to labor and stealing from him are different offenses (although, if we take the former to involve specifically the stealing of labor, the difference between the objections may be one only of generality).

Nonetheless, it is sometimes suggested that Nozick's argument is essentially concerned with the violation of property rights or with theft, rather than with forced labor in that Nozick presupposes that one has a property right in the portion of one's earnings the state takes in taxes, a fight his critics claim he fails to establish (Kymlicka 1990, 107-18; Michael 1997, 141; Weinberg 1997, 336; Otsuka 1998, 71).(3) Nozick's argument, as stated previously, nowhere explicitly appeals to any claim about property rights, and it is by no means obvious that an argument objecting to some practice on the grounds that it amounts to forced labor needs even implicitly to do so. Clearly, I might still be forced to labor for someone else if I labor at all, even if I have no property right in the product of the labor: a slave may own no part of his master's land or tools, and thus arguably he cannot own whatever he produced using them-vegetables, say--but he is nevertheless a slave, even if he is allowed to eat some of the vegetables and thus labors partly for himself. The master might even allow him to idle away the days if he likes, but insist that if he labors to any extent, some of his labor must be for the sake of the master: if the slave grows tomatoes because he wants them, the master will take a portion of them; if he tries to grow only one tomato for himself, the master will nevertheless take a third of it; if to avoid giving the master that third he tries somehow to grow only two-thirds of a tomato, the master will take a third of that tomato; and so forth. Insofar as the master "taxes" away a portion of the product of his labor, the slave has obviously been forced to work for purposes other than his own, even though he has no property right in the product of his labor (the portion of it he is allowed to eat also belongs to the master).

It might be replied that this example would be analogous to taxation in modern liberal democracies only if the slave were allowed to leave the master's property and work somewhere else, as a citizen is typically allowed to leave the state in which he finds himself and thus avoid its taxes. Also, in such a case he would be dubiously considered a slave or forced laborer (so the example would show taxation to amount to forced labor only in a country that generally did not allow emigration, such as the former Soviet Union). Fair enough, but the example would not be analogous to the situation in modern liberal democracies because it would leave us with a picture of the state as somehow the rightful owner of all land and other property in its domain, which it merely permits us to use at its discretion. If we accepted that picture, then Nozick's critics could perhaps defend taxation on the grounds that the products of labor are made from elements that the state owns and to which we have access only as it allows, so that it is within its rights to take a part of the products of our labor. However, in fact, the state (at least in modern liberal democracies) is not and is not considered to be the rightful owner of everything. Moreover, it seems prima facie implausible to suppose that the state should be, and inevitably any society in which it is rightful owner of everything would be a totalitarian one, as no doubt even Nozick's critics would acknowledge.(4)

If they do acknowledge it, their objection to Nozick's argument can have no force, for although that argument does presuppose that the state does not own all property, that is all it presupposes by way of a theory of property rights. It does not presuppose any tendentious theory of the sort Nozick's critics claim it does; it assumes only that individual citizens own some property, and it shares that assumption not only with Nozick's critics but with the state itself. In allowing its citizens to keep at least a portion of their income, the...