Taxation as Penalty

“That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create;”
– Chief Justice Marshall, McCulloch v. Maryland (1819)

“Government taxes what it wants less of.”
– Commonly heard modern-day version

The first statement is generally true, while the second is generally not true, or at least, there is no necessary connection between the two things. Yet, the second is often stated as either a summary or a consequence of the first. Where is the difference exactly, and why do people who think they’re similar make this mistake?

First, why is the original statement true? Well, it’s mostly true, not strictly, axiomatically true in some lock-step logical manner. It’s true, to the extent that it is enforceable, because if taxation is increased to 100% on some product or activity, then there is no economic reason to produce that product or engage in that activity. A tax of 100% on income of any kind would effectively be slavery. (The history of tax revolts shows that you don’t need anywhere near a 100% tax rate to make taxation unenforceable. But there is as long a history of actual slavery, too.)

So, it’s easy to see that taxation can destroy an economic activity. Tax blueberry muffin income at 100%, and you won’t get very many blueberry muffins sold anywhere.

When we look at the second statement, though, we’ve moved from a statement about power and cause-and-effect to one about goals. In short, the first statement is one of means, and the second is one of ends.

Consider the story in The Seven Samurai (1954) by Akiro Kurosawa where a band of raiders plans to take most of the harvest of a local village. The first statement above could be re-stated as such: “The raiders have the power to destroy the village by taking all their food (or enough that they starve anyway).” But the second statement, similarly re-stated, makes little sense: “The raiders want the villagers to produce less food.”

Of course, it may be that the raiders are a combination of opportunistic and sadistic and would really like to see the villagers dead. But it’s easy to imagine that the raiders would be quite happy to have the villagers continue to produce food, even at a higher level, so that they might return season after season and steal from them. This makes perfect sense as a long-term plan, and if anything, the raiders should be quite happy to see the villagers produce more food than ever if that were possible.

Consider another story, that of Robin Hood, wherein a tyrannical usurper taxes the local populace mercilessly. As Rothbard says, the government is a gang of thieves writ large, and there is no essential difference between the two stories in that sense. And again, we don’t see the villainous king wishing for the population to have less income necessarily. He may wish it to the extent that a poorer population is less capable of fighting back, but this must be balanced against the fact that a starving population is not a great tax base, either. All else equal, he wants the tax revenue to increase.

Again, we see that the second statement is not necessarily true, even in cases where taxation is heavy-handed and vicious.

So, why does it seem like such an obvious conclusion to many?

At least partly, it stems from the idea of Pigouvian taxation of externalities. The actions of some (wrongly) impose costs on others. Taxing those actions will thereby reduce (or eliminate) those actions and thus reduce (or eliminate) the costs put on others. Here we have a clear connection between means and ends; taxes are the means, reduction of an activity is the end.  And with this connection, it’s easy for some to then view that means as essentially connected to that end. If you tax something, you must want less of it. Otherwise, why would you tax it? Don’t you know what that gets you?

Thus, for example, corporate taxation is intended to limit the number (and/or the power) of corporations. Taxing capital gains is intended to limit speculation. And so on.

While it’s possible that an individual politician has exactly that intent in mind, I don’t think it’s at all obvious that one implies the other. After all, there are many ways to limit an activity. Regulation is an obvious one. The number of doctors is limited primarily by the monopoly of the AMA and other enabling legislation, not by imposing a tax on doctors. The same goes for immigration, teaching, and so on.

Another reason for the conclusion is that most people assume that political planners intend most, if not all, of the consequences of their plans.  To take an action is to intend the consequences of that action.  But there are at least two problems with this.  One, government policies routinely result in unintended consequences.  In fact, this is unavoidable, not a matter of incompetence or lack of interest in forming good policy.  Two, politicians and bureaucrats have their own set of incentives that have little to do with the stated purposes of whatever legislation they put into place.  (Was the PATRIOT Act written by and voted for by patriots?  Of course not.)

To highlight this second point, consider the role of regulation.  In general, regulation can be thought of as a version of taxation because it imposes costs and can quite easily destroy an activity, either through an explicit ban or through the accumulation of indirect costs.  And so, people also tend to associate regulation with the desire to limit an activity.  However, regulation often tends to concentrate power in an industry, making it easier for certain dominant corporations to keep out rivals.  Often, the regulations are written and promoted by the industry itself in support of this end.  (Obamacare was primarily a gift to the insurance industry, even though it was portrayed as a way to rein in the power of the same industry.)

So, in conclusion, the fact that someone wants to tax something tells us very little indeed about their attitude towards it.  It’s theoretically possible that the intent is to destroy some activity, but given the array of other means available, the presumption should be the opposite until/unless some positive evidence is provided.  Just like regulation, both the intent and the result may be counterintuitive.

Billy Beck: No Shame

A correspondent to Beck expresses shame for jumping through government hoops to use his car:

Shame at being forced to think and act like this. Shame at realizing this type of behavior was business as usual in the communist countries. Shame at being compelled to take a short cut that on principle I wouldn’t take with my family or friends in an analogous situation.

Beck answers:

The only thing that I have to add right now is something that Tim Starr and Ernest Brown brought to my attention several weeks ago, which is that submission is not the same as compromise.

It’s nice that Starr and Brown recently brought this to his attention but Lynette and I (not to mention Greg Swann) have been telling him the same thing for years. Most recently:

jtk3isme: you pay taxes billy, so it seems to me you can
Wm J Beck III: What did you say?
jtk3isme: i said you pay taxes
Wm J Beck III: I mean: is that really what you intended to say?
jtk3isme: yes
Wm J Beck III: What are you talking about?
jtk3isme: you pay sales tax and other taxes
Wm J Beck III: John… have you *never* paid attention?
jtk3isme: sure I have
Wm J Beck III: I wouldn’t pay *those*, either, if I could find a way to stop it, and this fact has a serious implication.
jtk3isme: you do pay them, which means you *can*
Wm J Beck III: I’ll tell you what I’ll do: I will set up a fucking robot to let you know every Saturday that I haven’t burned myself on the Capitol steps. Will you shut your fucking impertinent mouth then?
jtk3isme: not a bit of it
Wm J Beck III: No, sir: I can’t. They’re different things.
jtk3isme: one theft is in principle different from another?
Wm J Beck III: No, they are different in practice. However, let me put it to you this way: by your way of thinking, I just die tomorrow. Will *that* shut you up?
jtk3isme: No, it will shut you up.
Wm J Beck III: You’re implying a problem of integrity, and I know the solution. Is that what you’re looking for?
Wm J Beck III: That should be at *least* as attractive to everyone involved.
Wm J Beck III: Certainly, the punk Swann might be satisfied.
jtk3isme: I’m not implying any lack of integrity for paying your taxes
Wm J Beck III: Look, John: don’t try to bullshit me.
jtk3isme: I say it’s fine
Wm J Beck III: It’s *not*.
jtk3isme: no really it is okay to live in the world, be it good or evil
jtk3isme: they commit a crime but you do not by paying

My original commentary stands:

We’ve had the same discussion a number of times. Every time we do Beck chooses to construe it as an implicit attack on his integrity, as if I were saying he ought not be paying sales tax and other taxes. On the contrary, I’m saying that it’s fine for him to pay sales tax and it would be fine for him to pay income tax. I’m saying his behavior demonstrates that he judges that paying sales tax is better for him than not paying it – else he wouldn’t pay. His behavior demonstrates that he judges he should pay sales tax (which of course is not to say he should have to pay it, he shouldn’t) to get on with pursuing other values.

And he could pay income tax to get on with pursuing his other values.

Clearly Beck submits to vehicle inspection because he judges his life will be better for that submission under the circumstances. And clearly Beck submits to having his required papers inspected every time he catches a commercial flight because he judges his life will be better for that submission under the circumstances.

And that’s perfectly fine. But Beck explains to Richard Nikoley about how the state is killing him:

I don’t know what any of you ever thought was going to happen to me. I had to explain something to Lynette the other night, which ought to be available to a moment’s consideration by anyone in the custom of thinking. I’m forty-nine years old now, Rich. When I come to face the first serious systemic medical crisis of the sort that commonly happens to human beings approaching that part of their lives, there is going to be no way in this world that I will be able to deal with it in the way that every blinking asshole on the street assumes that such things should be taken care of.

All we’ve done is point out to Beck that he doesn’t have to die that way, that he could get plenty of decent medical care the same way he gets his car registered and the same way he gets to fly to a gig: by submitting to some injustice.

For this we get:

Do you understand? I had to point out to her some elementary facts involving the nature of production and the function of money in human life, because those two people — John and Lynette, who really do seem to care about me with a good deal of the emotive force of hysterics — have serious difficulty at bringing themselves face to face with real-live practical implications of a murderous society. Forever, I have been telling people: “This ain’t no disco. Ideas matter.” Their estimation of my personal devotion to an ideal of freedom rises almost to the level of resentment because I am so serious about it. And I appear to be the only one on the scene who is not fooled: I have always known — every step of the way — exactly where this, my life, was going in the present political circumstances, which have only darkened greatly in general since I took my first adult steps.

I’d like to ask Richard: Do you resent the fact that Beck refuses to pay income taxes while you pay that ransom to improve your life under the circumstances? Does it seem plausible to you that Lynette and I resent him for not paying income tax while we do pay taxes? And if it’s not plausible, then who’s exhibiting “the emotive force of hysterics”? And why?

I have an idea why. Principle does not require Beck to do without health care or the bulk of the fortune he could earn any more than it requires him to do without his car or air travel. Beck could still improve his lot in life dramatically by submitting to some injustices the very same way he already submits to others.

But at 50 it would be a very bitter pill to swallow – to concede, even implicitly, that he has foregone decades of production that principle did not require him to refuse.

The Gulag Du Toit

The spectacle of hispanic protests winding through the streets of America has riled the ranks of cultural conservative freedom fighters, it’s given the straight-shooting Liberty Belles a case of the vapors, and it’s even got Kim du Toit laying in the framework for American labor camps.

Addressing the concern that immigrants might get over or under an American Wall constructed at the border, du Toit proposes:

And we catch them doing it, and either repatriate them (first offense), or imprison them in tented labor camps for five years (subsequent offenses). They wanna work here? Fine. Let them do it as convicts, earning $1 per hour.

Du Toit implies that his labor camp solution could be a joke, but it stands to reason that he’s at least half-serious about it in the face of the high stakes game that du Toit, himself, outlines below.

Jokes aside, here’s the thing.

Illegal immigration costs us an untold amount of money each year, in social services, law enforcement and unpaid taxes. That’s just pure currency we’re talking about.

Now add to that the harm done by drug smuggling, terrorist infiltration and increased gang violence.

Ask me again whether the cost of securing our southern border is too much.

Expense, drug crime, terror, and unpaid taxes inflicted on the country as a result of the unauthorized crossings of a line on a map. That’s du Toit’s justification for apprehending and detaining illegal immigrants at gunpoint, but if the consequences of illegal immigration in the form of drug smuggling and unpaid taxes are unacceptable, then why stop at throwing wetbacks into the labor camps when there’s plenty of tent space left for domestic drug dealers and tax evaders, as well? That’s the beauty of your gulag, Kim. It’ll not only keep Club America exclusive, it’ll also re-educate red-blooded American druggies and tax deadbeats.

The Custom of Thinking

At Two–Four Billy Beck has this to say about my suggestion that he should consider getting health insurance:

I don’t know what any of you ever thought was going to happen to me. I had to explain something to Lynette the other night, which ought to be available to a moment’s consideration by anyone in the custom of thinking. I’m forty-nine years old now, Rich. When I come to face the first serious systemic medical crisis of the sort that commonly happens to human beings approaching that part of their lives, there is going to be no way in this world that I will be able to deal with it in the way that every blinking asshole on the street assumes that such things should be taken care of.

If Billy Beck gets a serious ailment he will need either to pay for his treatment, use insurance, or he may not get effective treatment – just like any blinking asshole on the street would have to deal with it. I’ve suggested just one of many workable solutions to his impending health dilemma. A 49-year-old male can buy a very decent health policy for less than $100/month in most states in this country. $1200 a year. Is it beyond the realm of possibility that Billy Beck could manage such a payment? Yet, he rejects the very idea of it below.

Beck III: Tell me something: what would you have me do when, say, a serious kidney ailment — like the one that my father had in his late-50’s — rolls up on me.
Beck III: Go ahead. Tell me.
Lynette: What did your dad do when he had his back in what, the 1980’s?
Beck III: The United States Air Force — according to their contract with the man for his service — shelled out about a half-million dollars to save his life.
Beck III: Do you undestand?
Beck III: Nothing remotely like that is going to happen in my life.
Beck III: And here is a fact: if I’d been left alone to produce…
Beck III: Of for Christ’s fucking sake: I’m ont even going to entertain that with a mouse click.
Beck III: I mean: this is just stoopid.
Lynette: You can get health coverage
Beck III: You’re delusional on that popint, Lynette.
Lynette: Far as I know you don’t have to be in good standing with the IRS to buy health insurance
Beck III: How the fuck do you think I’m going to pay for something like that?
Lynette: I don’t know
Lynette: You’d think of a way
Beck III: That’s right. You don’t.
Beck III: Like *how*?
Lynette: Landscaping
Lynette: You’re in good shape
Beck III: This is getting absurd.

“Don’t poke it in the eyeball with a sharp stick.”

Another tax protestor was convicted Friday.

Like I said when this “861” nonsense first came to my attention:

What you, Rose, Schiff, and the rest of the folks digging around in the law books don’t realize is that you’re acting like fucking focus groups for FedGov.

You’re all running around with your writs and affidavits and whatnot, showing them where to slam the next wall down in your path.

The evil and destruction of the income tax are apparent to everyone that cares to look, but no one’s going to mind because they all get “free” shit too, and they aren’t about to let their neighbors get away without paying if they can’t.

Which they can’t, all this fringe-flag crap is a quick ticket to the slammer as a political prisoner. If that’s what you want, fine, but realize up-front that rational ignorance is going to keep the vast majority of the populance from giving a damn about you and your tenner.

Seriously: if you want to evade taxes, evade them. Don’t show up on the radar. Double-don’t go around peddling schemes and books purporting to show how to “legally” avoid paying taxes.

First rule of tangling with something a million times bigger than you: don’t let it know you exist.

Second rule: don’t poke it in the eyball with a sharp stick.

This generated a fair amount of controversy. The IRS Caught Cheating! and Larken Answers Critics threads at are full of posts telling me I was wrong, wrong, wrong.

Except, oops, I was right.

The government isn’t going to dismantle itself any time soon, nor are the pitiful voting masses going to suddenly discover untapped reserves of outrage at your self-immolation.

Henry David Thoreau, Bill Clinton, And The Movement Mindset

Here in the declining days of April, having, along with the rest of the mass of thralls, recently sent off a yearly accounting of my life to the bastards in DC, I see that the tax protesters have come out of the woodwork.

And I don’t mean the children of Thoreau, the “this rotten government can kiss my ass” tax protestors. I have respect for those individuals that choose to pursue their own ends in the face of government dictat.

I’m speaking instead of the people that examine arcane legal documents, claiming to have found some nugget of detail therein that exempts them (and everyone else) from a legal obligation to pay taxes.

Like the folks referenced here.

What does someone say when they claim that the Constitution doesn’t authorize income taxes, and therefore the IRS is in the wrong for collecting them? They’re saying that if the Constitution in fact authorized income taxes, then you’d be in the wrong for not paying them. To put it more plainly, if the Constitution authorized you to beat the shit out of Mexicans, would that make it right?

Yes, or no?

Because those are the only two choices on the table, here: either government law is in fact the arbiter of right and wrong, or it is not. If it is, then the government of the United States can rightfully pack up every person it wants to into cattle cars and stuff them into the ovens — as long as the paperwork is correct. If government law isn’t the arbiter of right and wrong, then the arguments about what “the law” purports to authorize are meaningless for determining what ought to be done.

This line of thinking is often dismissed as being impractical. Me, I’m wondering just what it is that people who endorse government are in fact attempting to practice.

The most charitable explanation is that they don’t know, either.

Now, some of the folks in the tax-protest movement admit that their endorsement of government isn’t honest, but claim that it’s merely a means to an end. Most people can’t or won’t understand the moral arguments, they say, so they feel that they need to lie in order to spread their ideas. They don’t call it lying, of course, they call it “making arguments”. But calling a tail a leg doesn’t make it so: words do in fact have meanings.

Look: anyone that can be convinced by rational arguments is best served by being presented with those arguments, which in this case consist of “My stuff! Mine!”. As for those that can’t be convinced by reason, what are the tax protestors offering? They’re offering a lie. But their opponents are offering better lies: free stuff on everyone else’s dime. Sure you pay a little in taxes, but Senator Fatbottom’s getting Frogdick County twenty million bucks in Federal grants because of it! What, you wanna get rid of all the things that the government gives you?

It’s transparent nonsense, but unlike the transparent nonsense the fringe-flaggers are offering, it’s attractive nonsense. Consumers of nonsense will take attractive nonsense over unattractive nonsense, the proof of that is as close as the last election you care to examine.

If the tax-protest movement were serious about attracting people who can’t process rational arguments, they’d adopt tactics from other purveyors of foolishness. Why not claim a religious vision about the issue? That works very well for attracting hordes of people who aren’t inclined to think too much about the matter in front of them. Why not find some celebrity to endorse their cause? Courtney Love yelling “Taxes fucking suck!” at a concert would garner more attention and thus more unthinking converts than the tax protest movement has achieved to date.

The answer is of course that they aren’t interested in either making good arguments or in gaining support for their cause, they’re interested in eating their cake and then getting to have it, too: they want to feel like they’re making some sort of moral argument while at the same time feeding appealing lies to the masses.

The end result of that, as always, is that they’re left with neither principles nor appeal.

Political movements lead to exactly nowhere for principled individualists, because mass politics require the suppression of individuals in favor of the collective. Honest individualists recognize this and abandon mass politics for the pursuit of their own values. Opportunistic collectivists realize this and exploit mass politics for their own ends. Movement types, well, they play-act at principles while they analyze what the fringe around the American flag really means.

It’s up to you what you want to be: Henry David Thoreau marching to the beat of his own drummer, Bill Clinton eagerly fleecing the masses, or some pitiful myope dropping his shovel and petitioning his masters because they aren’t whipping him according to regulation.

Why Conservatives Will Always Lose

Y’ever wonder why the right-wingers always seem to be left standing around slack-jawed in the aftermath of the latest socialist advance? Read this:

Republicans Plan Push For Elimination of IRS.

“People ask me if I?m really calling for the elimination of the IRS, and I say I think that?s a great thing to do for future generations of Americans,” Speaker of the House Dennis Hastert explains in his new book, to be released on Wednesday.

Granted, Drudge doesn’t shoot 100%. But this is exactly the sort of bold action from principle that Bush has been known to do, and freeing us from the tangled gordian knot of the IRS would indeed be a gift to the future of America.

Now, I’d expect that some sort of IRS-replacement scheme would involve one or more of the following:

1) a National Sales Tax, a one-time tax at the point of sale;
2) a Value-Added Tax (VAT), which gets tacked on at some magic rate at every transaction of an item (trees -> lumber -> house = 3 taxes);
3) a Goods and Services Tax (GST), which is #1 and/or #2 on parts and labor.

This is supported by Hastert’s own words:

Now consider that a flat tax, national sales tax, or VAT would not only eliminate the need to do this, it could also eliminate the Internal Revenue Service (IRS) itself and make the process of paying taxes much easier.”

“By adopting a VAT, sales tax, or some other alternative, we could begin to change productivity.

Let’s ignore, for now, the point that the enforcement mechanism for all of this would necessarily be at least as large and as intrusive as the IRS. Let’s also ignore the fact that Hastert wants to make taxation “easier”. Instead, let’s think about what happens after this plan is enacted.

Why wouldn’t there be a higher tax rate for “socially irresponsible” goods and services? A 100% tax rate on booze and smokes could go towards combatting those evils, or at least towards funding government agencies whose purported agenda is combatting those evils. They’re both the same, as far as the voters know anyway. A 50% tax on guns and ammunition could go towards reducing gun violence and putting 100,000 more police on the streets. Disparate tax rates on three-cylinder Low-PollutionMobiles and evil gas-guzzling SUVs would prod purchasers towards environmentally-friendly alternatives, although the local, county, and state VAT/GST on motor vehicles would encourage even more to use public transportation.

What’s that, you say? Local versions of a National Sales Tax? Why not? Here in the Evergreen State, I’m sure a 5% GST on automobile parts, services, and sales (all to fund the Great Monorail Leap Forward, of course) would be happily enacted by the urban core localities. In fact the possibilities are limitless: backwards Southern counties would be slapping 1000% taxes on sex toys, urban hippie hellholes taxing gun shops out of town. Want to stop private gun sales in your state? Simply add a modest VAT, since only businesses can get VAT registration numbers, and a business that does firearms transactions must have a Federal Firearms License: “Sorry, it’s those gol-dang Federal laws that’re making this happen – we’re just trying to fund gun safety. You aren’t against gun safety, are you, Citizen?” It’d be a dream come true for every would-be social engineer on every Hicksville city council.

But the guy who wrote the gushing quote above isn’t seeing the natural, inevitable results of this particular bit of policy wonkery. He’s only focused on the here-and-now, which as near as I can tell is about 80% “Re-Elect Bush” and about 20% “No More IRS”. He and his fellow voting conservatives never stop to think that the policies they agitate for will extend beyond the next election – government institutions are tools that will respond to whoever is holding the handle, and it won’t always be Bold-Principle Bush.

An Unsurprising Turn Of Events

Lew Rockwell notes a tidbit about the famed anti-tax loon Irwinn Schiff:

Author Irwin Schiff, at war with the IRS for years over his aggressive claims that paying federal income tax is voluntary, may finally have turned defensive. In a back-tax-collection case in Las Vegas in January, Schiff told the court in a filing that he suffers from delusions, including a fantasy that he is the only person qualified to interpret federal income tax law. Schiff’s psychiatrist said Schiff has been paranoid for years, stemming from his having lost heavily in a tax shelter that turned out to be a Ponzi scheme.

I’m guessing that Schiff’s throwing in the towel, here. I’m only surprised that it took this long.

I have never, ever, understood the tax-protest movement. They seem to feel (not “think”, note) that the government of the United States will follow its own written rules if only they bravely sacrifice themselves for their “cause”. Morons, every one of ’em. When some activist is tangling hard with the government, they are making a bet that the government will judge them harmless enough to let alone. The Bonus Army marchers, for example, took the wrong end of that bet.

Despite my disdain for activists in general, I think I despise the so-called right wingers more than the leftoids. The right inevitably brings up the Constitution in the defense of their pet cause, and that is inevitably a losing game. They’re doing me a helluva disservice by conceding the premise that “the law” is indeed right and proper, and that “the law” ought to be followed. Some days, I wish that FedGovCo would just up and can the whole Bill of Rights, just so’s I could hear what the right-wingers would say. Not that I think they’d grow any principles or anything – they’d like as not spend the rest of their gulag years trying to prove that an undotted ‘i’ invalidated the whole thing, and could they have some freedom now, please? At least the tree-sitting hippies aren’t spending their time building legal precedents against themselves.

It looks like Schiff is going to join the rest of the sovreign-citizen-admirality-court-common-law-whatnot folks who came up too high on the radar. I hate to see it.

And no, I don’t see any way out, either. I judge that it’s far better to look for a tool, though, than it is to try to beat through stone walls with my head.