Truly fair taxes

By Bruce Walker
web posted October 30, 2000

Fairness appeals to almost everyone, but people often disagree about what fairness means. Unfairness is easier to understand, and cheating is familiar examples of unfairness. Spouses who break marriage vows are "cheating." The auto mechanic who makes unnecessary repairs "cheats" you. Fellow students who copy your test answers "cheat." This cheating is theft by fraud - taking from another without real consent or acquiescence.

Marxists have described labor as extracting value without true consent, because the alternative in Socialist theory is starvation. This, Marxists, assert, is fraudulent bargaining between labor and capital, and so it is as wrong as any other type of cheating. Whether this analysis ever had merit in feudal economies, modern industrial economies offer people many potential employers, business opportunities, familial support, and charitable alternatives to starvation. Individuals balance many factors - working conditions, internships, leisure time, job satisfaction, status, and security - when choosing how to survive financially. The stark choice of life or death is illusory. Poor people, if anything, tend to be overweight.

So what has Marxist fairness become? Continual Fabian pressure towards equality of results has replaced the clarion call of violent revolutionary action. Equality is achieved by using taxation as a mechanism to deprive the wealthier members of society of their money, which is presumptively the product of unfair advantage.

This policy translates all values into money, but money can't buy everything. Senior citizens generally have more money that young people leaving High School, but the elderly also have much less life to enjoy than the young. Age also brings health problems, diminished vigor, loss of beauty, and other costs that money cannot truly balance. Old people today also lived through global depression and world war - how are they to be compensated for that?

Taxation as a means of redistributing wealth also ends at the political borders. While Marxists seek through progressive taxation to enrich the lazy man in Cleveland at the expense of the hard-working woman in Chicago, what about the farmer in Punjab, who works twelve hour days for mere subsistence? Is he not entitled to the relative riches of the lazy man in Cleveland?

Redistribution of wealth presumes knowledge that no one in a market can ever posses. Just as the action of observing events at the subatomic level itself produces the result, so the act of acquiring information from a market itself changes the dynamics of the market. Yearning for such impossible fairness is simply greed, lust, and envy dressing up in more respectable clothes.

Marxist attitudes towards taxation also presume that communal demands from individuals (what may be called social taxation) is ultimately defined in terms of money. That convenient and precise measurement we call money has been relatively rare in the history of social taxation. Conscript soldiers, serfs working the lord's fields, crop offerings to priestly classes, sacrifices of virgins to volcanoes, and other non-monetary taxes are more common.

The tax collector also has seldom been as formal as an IRS agent. Social taxation relies much more on custom and tradition than on statute and regulation. The tax is often not paid to anything as formal as a government (ask New Guinea tribesmen about their village charter, and expect blank stares). The obligation of social taxation comes when the benefit that individuals together derive from some pooling of resources surpasses conflict or bargaining for the resource. When water is scarce and essential, for example, a method for sharing the water makes sense.

Many of those activities supported by social taxation are best paid by the conduct of individuals. Police protection and fire service require a measure of communal support, but respect for the rights of others is the most cost-effective method of stopping violence and arson. Honorable dealings reduce the need for commercial codes and lawsuits.

Even those grand works which we have come to believe only government can accomplish - schools, libraries, parks, bridges, fountains, hospitals, and orphanages - have historically been undertaken most effectively by the philanthropic rich, and without draconian taxation many rich people would quite naturally turn wealth that they could not reasonably consume towards expenditures for the general good.

What if the good conduct of people and the generosity of the rich still leaves a gap between the common good and the resources of social taxation? In small towns of the Old West there were some problems - range wars, dangerous bridges, foul wells, rough roads, poor medical facilities, and dearth of schools - that were sensibly addressed by expenditures for that purpose which our Founding Father called in the Preamble "the general welfare." That means taxes.

Marxists screech "Soak the rich!" Personal bias insures that many people hear this dreary cacophony as sweet music. The rich, after all, can pay more. This has produced progressive (rather than proportional) income taxes, estate taxes that hit the rich hardest, capital gains taxes, luxury taxes, property taxes, and other measures directed at making the financially successful members of society pay their "fair share."

Truly fair taxes, however, requires a radically different result. That same good behavior which reduces the need for government services also increases the prospect of an individual becoming financially successful. Diligent students learn more. Those who exercise, diet, and avoid excess are healthier. Courteous and honorable people do better in commerce.

Not only does good behavior reduce the need for people to use government services, but it also encourages others to rely less on government as well. The salesman with polite manners and seriousness about customer satisfaction does not just enrich himself: He supports the warehouse workers and clerks who ultimately depend upon company sales. The gentleman or lady who is thoughtful towards strangers encourages a civil society with less bickering and more trust.

Governments have long recognized the value of good citizens. The Electors of Brandenburg provided financial incentives for expelled Iberian Jews to settle in Berlin, correctly perceiving that these industrious and law-abiding subjects were worth an investment of money. The Tsars enticed Germans to settle lands around the Volga, also seeing that fields given to productive farmers was more valuable than land sold to less efficient Russians.

While evaluating the worth of people based upon nationality or ethnicity works poorly in global societies, the case is quite different with individuals. Henry Ford, George Washington Carver, and Thomas Edison paid more in taxes that the average citizen of their time, but if these three men had paid no taxes at all, the balance sheet would still not be equal. It was society that owed these men taxes.

And how much was Penicillin worth to mankind? How much Ether? Morphine? Antiseptic? Aspirin? Could all of us who have benefitted directly or indirectly from these vast contributions ever hope to return a fair compensation to the handful who worked, often alone and ridiculed, to enrich our lives forever?

The narrow, brittle, vengeful standards of Marxism demand that those who acquire more must pay more, and taxes are a handy bludgeon to accomplish this dim goal. Yet, as Isaac Newton observed, what he saw was visible because he stood on the backs of others - Euclid, Archimedes, Copernicus, Pythagoras, and others who picked the mine shaft of our discoverable universe. Newton used these dead men to give us optics, gravitational theory, physics, and cosmology, and he bequeathed those to the yet unborn. They all gave more than they took - much, much more.

We know all this. So what causes such hatred by some people towards our living and dead benefactors? Envy is part of it, surely. But a deeper passion trolls the cold hearts of these cold people: Guilt.

Mozart, I can never repay you for the 40th Symphony which even now lingers in my mind. And Dr. Fleming, your discovery of Penicillin kept me from dying of pneumonia was I was four. Messrs. Franklin and Carnegie, the lending libraries you created and constructed have opened more delights for me that I can repay. General Washington, when you gave up power because you cherished the liberty of your countrymen more than any notion of your own wisdom, then that prudent goodness made a homeland for more millions than you would ever know. President Reagan, I thank you for winning a war I thought might last my whole life, and which we might have ended up losing. Thank you all who created so much more than you consumed.

And to you sick people poisoned by the toxins of envy and guilt, I offer an antidote that will make you well: Profound gratitude.

Bruce Walker is a frequent contributor to The Pragmatist and The Common Conservative.

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