Taxation and Expropriation
Why have the economic views commonly known as Georgism or geoism not become more popular? Perhaps, says author Ian Lambert, people in our civilization hold unconscious assumptions about economics that preclude, or make it difficult to understand, the Georgist viewpoint.
We are reprinting Lambert's important presentation on this subject in weekly installments.
(Part One) (Part Two) (Part Three) (Part Four) (Part Five) (Part Six)
by Ian Lambert13. Taxation and Expropriation
Some years ago, an African state decided to seize the assets of a multinational oil company doing business within its borders. However, it did not do so by enacting expropriating legislation; it introduced a tax of 99.5% on the value. I think there was a Labor government in Britain at the time; at any rate, the reaction of Labor politicians was mute, given that their top rate of income tax was 98%. However, Conservative spokesmen deplored the action of the foreign state as "sheer expropriation". This brings us to the question of the moral basis for taxation and whether it differs from expropriation.
The technical difference between taxation and expropriation is that, generally, taxation is the imposition of a monetary obligation whereas expropriation is the seizure of specific assets. It is this great fact that prevents us from appreciating the truly pernicious effects of modern taxation. In Britain and America, we are appalled at expropriation and believe that there is no justification for a government seizing our property, whether that be the decision of the majority of society or not. Indeed, such action is almost certainly prohibited under the Constitution of the United States. And yet, although we dislike having to pay taxes, we do not regard them as equally pernicious.
Why do we not regard taxation as equally pernicious as expropriation? The traditional moral defenses of taxation are moral populism, utilitarianism and the social contract - but as we have already seen, Henry George shot every one of these criteria to pieces. Is there, then, any moral justification for taxation? George's response was simple: just as Jesus exhorted us to render unto Caesar what is Caesar's, so too must we render unto the community what is due to the community.
Now, what is "due" to the community - literally, the result of the community - is the economic rent of land. This provides the natural fund from which tax should be paid (and incidentally, The Physiocrats, Adam Smith and David Ricardo had all pointed this out before George). All other taxation is truly immoral - a negation of fundamental property rights. For, taxes on wages mean that the state has the right to the labor of its members, which makes all men to some extent the slaves of the state - no wonder we call them our political "masters" and not political servants! Similarly, taxes on capital and interest are claims that the state is entitled to the private wealth of its members.
Henry George saw the twentieth century socialist state, of nationalization and high taxes, as morally barren:
"Modern socialism is in fact without religion, and its tendency is atheistic. It is more destitute of any central and guiding principle than any philosophy I know of. Mankind is here; how, it does not state; and must proceed to make a world for itself, as disorderly as that which Alice in Wonderland confronted. It has no system of individual rights whereby it can define the extent to which the individual is entitled to liberty or to which the state may go in restraining it. And so long as no individual has any principle of guidance it is impossible that society itself should have any." -- Henry George (SPE).
The true principle of relativity which Einstein introduced is that the scientist is part of his own experiment and not separate from it. The position of the scientist has to be factored in, to be taken into account, because he is not outside and independent of what he observes. And in the moral realm, this warns us against all claims by individuals and governments to be superior to and separate from what they may observe and govern who claim to be themselves exempt from the rules which they lay down for others.
The truth is that modern taxation is theft coupled with attempts to justify it by moral populism, utilitarianism and the theory of the social contract. But theft it is. And, if governments be so contemptuous of individual citizens' property rights, how can it complain when many of its citizens come to be just as contemptuous?! Governments are supposed to set an example, to be beyond reproach -- not above the law.
Next Week -- Civilization, and a Conclusion
Ian Lambert is a globetrotting man of many talents. This presentation was originally made at the 10th Annual Conference Of The Council Of Georgist Organizations, Santa Fe, New Mexico, July, 1990.
What's your opinion? Tell your views to The Progress Report:
Page One Page Two Archive Discussion Room Letters What's Geoism?