(Presented on the 16. April, 1997 Meeting of the LU Students of Objectivism.)
DISCLAIMER: LU Students of Objectivism is not an official spokesman of Ayn Rand's philosophy of Objectivism. While this essay is an attempt to apply Objectivist principles authentically and sincerely, any mistakes or misrepresentations are those of the writer alone.
I. CURRENT STATE
Taxes were due yesterday. I sincerely hope that you were able to get them in on time. However, I really wish that you didn't have to. Do you suppose that by this I mean that the government should grant exemptions to students who are occupied by far more important things? Or perhaps would this be an exemption I would give to all people as long as they could show some need for more time? Well, if either of these options were what I meant, there wouldn't be much left to talk about, since I couldn't possibly give a set of cogent reasons for any of these proposals--if the taxes must be collected, the taxes must be collected. Rather, I'm going to start by posing a more fundamental question--quite by coincidence tonight's topic-- "Is the Income Tax a Moral Institution?" While I will speak to the relevant points of Objectivist ethical and political theory in giving the answer (which, of course, is "No!") I will also concentrate rather seriously on the practical side of the question, highlighting some alternate ways of funding a proper government. You will be surprised by the diversity and applicability of them.
In case your own experiences with taxes aren't enough to do so, I will attempt to motivate you for what is to follow by listing some of the more disheartening statistics about the state of our tax system today. I've borrowed the following list of fun facts from Representative Dick Armey's page at http://www.flattax.house.gov:
- The average family today pays more in taxes than it spends on food, clothing and shelter combined
- Each year Americans devote 5.4 billion hours complying with the tax code, which is more time than it takes to produce every car, truck and van made in the U.S.
- The IRS sends our 8 billion pages of forms each year, which if laid end to end, would stretch 28 times the circumference of the earth.
- The typical middle-income family of four paid just two percent of its income in taxes in 1948. Today, that same family pays about 24 percent of its income to the federal government in taxes.
- The 1913 income tax code contained 11,400 words. The current tax code contains 555 million words.
- According to the IRS, it takes an average taxpayer 2.9 hours to fill out a 1040EZ form and 11.6 to fill out a standard 1040. Taxpayers who file a schedule C require 21.9 hours to fill out 1040.
Or consider the following calculations from the CATO Institute:
[In 1992] a wage earner in an average tax-state must earn $17,038 to purchase a $10,000 car. That means that the worker pays $7,038 in income, payroll, and sales taxes on a $10,000 car (A Consumers Guide to Taxes: How Much Do You Really Pay in Taxes?, CATO Briefing Paper No. 15, 15. April, 1992).
But I really do assume that you are all familiar with the "discomforts" of our present tax code. The question to ask is: are you justified in feeling this way?
The standard liberal response to any such discomfort is to write it off by putting you on a guilt trip: "The taxes which we pay in this country are merciful compared to those charged of most Europeans! Its about time that we grew up and started acting like our more mature European comrades by paying our true fair share in taxes!", etc., etc.
The conservative--surprise, surprise--is usually quite vexed by such arguments. The best he can do it to try to apologize by saying that he's working on that problem. The same sort of response is typical given a liberal's argument against a flat tax which would reduce the amount of taxes paid by the rich: the conservative will say, "Oh no! The rich will still pay a lot of taxes under a flat tax regime--I just can't show how right now for lack of data."
Notice how each side assumes the same type of ethics: the rich owe something to the rest of society because they are rich, and this debt is paid off by taxes. Never mind that "average laborer" who must pay twice the actual price of a car to obtain it. Never mind that the middle class is the true bearer of the tax burden in America. On this view, regardless of how little might actually be achieved from taxing, the government has a duty to soak the rich, if for no other reason, then that they are rich. The variations in interpretations of this doctrine are insignificant here: whether the liberal justification via outright socialism or the conservative one, which attempts to justify capitalism on collectivistic/altruistic grounds, each view is equally based on a fundamental desire for sacrifice.
The liberals and conservatives common presupposition of the ethics of altruism--the idea that an individual must sacrifice himself to others, in this case to society--is the root cause of the general trend toward statism in this country. When two parties who are alleged to be opposed to each other actually share the same fundamental premises, only superficial debates over bureaucratic minutiae will serve to obscure their common desire, tyranny.
II. THEORY
To unmask this fraud for what it is, the philosophical errors being committed by each school of politics must by unmasked. This can only be done by starting from scratch and constructing a new theory of ethics and politics. Fortunately, someone has already done that for us: Ayn Rand.
Because I want this discussion to emphasize the unavoidable connection between theory and practice, I will first present the abstract theories of Objectivist ethics and politics, and then move on to their practical means of implementation.
Ayn Rand begins her ethical theory in her essay, "The Objectivist Ethics" in The Virtue of Selfishness by asking a unique question: why does man need ethics in the first place? It would be wonderfully nice if we could just start by assuming the meaningfullness of the concept of ethics and then procede to hash out all of the implications of that concept--determining which values man should pursue. This would be nice, but it would not be realistic. Many philosophers don't think that the concept of ethics is meaningful at all. While we shouldn't cater our inquiries to satisfy them, we should at least satisfy our own critical curiousities. Ayn Rand does just that: her identification of the need for ethics in the first place results in the derivation of a specific theory in accordance with the general purpose of ethics.
What is ethics, or morality? In Miss Rand's definition, it is "a code of values to guide mans actions and decisions, the actions and decisions which determine the course of his life". Well, what then is a value? "A value is that which one acts to gain and/or keep". Miss Rand observes that the concept of value can be analyzed into further constituent parts--it is not an irreducible primary, as, for instance, the concept "red" is. To speak of a value is to speak of something to whom a thing can be of value, and and to speak of something for which the same can be of value. In short, the concept of value presupposes the existence of a certain kind of entity which can act to achieve some end.
As a matter of empirical fact, only living organisms are those which exhibit such qualities as would qualify them as value-pursuers. That goal for which living organisms pursue values is their own life. To put it in Miss Rand's terminology, "It is only the concept of life which makes the concept of value possible."
Recalling, however, that values are pursued with a certain goal in mind--yet another value--we must recognize that to avoid an infinite regress of means and ends, we must ground our series of values with an ultimate value, that is, an end in itself. By identifying the roots of the concept of value we have already touched upon the phenomenon that will give us this grounding--an organism's life. Only an organism's own life is a value pursued for no sake other than itself. An organisms life is only attainable through a constant process of action: one's living today is a necessary condition for one's living tomorrow.
Different kinds of organisms pursue different kinds of values. Tigers pursue gazelles. Gazelles pursue savannah grass. Savannah grass pursues greater sunlight and nutrients. The tiger, however, cannot short-circuit the process by pursuing sunlight--he will soon find that pursuit to be futile. As such, only the terms, methods and conditions required for the survival of the kind of organism an organism is will be its standard of value, which is to say only the nature of the organism's life. That which is in accordance with the nature of the organism's life is the good, that which detracts from it is the evil.
The same goes for man. His standard is "Man's Life". Unlike other creatures, man has no tusks, claws or fangs by which to survive. He must rely upon his mind--his reason. At the same time, however, to use his mind, he must choose to think. Nature will not give him the answers for free. Because of this capacity, man's survival is not guaranteed in the sense that it is by those other organisms which function strictly on instinct. Man does not automatically pursue those values required for his survival. Rather, he must think in order to know which values those are. For instance, is it better for him to wait for gazelle meat to wind up on his plate by itself, or should he build weapons to hunt it? Only one of these answers will be in accordance with his standard of value. Therefore, man must formulate a code of values--all of those possible objects of pursuit which accord with his standard of value. And, as we discussed before, a code of values is morality--ethics. THIS is why man needs ethics.
Because man survives by reason, his ethics will tell him that any actions which facilitates his reasoning will be good. These virtues include rationality, independence, honesty, integrity, productiveness, justice and pride.
The virtue of justice consists of treating people as they ought to be treated--granting them their due. They are primarily due their own life--they are ends in themselves. If they are ends in themselves, then they are not means to the ends of others. If this is the case, then man must live for himself, neither sacrificing himself to others nor sacrificing others to himself.
The primary social form of recognizing man as an end in himself is contained within the concept of "rights". "A right is a moral concept, defining and sanctioning mans freedom in a social context." Man requires rights because there are certain necessary conditions for existence in a social realm. Just as the value of life is the source of all lesser values, so the right to life is the source of all rights. The freedom which man requires to implement his right to life is freedom from physical coercion. Only physical coercion can stop a man from pursuing his own values, such as when a man is robbed of his physical wealth--his property. The right to property is the only means of implementation of the right to life. Man must have material goods in order to survive.
Noting this theory of social ethics, it becomes obvious that the only proper political theory is one which delegates the government to roll of rights protector. A government is a monopoly on the use of force, and the only just use to which force can be put is in retaliation against a prior initiation of force. Because government is an agency of force, any effort to go beyond rights protection would entail an unjust use of force.
AND: this is exactly what happens in the case of taxes. When the government decides that it will fund some social welfare scheme by expropriating the funds from innocent citizens, it is initiating the use of force against them. After all, the government threatens to lock the citizen up if they refuse to pay their taxes. Morally, there is nothing that separates such acts from those of common criminals. The only difference between taxation and theft is that taxation is committed by faceless minions of prim little bureaucrats who are able to wash their hands of the blood by merely dealing with the paperwork.
So it might seem as if we are left with an unresolvable contradiction: government must exist to protect rights, but it cannot exist by taxing its citizens. How else, then, is it to fund its rights-protection operations? It cannot be through taxes, because that would violate rights. There must be other alternatives if government is to be just.
III. PRACTICE
I shall survey the variety of possible funding mechanisms for a just government in the order of the branches of government, form most important to least important. The branches of a proper government in this order are: the courts, the police and the military. Right off the bat, then, we can see that funding such a government wouldn't be as much of a problem as we might have expected, because it simply wouldn't be as big as it is today: no welfare, no social security, no transfer payments, no regulations of any kind.
There would be two primary purposes to a system of courts in a free society. The first would be the enforcement of private contracts. The second would be the administration of criminal and civil justice. In a free society, a court system would function just as it would today. The only differences would be in the jurisdiction of such courts (for instance, they wouldn't be able to send a person to jail for not paying taxes!) and the funding of such courts (it wouldn't be through taxes). What I am going to suggest are those means of funding a court system which would seem to apply most logically to such a context. Many of these funding mechanisms could be used for the other two branches of government, just as many of the funding mechanisms for other branches could be used for this one.
In her essay, "Government Financing in a Free Society" in The Virtue of Selfishness, Miss Rand proposes the primary means of funding tort justice: contract insurance fees. Whenever two private individuals would enter into a contract, they would voluntarily pay a fee to the government to enforce the provisions of their contracts should any violation of them arise. Note the nature of this arrangement: the government is not forcing them to pay--they don't have to have their contracts enforced. They are really just paying for a service. (However, only the government would be permitted to enforce such contracts if necessary, because the government is the agency of the retalitory use of force. Any contract enforcement would require retalitory use of force, so private citizens would not be justified in using their own force. While they do retain the right to self-defense in immediately life-threatening situations, anything less threatening must be dealt with by the objective methods of the government.)
Note the benefits of such an arrangement: because presumably few contracts would be violated, most of the fees collected could be used for the court system in general, much as premiums paid by healthy health-insurance purchasers are used to pay for the sick ones. By pooling risk, emergencies can be funded. Note also that because there certainly would be contracts of different financial worth agreed to, the government would be justified in scaling the fees based upon that amount. Thus, the fees from any big contracts which would be fulfilled would do great deals of good for funding court procedings for all of the little guys--and in a completely non-sacrificial manner.
A similar method of funding particular civil court disputes would be for the losers to pay for court costs. In criminal cases, criminals found guilty could be charged for such procedings. In either case, no rights would be violated, because the party paying would have forfeited certain of their rights by virtue of being found liable or guilty.
The police would be the next most important branch of government in a free society. Their job would be to enforce all of the laws against force. The police in a free society would basically operate much as they do today, but they would operate under the same new constraints as the system of courts would.
Because all property would be privately owned in a free society, the opportunities for private security firms would be expanded dramatically. For instance, the owner of a road would be able to employ his own highway patrol, as he would want to because traffic accidents on his roads would not be profitable. However, the role of the governments police force would continue to be important, and the role of private security firms would always need to be subservient to the governments role; many regulations would be placed upon the private security firms regarding the retalitory use of force.
The fact that all property would be privately owned would not limit the ability of the public police from showing their presence. Just as now, part of the cost of operating a police force is purchasing privately made vehicles, so in a free society would the public police pay for the use of private roads so that they might patrol the area in general. Furthermore, it would be likely that owners of private roads would let the police use their roads for free, since they would basically be getting free highway patrol services because of it.
The source of funding for the public police would be a sort of security insurance to be sold to those asking for it. The rich, in particular, would want to protect their goods and lives against criminals. As a result, they would purchase the protection of the police, voluntarily.
However, the polices protection would not extend merely to the rich. It would make no sense for the rich to merely hole themselves up in fortress-like mansions with well-trained private security guards, because this would be waiting for the criminals to take over the rest of the outside world and eventually lay siege to their homes. The rational, long-range view would be to pick up criminals efficiently in all cases before they attempted the big jobs. This would mean that criminals offending against the poor would be picked up by the very same police force being funded by the rich. After all, a criminal found stealing from the poor would be even more likely to steal from the rich.
Furthermore, a system of enforcement in which the police would only attempt to protect the rich would not protect the rich (or whomever the the actual clients would be) because in many emergency situations where the actual clients would be robbed, raped, mugged, etc., the police would not have time to stop the crime and ask to see the victims credentials before the police would decide to protect the victim against the perpetrator. To make sure that none of the clients would be harmed, the police would need to protect all victims.
In the end, this means of protecting all would be voluntarily funded and non-sacrificial. It would not be a sacrifice for the rich to pay for the protection of the poor precisely because protection of the poor from criminals would be to lock up criminals, who pose an even greater threat to the rich. This is a concrete manifestation of the principle that rational men's interests do not conflict, and that often times the self-interest of one can have unintended beneficial consequences for another, non-sacrificically.
The final branch of government in a free society would be the military, which would have the purpose of protecting a country from foreign agressors. The major differences between a military in a free society and the one we have today would be that its funding would be voluntary, there would be no draft, and there would be few if any foreign bases to protect other countries that could very well protect themselves.
One means of funding such an effort would be an "overhead" view of police protection. Just as the security guards at a factory are the overhead for the production of, say, Coca-cola, so a military force is the overhead for the production of police services in a certain geographical region. After all, the police cannot protect rights domestically if the entire country is being invaded by evil communists. Therefore, a portion of the revenues collected by each of the police agencies could be pooled nationally to pay for the military, on an "overhead" view of funding.
A further means of funding such a national effort would be corporate donations. After all, the security and stability created by a standing military, or the protection provided by it for trading routes are absolutely essential for conducting business as usual. In times of war, great patriotic fund-raisers could be held in which case business would find it even more in their interest to contribute--because having a factory bombed simply wouldn't help their profit margin.
Actually, times of war are a great test of the theory of military funding, which in turn is a great test of voluntary government funding in general. After all, if voluntary funding works in such an extreme situation as war, it would certainly work in all conditions. How does one fund a war? Well, an important factor is having troops. But troops in a free society would be volunteers, not draftees. This isn't as bad as it sounds. Free men have always risen to defend their country in times of actual invasion (look at the American revolution!). The only situations in which volunteer armies have not been possible are those situtations in which the government has attempted to engage in an unjust, usually foreign war. No one would want to die to protect Vietnam, so having an all-volunteer force would actually serve as a check on governmental power to unjustly extend its hegemony overseas. Also, in modern war, the need for men has fallen in proportion to the increased need for technology (witness the prominent roll played by technology in winning the Persian Gulf War).
The issue of war, which, as I have said, is the touchstone for all of the theory of voluntary government financing, actually gives us an opportunity to answer one of the objections that is commonly made against voluntarily-funded public goods: the "free-rider problem". The free-rider problems argues that if provision of public goods is attempted voluntarily, then it will be impossible or next to impossible to achieve because no one will have an incentive to volunteer such funds, because they will be covered by someone else's provision of the same funds. In the case of war, the argument states that because everyone would know that one person's provision of funds for the military would help them all, since it would be protecting the same borders, therefore they would not need to provide funds themselves.
In the case of war alone, this argument fails on several accounts. First of all, one person cannot possibly shoulder the entire burden of defending a country. People will know this and realize that only many contributions will make the military effort possible. While some will still try to free-ride off of those many contributing, they will be in the minority, because everyone else will recognize that if everyone were to free-ride, nothing would get done and then they would all be in trouble.
Furthermore, at least in the case of the military during a war, the goods provided are not as public as the free-ride argument would have you believe. A government cannot protect all of its territory by merely protecting its borders, as if they represent an impenetrable wall through which the enemy could not go. Geographical territories are actually--yes--three dimensional. They have a top--a rather large open portion through which all sorts of aeronautical devices could fly. They even have a bottom, through which enemy diggers can tunnel. Even the border itself is not entirely defensible, especially when a country has borders as long as the U.S. In short, a person living on the interior of a country cannot feel safe just because the rich people living near the borders are paying for the military. The entire country is susceptible to attack, and so everyone is at risk. Therefore, it is in everyone's interest to fund the military. Even in the case of a military defense system which would truly protect a huge number of people from a whole category of attacks--such as an anti-ballistic missile system, which we really ought to have--the entire system could not be implemented with the help of just a few. More would need to contribute because it would be expensive, and the interest of the business community here would be especially evident (especially when it might give them a chance to showcase some of their own products, such as their own brand of missiles).
So really, the essence of the answer to the free-rider problem, a problem which could be said to apply equally to any of the branches of government, is that if no one gets the job done, everyone will be screwed. Because no one wants to be screwed, someone will rise to do the job. And because most would know of the possibility of the free rider problems occuring, most would act to see that it wouldnt. This would be the long-range, principled approach to the matter. Just consider how many people pay for public radio voluntarily when they know they could get it for free anyways, and then consider how much more important protection against communist invaders might be than listening to Garison Keillor. I, for one, would certainly agree voluntarily to fund the military in a free country (assuming that I had slightly more money than I do right now--and that I didnt have some overwhelming urge to give it to "The Prairie Home Companion", instead!).
One remaining objection to voluntary government funding might be that in the present day, the government already owes several trillion dollars in debt. How could they expect to pay that off by resorting only to volutary contributions? The answer would be by selling off the vast portions of federal lands and national parks and other assets which the government shouldn't own in the first place. This would be more than enough to cover the bill, and then we would be free.
One final note is necessary: voluntary government financing would be the last, not the first achievement of a system of freedom-based political reforms. There is no way in which such a system would work today. Before it would work, all of the other forms of government regulation would need to be disbanded; the economy would need to be freed; all welfare spending would need to cease. The path to achieving these goals is a long and tortuous one, and we will have to wait until the bitter end before we can expect to see a voluntarily funded government. However, we should keep such an end in view, as it will be well worth the struggle.
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