As our tax code is currently written, the state has a claim to a large share of everything a citizen earns or produces. Those who do not comply will have their assets seized by the state, and can be judged and jailed by the state’s tax tribunals (instead of law courts and a jury of the citizen’s peers). This is akin to slavery, because the “master” lays claim to all the produce, and the “slave” has no option of exiting the arrangement, except by fleeing to another country. In most systems of real slavery, the slave could buy his freedom if he produced enough over his lifetime; but under income tax slavery, there never comes a day when the bill is paid, and the “reward” for greater production is simply that the state takes a larger share of it.
Just as the moral corruption of real slavery provided cover for other immoral beliefs and practices (racism, abuse, sexual exploitation, etc.), so too does income tax slavery prop up attitudes and practices that are not morally consistent with the values of a free society:
- Latching onto human envy, progressive taxation of income can be used by populist politicians and class warriors to punish the wealthy with higher and higher rates. (But due to the logic of the Laffer Curve, such rate increases can actually reduce state revenues, instead of increasing them.)
- Once the progressive income tax becomes entrenched in a society, the temptation to use it towards redistribution of wealth becomes hard to resist for policy-makers. Taking the rich down a peg and providing income supplements to the poor become permanent rather than temporary measures. This may seem a noble endeavour, but if it is done through a system of coercion, it is not morally laudable.
- With the introduction of at-source income tax deductions, the state coerced employers into doing their bidding, making every payroll clerk in the country an unwilling accomplice in a moral transgression. To add insult to injury, citizens must wait a several months before they can rectify any possible over-deductions, and in the meantime the state holds onto their earnings (without paying interest).
- With high rates of taxation come pleas from all sectors and interest groups for tax exemptions. In the hands of politicians hungry for re-election, these become the pork used to buy political loyalty. This not only corrupts the democratic process, but also creates a level of complexity in the tax code that requires a legion of lawyers and accountants to sort through. These compliance costs are borne by individual tax filers and by companies and their customers.
- Tax exemptions are also a tool in the hands of social planners who wish to mould the behaviour of citizens according to their ideal. Though tax credits for children’s music lessons (for example) may seem harmless, they give credence to the idea that government can rightly be involved in the details of how parents raise their children (or whatever the area of private endeavour may be).
By abolishing the income tax, we remove the specter of slavery and restore meaningful self-ownership to individuals. We also remove a massive source of temptation from demagogues, special interest lobbyists, and central planners, as a well as a major vector of unfairness and corruption in our democracy. When people look to the state to provide the benefits they want while having others bear the costs, moral laxity sets in. And as half of federal government revenues are provided by the income tax, abolishing it could go a long way towards reversing this trend and setting better conditions for the growth of personal and civic responsibility. This in turn would shrink the federal government, moving the nexus of political power towards provincial and local governments (where its excesses can be more effectively checked by citizens) and allowing civil society to come out from under the shadow of the state.
Clayton Welwood, Outreach Team Lead, BC Libertarian Party