Many of us are part of the enlightened civilization. We belong to the illustrated and knowledgeable West who has done away with slavery many decades ago. We are proud of it. We lecture about it. We have the high moral ground. We are sure of ourselves. And we are mistaken.

Not only are we not free, but slavery is quietly being brought back through taxation.

Are we being taxed to death? No, just into slavery.

 

THEORETICAL JUSTIFICATION FOR TAXES

Taxation is necessary for the good of society. At least that’s the standard explanation. Of course, it is a lie.

We have demonstrated in Don’t talk to us about society that the term “society” is meaningless in the context politicians use it. There is no “society” and therefore there can never be something done “for the good of society”. Much less justify theft.

The concept of taxation comes from antiquity. The idea was simple: it was a racket. It was protection money, plain and simple. If you refused to pay, the ruler would send his army and kill you and your family, or worse.

Rulers were not stupid people. They understood that plain theft supported by naked violence only goes so far. Revolts keep popping up and revolts are expensive which is bad for business. They needed a propaganda system. Psychological warfare.  A system that would make people doubt about the injustice of paying protection money.  In recognizing this, the rulers were a step ahead. They could afford to hire the most brilliant people. Their advice: a two prong approach:

• Make it a religious right given to them by god (or a representative)
• Cloak it in pseudo-rationality by making it a “law”

Guess what? It worked! Peasants were brain-washed into believing that not paying taxes was opposed to god and it was illegal. They suspended disbelief precisely because those arguments were irrational. God is not rational. Laws are not rational. How could a rational argument be applied to something that was irrational and all powerful at the same time? Of course it could not! Therefore any argument stating that taxation was theft was systematically rejected.

Over time, with the development of constitutional or parliamentary monarchies, the  “representatives” of the people also learned how to play this game.

At first, they had enough power to simply appropriate (steal) tax money. Later on, they refined the game by using tax money to bribe voters to get re-elected. Instant job security through taxation.

After that, communism was developed. Communism is a complete nonsense, of course, but it does have an appealing property for autocrats. It provides the necessary theoretical background to steal everything. The rational is simple: in a communist society everything belongs to the state to prevent the exploitation of the worker. This is possible because the government is composed of workers.

Nice theory. Reality, of course, was traveling a completely different route. This was a blank check to steal everything in sight and use it anywhere one pleased, as long as one bribed its way to the top of the power pyramid. In the USSR it was called the Nomenclatura. Those who were so important as to be in a special phone book for… well… important people.

Communism never prospered (not surprisingly since people are not that stupid) but its milder, more politically correct version (socialism) did.

Socialism adopted the same ideas of communism but understood that in order to maintain control over people, overwhelming state terror was unnecessary. Besides, it was too expensive. So they created a system where they will steal (tax) from you, but to a lesser degree. To what degree? To a degree that's tolerable. By doing this, they were able to maintain control through a minor police force and kept the army in reserve. They were successful beyond anybody’s dream. Today we live in a socialist world.

And here we are. Still wrapped in the same nonsense. Our money still being stolen, our lives still being threatened by naked force.

Of course, today we have Spin Doctors and Theoreticians. Central Bank Directors and World-Wide Financial Organizations. We have Democracy and Parties.

Taxes are the price we pay for civilization.

We are free!

What a pile of buffalo dung!

When you remove all the layers of disguise and lies, all the politics and financial theories, we are back at the beginning: Tax is theft, protection money. Brutal as usual.

There is no rational justification for taxation because theft is irrational. Plain and simple.

 

PRACTICAL JUSTIFICATION FOR TAXES

There is always a person out there telling us that the theory behind a taxation system is irrelevant. It is so because our taxes are used to provide us with a better life. As such, it is our duty to help everybody else in our political system. And since we are greedy by nature, the taxation system must be enforced by force.

Just look at all the wonders that the government has done for us! Roads! Bridges! Police! Schools! Hospitals!... the list goes on and on. We will spare you.

This idea of ignoring the theoretical basis and looking at reality actually has some merit, just not enough.

The principle being that if it works and produces some good we should use it. The flaw resides on the blindness of such principle. It is no enough to see at the good that the system produces, but we must also look at the cost and verify that there are no other, better systems out there.

Unfortunately, this is exactly the case. The Absolute Austro-Libertarian system minimizes costs and maximizes “good” through a general increase in quality of life.

This nullifies the principle that the current system is bad but it is the best we have. It is simply not true.

This being the case, we are back at the point where even if we only look at practical benefits, we still find the taxation system lacking severely.

The conclusion is inevitable. There simply is no justification for a taxation system.

 

TAXATION IS FAIR

We would not be thorough if we would to ignore this issue.

Many people could not care less about theoretical or practical reasons for taxes.

They just look the pie chart and what do they see? Rich people pay more; much, much more on taxes than middle class or poor people.

There you have it! Proof!

The taxation system is fair.

Rich people, who don’t need the money anyways, pay far more taxes. The government then uses this money to provide goods and services to those who can’t afford them.

Poetry in motion. Social justice. Economic equality.

All nice, but false. Of course.

As Absolute Austro-Libertarians, what irks us the most about this calculation is that nobody, ever, bothers to calculate how much better off would people be if the rich would not have to pay astronomically high taxes.

We have explained in Those Bastards - The Rich People why it makes no sense to punish rich people, so we won’t repeat the arguments.

All we will add is that if rich people would not have to pay taxes, all of our society would be so much better off. So much in fact that we would not need them to pay taxes in the first place!

Of course taxation is unfair! It has nothing to do with who pays more and who pays less. It has all to do with the quality of life we are missing because we are paying taxes.

 

THE TAXATION SYSTEM

Taxation is nothing but theft. Theft on a massive scale, a global scale. Those who refer to taxation as plain and simple are grossly mistaken. Contemporary taxation is neither plain nor simple. It is a sophisticated machine being perfected by an army of bureaucrats which, in a sadistic twist of faith, are paid with our own taxes.

Legally speaking, we are powerless against taxation. The taxation system perverts all it touches. Consider the following points, which are true in all countries in the first world with minor differences:

• Tax law inverts the concept that one is innocent until proven guilty. In tax law one is guilty until one can prove its own innocence.
• The whole might of the state is brought to bear against you to ensure you cannot prove yourself innocent.
• Taxation law is bad enough in its generality. The real damage is made by the bureaucrats who write the Regulations of the Law. This means that un-elected officials decide how the law will operate in the real world. There are no counter-balances or reality checks.
• Even further, the power of these very same bureaucrats is so, that whatever they say, goes. The old joke amongst tax lawyers that the definition of tax law is whatever the Tax Authority says it is, it’s quite real.
• Taxation systems are a power onto themselves. A sovereign organization within the government.
• Taxation systems have their own investigators (they don’t rely on the police) and their own prosecutors (they don’t rely on District Attorneys either).
• The decision to prosecute or not is determined by bureaucrats who are under policies to fulfill quotas of either number of prosecuted tax evaders or amounts of recovered money.
• Taxation systems have their own Tribunals and Judges. Most of the time there are no Juries. A nameless, faceless, judge decides your fate.
• Oftentimes there are no standard Tribunals. You are brought in front of Administrative Tribunals which are staffed by bureaucrats and not judges. The bureaucracy that administer the taxation system decides your fate.
• Tax bureaucrats write the regulations, demand, investigate, prosecute, judge and declare you guilty. They are not allowed to execute the sentence yet… but they are working on it. Soon we will have our very own KGB.

This is as real as it get. You usually don’t think of the power of the state because you don’t feel it. You are accustomed to a constant level of persecution and prosecution. It is a way of life. However, as soon as you step outside this magic circle, the whole power of the states falls on you.

You will be surprised and astonished as to how fast you will find yourself into handcuffs and dragged into a police car. How fast you will be brought in front of the taxation in-justice system, prosecuted, declared guilty and your life destroyed.

All your assets can be seized (which is an elegant way of saying stolen). Your job? Gone. Your marriage? Broken. Your kids? In the Juvenile system (which is the politically correct way of saying locked-up). Your reputation? Burned. Your life? Gone!

Do you think this is a joke?

Do you think it won’t happen to you?

You have nothing to hide, right?

Don’t be ridiculous! The Taxation System is not there to make sense, it is there to still money. They don’t need rational or reason. Why would they? They have the sweetest deal there is to be had with Politicians: as long as they keep steeling money and passing the lion’s share to them, their jobs are safe.

Why do you think they created this neat little kingdom of theirs? Because they want absolute control to do with impunity what they want to do.

Don’t’ believe us? We challenge you to go to a tax lawyer, any tax lawyer. Ask the following question: how often do they win in court and how often do they negotiate with Tax Authorities?

Actually, you don’t need to do it. We will give you the answer for free: most of the time! Do you know why? Because every good tax lawyer knows that they can’t possibly win. The system is arbitrary and rigged against people. It is far cheaper to settle out of court. Always.

 

TAXATION LEVEL

As Austro-Libertarians we are sick and tired of hearing the argument that a reasonable level of taxation is desirable and achievable. The flaw in the argument is, of course, that no two people agree on what “reasonable” means in numerical terms. Some countries consider reasonable 15% while others won’t take less than 45%, and this is just in one tax bracket. Let’s not dwell what happens as tax pressure reaches 90% levels!!!.

In addition, even if we could all somehow magically agree on an optimum taxation level, the taxation system will always remain dominated by politicians and managed by bureaucrats. In other words, flawed people.

That’s the Achilles heel in all Political Theories and Systems. They have to be controlled by humans, with all their flaws and desires. Their greed and thirst for power. There is nothing that opposes these forces automatically. All opposition is active and demands a huge effort. To make matters worse, it gets against our own interests because it wastes our resources. Is then a surprise that politicians get away with it all the time?

A taxation level can never be rational nor reasonable because it is irrational. It does not originate in the needs of “society” but in the minds of politicians and bureaucrats. It is not based on reality but on the idealized models of people at best and in plain old politicians' greed at worse.

There was a time where humans had a break from taxes. A very brief time, roughly between 1800 and 1920, depending on the country in the West you look at.

At that time there was no income tax. Nothing. Zero. A little bit of tax existed but it was directed solely at imports, mainly to “protect” local manufacturing.

Fast forward to today. Consider Timofei. He works for a company in a Western country. He is middle class. Adequate job but nothing superb.

When he receives his check, taxes are deducted from it. He then uses the reminder to purchase goods and services. On each purchase, taxes are charged. But Timofei likes the company he works for and he buys shares of it. Taxes are charged on his purchase. Timofei expects his shares to generate profits in the form of distributions… which are also taxed. Of course, the company can’t distribute all the money they would wish because… they are taxed before that. Neither can the company afford better salaries because… you guessed it… they are taxed.

And no. This is not the end of Timofei’s story. It is just the beginning. Then we need to account for taxation of taxes. The Taxation System is very expensive and this is a tax on itself. A large proportion of a national tax income is spent in either government bureaucracy or worse… having to fulfill bureaucratic demands… which removes millions of millions of Euros or Dollars from the economy. Money that could have been used for productive purposes but is now wasted in… you guessed it again: useless paperwork!

Ahhh… but we are not finished yet. To the Taxation of Taxes, we need to add the payment to the Taxation of Taxes.

What do we mean? Our taxes are supposed to pay for goods but mostly services, that the government offers to its citizens. Of course, due to the idiocy, unconstrained greed and incompetency of politicians, there is never enough. So we need to add “service fees”. Have you notice how suddenly something that was free last year now requires a “small-fee”…? Small-fee that won’t be so small in five or ten years!

Are we finished yet? Of course not! Then we have the “good” tax which is inflation. Our money progressively buys less and less goods. But somehow, through the mystery of Central Banking, this is “good” for us. Again, the reality is that inflation is nothing but a hidden tax.

Are we now finally close to the finish line? No. Not a chance. To all these taxes, we need to add the tax to stupidity or more precisely, vote purchasing. All those idiotic expenditures that “as a society” we just “have to have and support”. Such as Soccer Centres, Gyms, Municipal buildings and Government Properties. Public funding for irrelevant scientific research and Public TV or Radio.  Foreign aid, spy agencies and diplomats.  The United Nations and the World Health Organization (who? yes, exactly!). The list goes on and on. There is no end to it. About 99.99% of all these expenditures have no impact whatsoever in our lives. Nothing. Zero. Nada. Niente. Nichts. Nix. Ingenting. Nicoha.

To this gigantic pile of waste, we need to add the “other” taxation. The one that politicians keep adding to our tab through external debts. They borrow to support the lifestyle they grew accustom to, or more precisely, to the level of expenditure they need to purchase sufficient votes to stay in power. This ever increasing debt is added to our tab, not theirs. Let’s be totally clear. To “service” this debt, more and more of our taxes are need, while we get less and less goods and services. This is yet another hidden tax.

And in the end, we have the last of the giants. The most useless waste of money of them all: the military.

How dare you! Yes, sir! We dare!

Let’s us be clear. We have nothing against soldiers. They choose a profession that was offered to them by governments. It is not their fault. It is the government’s fault. They created the need for the military out of thin air. Consider this. The military is the only expenditure in the government which can achieve maximum benefit for the people if it is never used! The only way to win the military game is not to play! And for that privilege, we are mortgaging our future and the future of few generations to come.

So yes. Taxation levels are not high. They are not even ridiculously high. They are so high that we need to invent a new word for it. We propose: fuck-you-very-much-high. OK. So there are five words in it, but we still like it because it accurately represents what the politicians think of us when they speak through taxation.

 

CONCLUSION

We have seen how there are no theoretical or practical justifications for taxation. We have seen that taxation is unfair and irrational. We have seen that the taxation system itself is authoritarian and out of control. And we have demonstrated how taxation levels are rising and will continue to rise for the indefinite future, simply because there is nothing to stop it.

All this leads to the inevitable conclusion that as we are robbed more and more, we become slaves of this system which is supposed to serve us. There reality is that there is no way out of this path from inside the system. The only solution lies outside. We will discuss this subject in a different lesson.

For now, it is sufficient to make clear that they don’t want us taxed to death, just into slavery.

In the end, you want out? We are showing you the door, but it is up to you to cross over. It’s your choice.

Note: please see the Glossary if you are unfamiliar with certain words.