As the saying goes: There are two things in life you can’t escape: death and taxes. With the advances in medicine, the chances to escape death are much higher than escaping taxes. They are about as close to eternal as you can get here on Earth.
Taxes are unavoidable by design. If they weren’t hardly anybody would pay them. Whatever you do taxes are right there: Get up in the morning, fill up the car (fuel tax), and get a cup of coffee (sales tax) on your way to work (income tax and Social Security). When you get back home you incur property tax just because you need and want a roof over your head. And in the not-too-distant future, we’ll pay a CO2 tax every time we exhale. And when you draw your last breath estate taxes are the final hoop to jump through.
One way to avoid taxes would be to hole up in a cave and abstain from transacting with the rest of society. This hardly is an alternative for most of us. Two other options are available to get around taxes: Get on welfare or become a bureaucrat/politician. They all are sustained by the taxpayer who produces the goods and services the public sector partially confiscates. A bureaucrat’s income tax - like any other tax he pays - reduces the amount he collects from the taxpayer but still makes him a net recipient.
The claim that bureaucrats or politicians get paid for rendering services to the „public“ is fallacious. If someone needs a service they can get it through voluntary exchange and at a lower price since there would be competition. This would eliminate the need for „public“ services, which are usually forced on their recipients. Let’s not start a discussion about whether there would be much demand for such services as enforcing proper pronouns, or saddling you and your descendants with excessive debt.
Get rid of government?
The only way to get rid of taxes is to get rid of government. But it is a utopian dream that we could live in a society without some form of government. There is no example in history of a society without a government apparatus that protects against violence, robbery, and fraud and enforces contracts. Some argue that all these services could be provided by competing private entities. This might work for a while until one of the competitors dominates the market and turns into a monopolistic quasi-government with no checks and balances to prevent the abuse of its unfettered power.
A less utopian and more realistic way to drastically reduce taxes is not the abolition of government but its containment and rollback to an absolute minimum. This might not sound revolutionary but it is. A reduction of the scope of government has to start at the very top. Since the Constitution was adopted the scope and power of the Federal Government have constantly grown. So have taxes. Taxation at the federal level has one critical aspect: the absence of competition for the tax dollar. If you don’t agree with taxes on the local or state level you can move elsewhere and the entity loses your taxes. If you disagree with federal taxes you have to leave the US and relinquish citizenship - and end up somewhere else where you pay taxes.
Robert Yates, a leader of the Anti-Federalist movement foresaw the perils associated with centralized power and opposed federal taxes on principle. In one letter he described federal taxing power as one
"that has such latitude, which reaches every person in the community in every conceivable circumstance, and lays hold of every species of property they possess, and which has no bounds set to it, but the discretion of those who exercise it.“
A federal income tax was first introduced with the Revenue Act of 1861 to fund the Civil War. It expired in 1866 and is a very rare case of a temporary tax.
In the second half of the 19th century various movements lobbied for a Federal income tax until in 1894 the Wilson-Gorman Tariff Act included an income tax provision. After the Supreme Court had struck down the new tax as unconstitutional lobbying intensified and the public got gradually convinced of the necessity for such a levy. Its proponents argued that it was necessary to finance „public“ services and „social reforms“, and to reduce inequality since the rich had unduly benefitted from the unprecedented explosion of wealth during the industrial revolution. This led to the 16th Amendment in 1913 - the worst Amendment in US history - which enabled Congress to pass the Revenue Act of 1913. Individuals were then taxed at a rate between 1% and 7%, and corporations at a flat rate of 1%. By 1918 the top rate had exploded to 77%. In 1944/45 it had reached a staggering 94%.
In the beginning, it’s about taxing (only) „the rich“, the top 1%, making them pay their „fair“ share. The whole spiel is about convincing a large enough number of voters that either someone else will foot the bill or that they’ll get more than they have to pay, i.e. that they will be net recipients. And it always helps to stoke people’s innate envy. The tactics of the tax fetishists have not changed.
If it were possible to get anywhere near the rates of 1913 it would be a fantastic result. But this requires a drastic reduction of the scope of government: Less taxes are the result of less spending. Pretty simple but not easy.
One way to cap government spending could be an ironclad Amendment to the Constitution that requires a balanced budget. No exceptions and no excuses. The debt ceiling circus proves again and again that politicians are addicted to debt and will do anything to avoid fiscal handcuffs.
A balanced budget rule would prohibit politicians from kicking the can down the road and funding their programs with deficit spending. It would force them to tell voters how much they have to pay in the here and now instead of in the future and it would make the public aware of the immediate consequences of public expenditures. A pain in the present is felt more acute than one in the distant future.
After Switzerland amended its constitution and introduced a so-called debt brake at the federal level in 2003 (and similar rules in the cantons and many municipalities) overall debt came down from 57% of GDP to around 40% in 2019. But along with the growth of GDP over this period total tax receipts went up by about 70% from roughly 130 billion CHF in 2003 to about 225 billion CHF in 2019. Hardly a reduction of government activity especially when cumulative inflation over this period was only around 6%. In Switzerland, the debt brake at least prohibited an explosion of public debt but it didn’t lead to a reduction in spending or less taxes.
The example of Switzerland shows again that for taxes to go down in relative and absolute terms expenses must be cut. And they only get cut when their purpose is rejected by the public and voters.
Taxes are about ideas
This gets us to the key point of this article. Taxes are about ideas. Pressure groups, activists, ideologues, and politicians are forever bombarding voters with „good“ causes to capture their imagination. That’s their sole purpose, their reason for being. Their tactics don’t change. They claim to promote justice, equality, progress, or fairness. And they are in it for the long haul. You can’t win this race by opposing taxes on principle.
Very often ideologues and activists are moving in the orbit of government and its bureaucracy. Since they don’t create value that people are willing to pay for they depend on handouts from the state. Whoever controls the public coffers can rent these mouths to spread the propaganda and convince the public of the necessity for more government, bureaucracy, and more and new taxes. Once public opinion supports a cause taxes follow automatically.
It is therefore crucial to get government and its never-ending propaganda out of our heads. The first step is to listen closely. Propagandists and politicians are experts in wordplay and newspeak. They twist, reframe, and recast. Take „free childcare“ for example. To use the word free in this context is ludicrous. The resources that are required for childcare are not free of course. Caregivers don’t work for free and the buildings where all this takes place aren’t free either. Most people don’t question this narrative though. As long as they don’t exchange their cash for a good or a service directly they don’t make the connection between the price and the taxes they pay. If the lie about „free“ services is repeated often enough it morphs into truth.
Paying for „free“ childcare through taxes kicks off an avalanche of consequences. Parents who take care of their children rather than handing them over to „free“ childcare pay twice: taxes for a service they don’t want and the income they forego. And those who don’t have children are forced to subsidize other people’s choices for a government freebie. Parents who don’t work are incentivized to use this „free“ service and to unload their responsibilities on the taxpayer who has to fund their leisure.
When a tax-funded service like childcare is sold as „free“ hardly anybody - especially the parents who go for it - questions its cost and quality. This leads to inefficiencies and wastefulness - a common problem that plagues public spending. Since the taxpayers have to pay whatever the cost all incentives for the system to become more efficient are eliminated. Bureaucracy once again expands with more government employees and overhead asking for more funds and framing their salaries and benefits as an „investment“ into our future.
Often government itself becomes a means to an end. Pressure groups, lobbyists, and political parties hijack this coercion machine to push their agendas. Rather than protecting individual rights and liberties government favors special interests and uses taxes to violate what it should preserve - the ultimate perversion of state power.
As long as these minions succeed in legitimizing government intervention in every aspect of our lives taxes will metastasize. It is therefore vital to push back their propaganda and reduce government to its only legitimate purpose: to prevent violence, robbery, and fraud, and to enforce contracts that citizens have entered into voluntarily. When a government robs its citizens for other purposes it loses its legitimacy.
Defund government
To defund government it is necessary to delegitimize its ends. Delegitimizing takes time and effort especially when fighting against entrenched structures and common beliefs.
The resistance against the taxes levied by the British Crown was rooted in the Whig tradition which was inspired by the Glorious Revolution and the (English) Bill of Rights. Cicero and Plutarch saw centralized power and taxation as a slippery slope to tyranny and dependence. The colonists took these ideas and many others as an inspiration to delegitimize the power of the British Crown. Instead of bowing down, they kicked off the great American experiment. It’s time to kick off another one.