Sam Harris has apparently ignited some controversy by writing a post agreeing with Warren Buffet’s position that the extremely wealthy should be paying more in taxes. Harris says that he has received quite a bit of feedback, much of it negative. The general thrust of much of the negative criticism concerns the very legitimacy of taxation itself, with many people claiming that taxation is a form of theft. This is something you sometimes hear from the more libertarian-minded, but I rarely see anyone asked to defend this claim, which is, after all, fairly startling, strongly counterintuitive to many people, and deeply important if true. Thinking about this issue has prompted me to write a fairly lengthy examination of it and the parallel claim that a person is entitled to keep everything that he or she earns.
Harris, I think, errs when he says,
I agree that everyone should be entitled to the fruits of his or her labors and that taxation, in the State of Nature, is a form of theft.
This is almost definitely wrong because, taken literally, it is nonsensical. In a state of nature there is no government, hence there is no institution whereby a government can take a portion of a person’s income. So in a state of nature taxation cannot be theft because there is no such thing as taxation. This is a fairly minor point, but it does make me wonder exactly what Harris meant to concede here. Some have taken him to be conceding that taxation is a form of theft, full stop. But, as I hope to show below, that is a very strong claim that requires considerable argument. So this, coupled with his attempt to qualify his concession by referring the state of nature, makes me think that Harris really did not mean to concede that taxation is a form of theft (period).
Regardless of what Harris meant to say, I think the topic is worth considering. First we need to ask why anyone would believe that taxation is theft to begin with. Well, fairly obviously taxation is the forced confiscation of part of a person’s income. But this alone doesn’t justify the claim that it constitutes theft since theft is the unjust (or illegal) taking of property belonging to another individual. So the claim that taxation equals theft boils down to the claim that it is the unjust confiscation of another person’s money. So why should we think that the government taking a portion of one’s income is unjust? One common justification is that it is wrong to take money that a person has earned. I want to consider this justification, but once again, we need to begin with a question: What does it mean to say that a person has earned his income? What does earning consist in? Let’s consider some examples:
Suppose I am the beneficiary of a large inheritance, say half a million dollars. Did I earn that money? Arguably, no. I just happen to be lucky enough to be related to the person who possessed it.
Suppose I buy a $5 lottery ticket and win $2 million. Did I earn that money? At least to me, the notion of earning does not apply to money that is acquired through random chance. If I and another person each take the same or sufficiently analogous steps in an effort to acquire some amount of money, only one of us can get the money, and the winner of the money is chosen completely randomly, it is at least highly questionable to claim that the winner earned the money.
Let’s think about the issue of taxation in these two cases. Would it be wrong for the government to confiscate a percentage of the money in either of them? If you say yes, then your justification must be something other than that it is wrong to take money that a person has earned. What is this justification?
Let’s flesh out the details of these examples a bit more. Suppose that each of the individuals in the two scenarios lives in a democracy with a functioning government that engages in many sorts of activities, all of which require money. One of the things that the government does is provide security for investments in the form of regulations of financial institutions, insurance on bank deposits, etc. The government also provides an ample defense force protecting its citizens and the country as a whole from financially devastating invasions (including those from powers who may seek to confiscate and redistribute the assets of wealthy citizens). Thus, to some non-negligible but unquantifiable extent, the value of the assets of the two individuals in the above scenarios depends upon the costly activities of the government. It is entirely accurate to say that the activities of the government are responsible for some portion of the assets’ value. Why would we not think that these two individuals indeed owe the government some of the value of their assets? Regardless of how you answer that question, you must at least concede that the government taking a portion of the income of either of these two individuals is an importantly different kind of thing than a person breaking into your home and taking your laptop. So if we are going to assimilate these two activities (robbery and taxation) under the concept of theft, we are going to need a very strong argument.
Something that might seem to follow from the claim that a person has earned his or her income is that she deserves what she has been paid. Undoubtedly the notions of earning and deserving are distinct, but I want to expand the discussion here and think in terms of what people deserve. I think that the appeal of the notion that a person is entitled to keep all of the money that she earns stems, at least in part from the parallel notion that a person deserves the money they are paid. But I think it is highly questionable that every person deserves all of the money that they are paid.
Some more examples:
Suppose I am a songwriter who writes a catchy tune that, even though it is not a particularly good song, becomes wildly popular because it is used in the soundtrack of a successful and popular film. I sell millions of copies of the song, taking in nearly a million dollars in one year. Have I earned this money?
Compare this example to that of a physician who spends years of her life and tens of thousands of dollars to earn her MD and medical license, and obtains a position in private practice where she earns $200,000/year. She has worked tremendously hard and is well-rewarded, but she makes only a fraction of what the songwriter has managed to acquire. Given the discrepancy in the amount of effort, talent, skill, etc. between the physician and the songwriter, I think that we may legitimately balk at the claim that the songwriter deserves what he has been paid. It is unclear what notion of dessert you would have to be using in order to believe that the songwriter deserves more money than the doctor.
The songwriter owes his wealth, to a large extent, to two factors, neither of which he has any control over nor responsibility for. First, the cost of producing copies of his work is negligible and thus there are few disincentives to scaling his product. He can cheaply produce as many copies as he can sell (or, more accurately, he can contract with a company that can cheaply produce and distribute the copies and share the profits with him). This feature of the songwriter’s reality is a result of a number of inventions, including sound recording devices and sound reproduction devices that the songwriter played no part in creating. Before the twentieth century, it would not have been possible for a musician to produce and distribute multiple copies of recordings of his music.
The second factor that contributes to the wealth of the songwriter that he has no responsibility for is the size of the population to which he is selling his product. A large population entails a larger potential for huge sales. Again, this has nothing to do with the inherent worth of the music that is produced. Brittany Spears could accumulate vastly larger sums of money than JS Bach because she was born at a time that allowed for her to produce and sell recordings of her product to a very large population. Is it reasonable to think that Spears is more deserving of the fortune that she acquired than Bach? Arguably, Bach was more talented, more responsible, and worked harder to produce better music. If anything, it would seem that he would be more deserving than Brittany Spears of the millions of dollars Spears “earned.”
Another example: Suppose I am the owner of a paper company that distributes paper to organizations all over America. I own a large fleet of delivery vehicles that operate on publically built and maintained roads and bridges. Without that infrastructure, my company would be unable to deliver our product in a timely manner. Would it not be reasonable to conclude that some non-negligible but unquantifiable portion of the value of my company is a direct result of the activities of my government? When you add the fact, discussed above, that the government also maintains a defense force that protects public infrastructure from the devastation of war and also provides for the kind of persistent peace that is conducive to a strong economy, it becomes even more problematic to assume that the money that my business takes in is money that I (or my business) have earned of my own accord and that thus it would be wrong for the government to take any of it.
Consider now the extremely high salaries of some CEOs and other executives. Does a person who makes $3 million a year really deserve so much more than a physician who earns only a couple hundred thousand? Does a CEO really earn his multi-million dollar salary? I don’t think that any CEO works harder, is more talented, or bears so much more responsibility than a physician that the CEO’s efforts are worth 10 times as much. And here we are comparing such an extreme salary to one that is already very large. Does the effort of a CEO (any CEO) entitle him to make 100 times more than the average teacher? I’m not suggesting that there is anything morally questionable about paying a CEO such a salary; that is a separate issue. The question I am asking is really about whether it makes sense to say of a person who gets paid so much money that she earned it or that she deserves it? To say that she deserves it is to suggest, at least to my mind, that her work is so valuable that it is worth 10 times what a well-paid physician makes or 100 times what some teachers make. And I just don’t see how to make that case.
Again, I want to be very clear here that I am not trying to suggest that CEOs shouldn’t be paid millions of dollars per year. That is not the point. Companies should be free to pay their CEOs whatever amount they think they can afford and is necessary to retain the CEO’s services. The question is whether the CEO earns that money, or, comparably, whether they deserve it. I have tried to bring up certain problems with suggesting that a person earns whatever they are paid (in the sense of deserving it or that they’re work is worth it) or whatever they acquire by legal means. But I certainly don’t have some well-worked out theory about how much work is worth a given amount of compensation. I just have the sense that at some monetary amounts, we are no longer talking about money that is earned (in the appropriate sense). Thus, saying that a person is entitled to retain everything that he has earned doesn’t really get you anywhere. Arguably, some people are rewarded with an income much of the value of which is not really earned in the requisite sense. Now maybe we can still make the case that it is wrong for the government to take any portion of any person’s income, whether that income is deserved (or earned) or not. But this, if it can be defended, must be defended in some way other than talking about people’s right to what they have earned.
So, I think it is very questionable to describe taxation as a form of theft. More appropriate seems Oliver Wendell Holme’s statement that “taxes are the price we pay for civilization.” All of this is to suggest that the person who wants to claim that taxation is a form of theft has a very big task on his hands to defend this claim. It is not obvious and nobody should concede it.