Are Tax Cuts Really Just Undemocratic Exploitation?

Are Tax Cuts Really Just Undemocratic Exploitation?
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Orange cartoon character with a big text "tax".Reprinted from

Will Wilkinson, the vice president for policy at the Niskanen Center, does not like the tax bill just passed by Congress. Writing in The New York Times, he finds the legislation “notably generous to corporations, high earners, inheritors of large estates and the owners of private jets.”

Wilkinson has discovered a surprising source for the legislation he dislikes so much. It is none other than the libertarian idea, promoted by Murray Rothbard and Ayn Rand, that taxation is theft. Under their theory of “absolute” property rights, taxation was “morally criminalized.”  Democratic majorities, in this view, cannot override property rights.

Wilkinson rejects this account. “The idea that there is an inherent tension between democracy and the integrity of property rights is wildly misguided.”  Democracy is a means for the poor and middle class to protect themselves from exploitative elites. Democracy is a relatively recent innovation; in pre-democratic states, ruling elites exploited the “lower orders.” Those not in the ruling elite need the redistributive democratic state for protection.

The fault is no doubt mine, but I find Wilkinson’s line of thought difficult to follow. How does the thought that taxation is morally wrong underlie a tax bill? If you reject taxation, would you not oppose taxes rather than enact new taxes? Perhaps what Wilkinson has in mind is this: in present circumstances, Republicans under nefarious libertarian influence could not proceed all the way to abolition of taxation. The best they could manage is not to tax the well-off as much as Wilkinson thinks appropriate.

If this is Wilkinson’s idea, though, the question arises: What is supposed to be the way in which the rich elites are exploiting the poor in the tax bill? One gathers that it is, as already suggested,  by not subjecting themselves to as high taxes as Wilkinson wants.  In addition, the deficit that will result from the bill may lead to cuts in redistributive programs like “Medicare and other social safety net programs.”

It is no doubt true that many government programs, such as bank bailouts, farm subsidies, and protective tariffs, favor the well off.  But giving “tax breaks” is not exploitation: it is letting people keep their own money. Further, redistributing money to the poor is not a way to protect the integrity of property rights: it is a violation of these rights. Of course, Wilkinson would respond that he rejects the natural rights to property that Rothbard accepts.  But then the argument would need to shift to his reasons for doing so; and, for now, my point against him is a more limited one. It is that if one accepts the libertarian view of property rights, refusal to “soak the rich” is not exploitation of the poor.

Wilkinson might defend his position in this way. Even if you accept property rights as Rothbard conceives of them, are not redistributive measures needed to compensate the poor for the government programs by which the rich do exploit them? Is not the proper course of action, though, to get rid of these exploitative programs rather than to violate rights further through taxation? Surely the best response to an exploitative state is to get rid of the state, not spread the exploitation around.

There is a further problem with Wilkinson’s argument. Why is the tax bill undemocratic? It was, after all, enacted by  a democratically elected legislature. Wilkinson says that the bill was passed in “great haste,” without adequate hearings on it. Are these requirements of democracy? One suspects that, for Wilkinson, only that counts as “democratic” which conforms to his ideal of a welfare state.

The problems with the tax bill are not those to which Wilkinson calls attention but rather that it mandates taxation at all. Taxation is indeed theft, Wilkinson and other “liberaltarians” to the contrary notwithstanding.

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Dr. Gordon is the editor of The Mises Review, and a contributor to such journals as Analysis, The International Philosophic Quarterly, The Journal of Libertarian Studies, and The Quarterly Journal of Austrian Economics.

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