Justifying Wealth Transfer

Taxation is theft. When the taxes are used to benefit the taxpayer, such as for roads, national defense, etc., then taxation is theft with compensation for the victim. But when we tax the rich to give out free money to the poor and middle class, taxation is theft, pure and simple. And that is what we are proposing here: brute force blatant wealth transfer. No pretences.

So how can we justify such a raw act of aggression? We do need to justify it; else we end up papering over our guilt with expensive pretence. That’s how we ended up in our current morass of special cases, programs and tax credits. Or even worse, we settle for might makes right: The People outvote the rich so The People take because we can. Where does that end? At what point does democracy degenerate into two wolves and a sheep voting for what to have for dinner?

Here is a list of justifications, ranging from liberal to libertarian (not in strict order). Weigh them in your mind. If none work for you, then ask yourself how any government enforced welfare can be justified? Have a guilt trip every time you use a public road while you are at it;-)

Charity beats property. Theft is bad, but so is allowing the poor to suffer. When we tax to pay for welfare (or free money for all) then we balance between two evils in order to minimize overall evil. This excuse may suffice, but can you sustain it happily in your mind? Or must you create categories and claim that taxation is something other than theft in order to sleep well at night? And how do we determine the balance between the two evils?

Equality of opportunity. For those on the far Left, property needs more justification than theft does(!) Social justice trumps classical justice. Where the far Left is strong the Right must defend property and markets on the basis of equality of opportunity. The poor are poor because they didn’t take advantage of available opportunities. This is true in part -- market societies do have economic mobility -- but not entirely: capitalism requires capital. The very poor need initial wealth with which to bootstrap. This is why all but the most radically conservative agree we should have either public schools or school vouchers. Education is capital. So is money. A minimum income solidifies support for private property and capitalism by providing true equality of opportunity.

Reparations for past injustice. Suppose the faction in power was to vote itself largesse from the treasury in great quantity, but after thoroughly looting the country it then voted for minimal taxes and secure private property. Does justice demand secure private property subsequently, or does justice demand at least a onetime transfer back to those previously robbed? Murray Rothbard, Mr. Libertarian himself, argued for the latter option in The Ethics of Liberty (Chapter 9). And he called for some rather extreme land reform in Chapter 11. Property titles in the U.S. (and elsewhere!) are sullied by past injustice: land robbed from the Native Americans, land worked by negro slaves, quitrents paid to undeserving aristocrats. Do we ignore past injustice? Can we rightfully claim it no longer matters? Class matters. Economic mobility is less than 100%. The descendents of the oppressed are poorer on average because of past injustice. This even applies to Saxons squashed by Norman Conquerors. Not only that, we have people alive today who were direct victims of injustice because of their skin color. Then again, conservatives quake at the thought of reparations good reason. Accounting for all past injustice would be a legal nightmare. Analyzing genes to figure how much each person is the descendent of the oppressed would create a new form of discrimination. Free money for all provides a solution: compensate all citizens. Those who are rich because of past injustice pay to those who are poor because of past injustice. This is imperfect justice, for sure. Some descendents of the oppressed are today rich, and some descendents of oppressors poor. But imperfect justice can be better than no justice at all.

The rich still rob today. Injustice continues, albeit more subtly. Yes, we have a supposedly progressive tax system to transfer from rich to poor. But we also have enormous subsidies for the already rich. The government borrows trillions, driving up the return on passive investment, which drives up profit margins and drives down labor rates. The government discourages saving by the lower classes (via Social Security) and encourages borrowing (via the mortgage deduction). Were the government to quit these activities, you would have to work or take significant risks to earn money, instead of being paid just for being rich.

An incremental step for more liberty. The Free Money for All proposal does require substantial gross taxes, but the taxes could be simple: a flat income tax or even a combination of property and excise taxes. What the government doesn’t transfer, you get to spend as you like. Ditto for the money the government does transfer! No longer would the government need detailed information on its citizens. No longer would we need to fill out lengthy forms, structure our finances in inconvenient convolutions, or knuckle under to social workers. The increase in liberty would be enormous, far more than even a 25% tax cut for the rich (which isn’t going to happen anyway).

Maximizing freedom vs. maximizing liberty. Property provides freedom -- if you have property. For the penniless, lack of funds is a far greater tyrant than even the most meddlesome bureaucrat. “Work or starve” is just as compelling as “Do what we say or go to jail.” In bygone times poor people voluntarily sold themselves into servitude to avoid starvation. Today, millions vote for dictatorial socialist governments for similar reasons. Small government with free money provides more freedom than government that is even smaller, but governs a society with a lopsided wealth distribution.

Royalties for forgotten ancestors. Are you descended from the inventor of the wheel? If so, where are your royalties? How about the author of the original “Snow White and the Seven Dwarves?” If so, where if your check from Disney? Our wealth comes not just from our works, but also from our cultural legacy. Even the most enterprising of us benefits from unearned wealth. But the benefits are uneven. A Citizen’s Dividend evens things up a bit. This argument comes from Robert Heinlein’s first attempt at a novel: For Us, the Living. (This, by the way, is a terrible introduction to Heinlein. It’s a bad novel, initially rejected by publishers and only published posthumously as a curiosity for Heinlein fans. It does have some interesting ideas, however, and some of them good.)

Payment for services rendered. Government is a business, and The People own it. Governments provide some very valuable services: law, national defense, protection of property, enforcement of contracts. The rich benefit enormously when the government does these jobs well. Look to the history of ancient Rome. When the government was strong, the rich bought palaces and pleasure slaves. After the government crumbled, the rich bought castles and armored henchmen. When the people vote for government that allows the rich to thrive, the people deserve a bit of payment in return, a Citizen’s Dividend.

A more complete set of inalienable rights. Liberty contains a contradiction. If you truly own yourself, then you can sell yourself, which ends liberty. Murray Rothbard and most other libertarians draw the line at selling yourself. You own yourself but you cannot sell yourself. This right must be inalienable. But is this the correct line? The right to own your own body is worthless if you don’t also own the right to breathe air. Free air is also an inalienable right in our society, one we don’t think about much as air is plentiful. But how about land to stand on? What good is a body without that? Henry George made a political career on the idea that natural rights include our share of nature. But the idea is much older. It is implicit in ancient Biblical law: gleaner rights and the Jubilee laws. If we were to rely on this justification solely, then we would get our free money not from an income tax, but from property taxes in land, water rights, and broadcast spectrum, as well as excise taxes on fossil fuels and dispersed pollutants.

Two Classes of Justification

Most of the justifications above are perpetual. Three are transitory. For some of you, Free Money for All might be a good transition out of our current welfare state but not a permanent institution. Or perhaps the amount of free money should be high at first to deal with past and current injustice and then phased down.

For those of you in the latter camp, consider that if we hold the free money amount constant in real terms, the amount of free money as a percent of the economy diminishes over time if the economy should grow. And since the underclass would have incentive to work and be more productive, and businesses would face a simpler tax code, grow the economy would.