Voluntary taxation

Last updated March 26, 2024

Voluntary taxation is a theory that states that taxation should be a voluntary act. Under the theory, people should have the option to pay taxes instead of being forced to pay taxes by their government. Under this theory, the people would control how much they pay and where they spend it. The theory is a part of Objectivist politics and many libertarian ideologies. Proponents of some studies assert that individuals will give to government, paying voluntary taxes to support specific functions.

In one study, subjects were each given $20 to be anonymously allocated between themselves and a charitable organization their discretion (repeated for 12 different organizations, $240 total/subject), voluntary donations for each organization averaged 22% to government organizations and 27% to private nonprofits, and were influenced by their cause, level, and perceptions of effectiveness and efficiency (on average, 76% of the endowment was kept by the subjects).^[1] State lotteries are an example of a voluntary taxation system.^[2]

History

The American federal income taxation system is sometimes called a "voluntary" taxation system. Marjorie E. Kornhauser writes, "Most people never pay their taxes voluntarily, in the ordinary sense of the word. Rather, they are generally anti-tax, in that they usually would prefer to keep any income they receive than pay it to the government in taxes. Voluntary, in the context of taxation, simply means that people do not have to be compelled to pay their taxes through actual enforcement actions by the state."^[3] The "income taxes are voluntary" argument has not prevented U.S. residents who did not file tax returns or pay taxes from being prosecuted and convicted for tax offenses.

Lysander Spooner stated, "It is true that the theory of our Constitution is, that all taxes are paid voluntarily; that our government is a mutual insurance company, voluntarily entered into by the people with each other; that each man makes a free and purely voluntary contract with all others who are parties to the Constitution, to pay so much money for so much protection, the same as he does with any other insurance company; and that he is just as free not to be protected, and not to pay tax, as he is to pay a tax, and be protected. But this theory of our government is wholly different from the practical fact. The fact is that the government, like a highwayman, says to a man: “Your money, or your life.” And many, if not most, taxes are paid under the compulsion of that threat. The government does not, indeed, waylay a man in a lonely place, spring upon him from the roadside, and, holding a pistol to his head, proceed to rifle his pockets. But the robbery is none the less a robbery on that account; and it is far more dastardly and shameful. "^[4]

In Second Treatise of Government (1690), John Locke took the position that all rights come from the people, and that the people must give their consent to be governed by elected representatives. L.K. Samuels extended John Locke's assertion under the “Rulers’ Paradox” to illustrate why the collection of taxation could be seen as voluntary. Samuels contends that the Lockean “consent of the governed” only applies to rights that people possess, which are then loanable to a governing body, under the social contract. In cases of torture, kidnapping, wiretapping, theft, and assassination and other such transgressions, Samuels asks: “Where and how does a representative government acquire authority to perform such coercive acts, acts disallowed for individual citizens?”^[5] Under this interpretation of John Locke, Samuels maintains that taxation would have to be voluntary since people cannot loan rights to others that they themselves do not already have.

Locke argued in a quote attributed to him that “the people cannot delegate to government the power to do anything which would be unlawful for them to do themselves.^[6]

Thomas Jefferson lent weight to a voluntary society, writing that "No man has a natural right to commit aggression on the equal rights of another, and this is all from which the laws ought to restrain him.”^[7] During his administration, President Jefferson abolished the whiskey excise and all other federal internal taxation on U.S. citizens, which was one of his campaign promises.^[8]^[9] The U.S. Federal government had no direct internal taxation for nearly 80 years.

Like many of the Founding Fathers, George Washington was an admirer of John Locke. He was vocal about the concept of consent of the governed, writing: “The Parliament of Great Britain hath no more Right to put their hands into my Pocket without my consent, than I have to put my hands into yours, for money.^[10]

Example

Here is an example of how a voluntary taxation system could function.

A state would distribute tax forms that could be filled out by recipients. The forms would describe options which the recipients could designate preferences as to how the recipient would like his or her money spent. For example, there could be a section for military spending, or separate sections for defense in general and specific conflicts in particular. There would also be sections to be for elected officials (who would still be necessary to carry out the wishes of the people) and also sections for charities.

The form would be divided into more and more sections so that people could specify their decisions. The entire form would be under the category of general. Then there could be a section for education and then even further for elementary school education. People could choose which sections they wanted and contribute to those sections. For example, they could contribute different amounts to each section of education or to the section of education in general, allowing their elected officials to decide the best way to allocate the money.^{[ citation needed ]}

In popular culture

When asked by Mario Lopez what her first executive order as president would be, Ellen DeGeneres advocated a mix of voluntary taxation and tax choice, stating "you should get to choose where your money goes instead of giving it and just letting them decide, I think you should decide."^[11]

Support

The arguments for this theory are as follows:

It allows greater freedom.
It performs both the function of collecting money for the government and allowing the population to decide where money should be spent. It is similar to allowing everyone to vote on government spending except that it is in a different format.
It allows government officials to easily keep track of the wants of their voters and the nation as a whole.
It allows people to "vote" directly with their money. For example, they can decide if everyone should have health care by contributing to that section.
It saves money that would otherwise be spent on tax collection by the government.

Sources

Payne, James L. "The end of taxation?", National Affairs
Rothbard, Murray N. Man, Economy, and State (with "Power and Market"), Ludwig von Mises Institute, 2004. Textbook with a section that describes most of the theory of Voluntary Taxation

Related Research Articles

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In moral and political philosophy, the social contract is an idea, theory or model that usually, although not always, concerns the legitimacy of the authority of the state over the individual. Conceptualized in the Age of Enlightenment, it is a core concept of constitutionalism, while not necessarily convened and written down in a constituent assembly and constitution.

Voluntaryism is used to describe the philosophy of Auberon Herbert, and later that of the authors and supporters of The Voluntaryist magazine, which supports a voluntary-funded state, meaning a lack of coercion and force in matters such as taxation.

<span class="mw-page-title-main">Public finance</span> Study of the role of government within the economy

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The efficient allocation of available resources;
The distribution of income among citizens; and
The stability of the economy.

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Two Treatises of Government is a work of political philosophy published anonymously in 1689 by John Locke. The First Treatise attacks patriarchalism in the form of sentence-by-sentence refutation of Robert Filmer's Patriarcha, while the Second Treatise outlines Locke's ideas for a more civilized society based on natural rights and contract theory. The book is a key foundational text in the theory of liberalism.

In political philosophy, the phrase consent of the governed refers to the idea that a government's legitimacy and moral right to use state power is justified and lawful only when consented to by the people or society over which that political power is exercised. This theory of consent is historically contrasted to the divine right of kings and had often been invoked against the legitimacy of colonialism. Article 21 of the United Nations' 1948 Universal Declaration of Human Rights states that "The will of the people shall be the basis of the authority of government". Consensus democracy is the application of consensus decision-making and supermajority to democracy.

In political philosophy, limited government is the concept of a government limited in power. It is a key concept in the history of liberalism.

Virtual representation was the idea that the members of Parliament, including the Lords and the Crown-in-Parliament, reserved the right to speak for the interests of all British subjects, rather than for the interests of only the district that elected them or for the regions in which they held peerages and spiritual sway. Virtual representation was the British response to the First Continental Congress in the American colonies. The Second Continental Congress asked for representation in Parliament in the Suffolk Resolves, also known as the first Olive Branch Petition. Parliament claimed that their members had the well being of the colonists in mind. The Colonies rejected this premise.

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No Treason is a composition of three essays by individualist anarchist Lysander Spooner, all written in 1867: No. 1, No. 2: "The Constitution", and No. 6: "The Constitution of no Authority". No essays between No. 2 and No. 6 were ever published under the authorship of Spooner.

Economic theory evaluates how taxes are able to provide the government with required amount of the financial resources and what are the impacts of this tax system on overall economic efficiency. If tax efficiency needs to be assessed, tax cost must be taken into account, including administrative costs and excessive tax burden also known as the dead weight loss of taxation (DWL). Direct administrative costs include state administration costs for the organisation of the tax system, for the evidence of taxpayers, tax collection and control. Indirect administrative costs can include time spent filling out tax returns or money spent on paying tax advisors.

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References

↑ Li, Sherry Xin; Eckel, Catherine C.; Grossman, Philip J.; Larson, Tara (May 31, 2009), Giving to Government: Voluntary Taxation in the Lab, SSRN 1422143
↑ DE Miller; PA Pierce (Winter 1997), State and Local Government Review, vol. 29, Sage Publications, Inc., Carl Vinson Institute of Government, University of Georgia, pp. 34–42, JSTOR 4355168
↑ Legitimacy and the Right of Revolution, vol. 50, Buffalo L. Rev., Fall 2002, p. 819
↑ Spooner, Lysander, No Treason
↑ Samuels, L.K. (2013), In Defense of Chaos: The Chaology of Politics, Economics and Human Action Review, Apple Valley: CA: Coden Press, pp. 308–309
↑ This quote is apparently a paraphrasing of Locke's ideals, since its exact wording is not found in his major works. Earliest publication of the statement in this form seems to be one made in Oversight Hearing on the Columbia River Gorge National Scenic Area Act, 1997
↑ Thomas Jefferson (1816), letter to Francis Gilmer
↑ Wood, Gordon S. (2010), Empire of Liberty: A History of the Early Republic, 1789–1815, Oxford University Press, p. 293
↑ Bailey, Jeremy D. (2007), Thomas Jefferson and Executive Power, Twenty-First Century Books, p. 216
↑ Washington, George (July 20, 1774), letter to Bryan Fairfax
↑ Ellen DeGeneres, Mario Lopez (4 May 2016). What Ellen DeGeneres Would Do If She Were President. Extra. Archived from the original on 7 May 2016. Retrieved 11 May 2016.

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[1] Li, Sherry Xin; Eckel, Catherine C.; Grossman, Philip J.; Larson, Tara (May 31, 2009), Giving to Government: Voluntary Taxation in the Lab, SSRN 1422143

[2] DE Miller; PA Pierce (Winter 1997), State and Local Government Review, vol. 29, Sage Publications, Inc., Carl Vinson Institute of Government, University of Georgia, pp. 34–42, JSTOR 4355168

[3] Legitimacy and the Right of Revolution, vol. 50, Buffalo L. Rev., Fall 2002, p. 819

[4] Spooner, Lysander, No Treason

[5] Samuels, L.K. (2013), In Defense of Chaos: The Chaology of Politics, Economics and Human Action Review, Apple Valley: CA: Coden Press, pp. 308–309

[6] This quote is apparently a paraphrasing of Locke's ideals, since its exact wording is not found in his major works. Earliest publication of the statement in this form seems to be one made in Oversight Hearing on the Columbia River Gorge National Scenic Area Act, 1997

[7] Thomas Jefferson (1816), letter to Francis Gilmer

[8] Wood, Gordon S. (2010), Empire of Liberty: A History of the Early Republic, 1789–1815, Oxford University Press, p. 293

[9] Bailey, Jeremy D. (2007), Thomas Jefferson and Executive Power, Twenty-First Century Books, p. 216

[10] Washington, George (July 20, 1774), letter to Bryan Fairfax

[11] Ellen DeGeneres, Mario Lopez (4 May 2016). What Ellen DeGeneres Would Do If She Were President. Extra. Archived from the original on 7 May 2016. Retrieved 11 May 2016.

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