The Meaning of Taxes

I feel silly writing this note because I am merely stating the obvious. However, it seems that from talking to a few people recently, something which should be obvious is lost to some. I expect this to not be so long so please bear with me. 

What are taxes?

Taxes are payment to a party, call it Government, for claims to monetary obligations or assertions that there is money owed. But what does money owed mean? It means that if I raise 10 chickens and the Government says I have to pay the amount of 3 chickens for taxes, it means the Government claims that the labor and the capital that went to 3 chickens is theirs. In short, it's as if I have to pay 3 chickens although I doubt any tax office would accept that as payment. The claim is being made that for every 10 chickens I feed and raise, 7 are truly mine and 3 are owned by the Government. 

But is this justifiable? And is this moral? To answer this, one can merely analyze by noting ownerships. In my chicken farm, I raise, labor, and feed 10 chickens. If they get sick, I pay the agricultural veterinarian for services and medicine. All effort and money spent comes from myself. Everything else that the chickens need to mature comes from the abundance of nature; the air, water, the earth, the occasional beetle or earthworm they find to eat are natural. Who owns nature? Nature as a whole is the heritage of all mankind. In abundance, the air, the water and the Earth obligate me with nil to mankind. In scarcity, I would arguably have an obligation to mankind; but it is not to Government. Why then does Government claim to own 3 chickens that I have?


The somewhat keen observer might say, the Government needs 3 chickens to supply the army to provide security for the nation. However, this is a bogus argument. Firstly, I did not ask for the security that they are requiring me to pay. Secondly, how did they get to the value of 3 chickens? If I raised 20 chickens instead, would they demand 6 chickens? Why would the amount of labor and capital I put into making myself comfortable in life be proportional to the amount of money I owe for security, if it is indeed that I owe money for security. The arbitrariness of using labor and capital as a measure is the argument's weakest point. 

This is evidenced when one looks at other forms of labor with less tangible products. If instead of chicken farming, I was a programmer and I wrote 4000 lines of code, why would I owe 1200 lines of code to the Government? It seems that chickens, delicate and tender they sometimes are, would require more physical security. 

There are ways to fund a manageable Government, but taxing labor and capital are at best suspect and at worst immoral. Government shouldn't be allowed to claim ownership of something, anything, be it chickens or programming code, for no legitimate reason.

The Land Ownership Kind of Ownership

People are often bewildered by what we mean when we say that ones land ownership is not absolute or that the ultimate owners of land is all mankind. They envision land being grabbed from them or that people trampling on their lawn plants or raiding their refrigerators. Hopefully, this short explanation will clarify why we say that all mankind is the ultimate owners of land and what the ramifications of this statement are. 

There are two ways to enjoy the rights of ownership of any given object. The first way is if one legitimately, unequivocally, and absolutely owns an object, then he or she should enjoy the full rights of its ownership. Ones labor falls under this category. As a corollary to this, capital and fruits of ones labor also fall under this category. 

The second way is if one pays dues to the rightful owner to enjoy exclusive rights. For example, renting an RV gives you an expectation of security and privacy while in the RV. 

The question posed at this juncture is what kind of enjoyment of rights of ownership is land ownership? Is it the first way or the second way? To answer this, we consult the ancients for wisdom. In particular, we refer to John Locke's 2nd Treatise 

https://www.gutenberg.org/files/7370/7370-h/7370-h.htm...

We begin with what people are familiar with: homesteading. Chapter V section 27 discusses the process and principle. Essentially, the principle of homesteading guarantees that people enjoy the rights of ownership to land that they have appropriated. It articulates that they should enjoy the rights in full and therefore they should remain unmolested by others when exercising those rights. That is, no one should take the land from them by force or destroy their possessions in that land. The important point to note, however, is that Locke ends the section with the phrase “at least where there is enough, and as good, left in common for others.” He repeats this phrase or a variation of this phrase several times. For example, in chapter V section 33 “Nor was this appropriation of any parcel of land, by improving it, any prejudice to any other man, since there was still enough, and as good left.” This condition is the Lockean Proviso.

The reason for Locke's emphasis of this point is clear when one reads the chapter in its entirety. Locke begins the chapter in section 25 with God (or 'nature' for those who prefer) “has given the earth to the children of men; given it to mankind in common.” This statement is a universal truth. The ownership of land is not transferrable and cannot be changed by the State or any individual or corporation. Its ultimate owners are all mankind and all mankind are heirs to the land.

In discussing homesteading, he was explaining that if land is in abundance, men can appropriate land and treat it as their own. However, this initial enjoyment of the rights of ownership lessens in degree proportional to the scarcity of the land. That is, as the demand for the land increases, the strength of the argument for appropriation decreases. Ultimately, land is never and can never be truly absolutely owned by any one individual, corporation or State. It remains the ownership of all mankind. 

We are now in a position to ask our main question: what kind of enjoyment of rights of ownership is with respect to land? It is of the second kind. Ones enjoyment of rights to ownership of land is established by effectively renting from all mankind -- or for practical purposes, all mankind local -- a unit portion of what mankind owns. When the demand for that unit of land is nil, no amount is owed. This is simply what homesteading is. 

On the other hand, when the demand rises, an injustice is created; that is, ones exclusive use of the land is excluding others from using the now in-demand unit of land. To correct the injustice, compensation has to be made to everyone around for the use of the land. To determine the amount of compensation that has to be made, consider how much someone else who was excluded would be willing to pay for renting the same unit of land. This value happens to be the free market value of the land rent. Hence, the just compensation is that land rent. This rent belongs to and should be distributed to everyone because everyone is the rightful owner of the land. A common misconception is that the rent becomes funding for the State. This is not so and shouldn't be so. 

- poikilos