As tax season rolls around again, it’s a great opportunity for principled libertarians to carefully consider their relationship to taxes. I like to compute the percentage of my income that goes to taxes. For most working people, that’s somewhere between 25 and 40 percent or more (not including sales taxes). When you get on up close to where you’re paying 50% in taxes, it starts to raise some interesting ethical considerations.
- Supporting the enemy. If I believe the government is primarily engaged in evil, destructive activities such as war and welfare, and I’m spending more than half of my effort supporting the government, aren’t I a net subtraction from the world? Most people believe some of what the government is doing is good and some bad, so maybe you want to calculate how much of the budget goes to things you oppose, such as the wars in Iraq and Afghanistan, the bailouts, or whatever it may be, and then multiply this percentage by your tax percentage to see how much of your time goes towards supporting your enemy.
- Non-financial aspects of your work. Is your job rewarding in non-financial ways? For example, a therapist or a teacher might feel they are affecting the world in a positive way that is hard to measure in dollar terms. If your job is one of these types, maybe you aren’t so concerned that a large percentage of your income supports the enemy, because you’re fighting back more effectively in other ways. For those of us in the financial industry, it’s generally harder to measure our positive effect any way other than in dollars.
- What are you doing with it? Are you giving all of your after-tax after-living-expenses money to the cause of liberty, to offset your support for the government? If you’re working, say, 25% for the enemy, are you working at least 25% for the good guys too? If not, should you be?
- The future. Higher taxes seem likely in the not-too distant future. If you’re already paying 40% or more, it might not be long until you’re paying 50% or more. In historical terms, we’re pretty low right now. In the 50s, top rates were over 90% and in the 70s, they were 70%. Once I’m clearly working 9 months out of the year directly for that which I oppose, it puts me in a very sticky ethical situation.
An interesting question that I haven’t thought about much yet is how the inflation tax plays in here. If you’re knowingly sitting on a pile of cash that the government inflates away to support the empire, have you essentially just handed that wealth over to the government?
Ron Paul has pointed out that if we simply changed our foreign policy from one of offense to one of defense, we would save nearly enough money to eliminate the individual income tax (which provides less than half the revenue for the federal government). There’s also the fairtax.