Taxation is Theft

What is the first principle of economics? Some economists will claim that it’s supply and demand, while others insist that it’s scarcity or the division of labor. The first principle of economics is “thou shalt not steal.” The word economics is derived from two Greek words: oikos, meaning “house,” and nomos, meaning “law.” Combined we get “rules or laws of the house.” Economics is ethical before it is practical. This follows the older definition of the word “economy” found in Noah Webster’s 1828 American Dictionary of the English Language: “Economy—Primarily, the management, regulation and government of a family or the concerns of a household.” The use of “political economy” as a definition does not appear until the eighth and ninth entries, and yet it’s the primary definition today.

Almost all modern definitions of economics, like contemporary definitions of “government,” assume that the State, civil government, is the starting point in understanding economic theory and practice. To grasp these, so the argument goes, the role the State plays in economic decision making in the allocation of scarce resources must first be considered. For many, this is a reasonable and moral starting point when resources are scarce and people have needs.
On the other side of the economic spectrum, classical liberals, libertarians, anarcho-capitalists, and even some conservatives contend that the means of production should be privately owned, economic decisions also should be made privately with goods and services exchanged in a free market with little or no positive (active) state intervention. The role of civil government in economic matters should be minimal, being limited to the protection of individual rights and property.

Modern economic theory presupposes that markets need to be regulated so there will be a “just” accounting for everyone. If there is inflation (an increase in the money supply resulting in higher prices), interest rates are raised and existing and future assets are diluted in value. If the economy is sluggish, governments will increase the supply of money to stimulate growth. If one segment of society is being left behind economically, taxes will be raised and income redistributed to smooth out the inequities in the name of “social justice.”

The advocates of a free market and those who declare for a managed market claim to promote justice with their policies. Again, there is little argument over wanting to establish a just market place, the question is, how do we account for justice? What is its source? Mutual consent? Public opinion? Enlightened self-interest? Those involved in economic transactions believe and hope for an agreed upon set of rules (laws) that apply to all equally, especially since “we live in an imperfect universe.” Like reason and justice, how do we account for the validity of these rules?

The Bible begins with two uncontested presuppositions: First, God exists, and, second, He is the Creator of “the heavens and the earth” (Gen. 1:1). A third presupposition logically follows from the first two: “The earth is the LORD’s and all it contains” (Ps. 24:1; see 1 Cor. 10:26). Not only the land, but the stuff of creation also belongs to God: “For every beast of the forest is Mine, the cattle on a thousand hills” (Ps. 50:10).

Private (personal) property rights are based on the fact that God is the prior owner who delegates a derivative ownership to His creation. The creator/creature-ownership paradigm is the model for how we establish the principle of private property and the laws that go with it. If I own a piece of property and decide to sell it or give it away, the transaction has legitimacy because I had legal title to the property, and I voluntarily decided to part with it. In the same way, God’s original ownership makes subsequent ownership possible and meaningful. Without the reality of prior ownership, the idea of private property does not exist.

The average American has only vague notions of these ideas. While most Americans would agree that stealing is wrong, they don’t seem to have a problem if some other entity steals for them. Consider this example. If John has a financial need, would it be right for him to rob his neighbors to supply that need? Most people would say no. Would it be right for John to get some of his friends to steal for him? Again, most people would say no. What if John convinces enough people to create a civil government that takes money from his neighbors to pay for things John and others need? Now the picture has changed, and I suspect that a lot of people would not call it theft because elected government officials are doing the taking.

The free market is counter intuitive for many people, especially politicians, many of whom have never owned a business. Passing laws for society and exempting themselves is standard fare in Washington. When Social Security was made law, Congress exempted itself and other government employees by developing their own private retirement programs. This changed in 1983 for new government employees.

Congress has been considering an energy bill that will include tax increases on energy consumption. It’s being sold as a tax on the oil and gas industries. Nonsense. It’s a tax on every user of energy. Corporations have never and will never pay taxes. A tax is an expense to a manufacturer similar to the raw products he must purchase to make what he eventually sells. All expenses — taxes included — are passed on to consumers.

In their purest form, taxes were imposed to pay for a service common to everyone (“common defense”) or to those who actually use a service (gasoline taxes for roads). The gasoline tax is a great example of a non-punitive service tax. The only people who pay it are those who use the roads. If you don’t drive, you don’t pay the tax. If you take a taxi, you pay it indirectly in the price you pay for the taxi ride because the price you pay includes the costs it takes to run a taxi. One of those costs is gasoline. The same is true when you and I buy something off the internet and it’s delivered to our home or office. The fuel costs that were necessary to bring the item to market and shipped are figured in the price.

So the next time you want the government to do something, keep in mind that it does not have any money. It can only get the by taking it from you and me or printing it. The first method is theft, something that would put us in jail if we did it. The second method is also theft. Printing money lowers the value of the currency that’s already in circulation. By inflating the currency, the dollars in our wallets and investments lose value.


  • Charlie

    A thoughtful, well-written commentary.

    And very true,

  • ariama parkessa

    I would also like to add that by fractional reserve banking where the banks can lend out 10 to 1 ratios of their "cash reserves" this creates digital money also theft, also lowering the value of the dollar. Most people don't realize that there is more debt than there is money in circulation. How can that be if monetary policy is sound and the federal reserve is not conterfeiting? Madoff went to prison for his ponzi crap. time for the white shoe boys of wall street to chill in a 6 by 8.

  • sleepergirl

    I wish this analysis were taught in every grade through high school. Stealing is an easy enough concept to grasp. I fear that new generations of Americans will have no clue about economics in any form. They will have grown up under "entitlemen" and come to expect nothing different.

  • Spikeygrrl

    @sleepergirl: Hear, hear!

    I never encountered a single economic concept in 12 years of prestigious, "gifties only" primary and secondary private education. My late parents, bless them, were good-hearted liberals in academia and wouldn't have known an economic concept if it'd bit them in the butt. I took my first econ course as an undergrad junior, fulfilling that pesky "distributive requirement" (familiar to all who've attended a small liberal arts college or huge university) for a one-semester in a social science. Suddenly SO much of what I'd seen and been so confused by became concisely and lucidly explicable! I changed my major on the spot and went on to two grad degrees :D

    We provide sex education for our young because, after all, most of them are likely to be sexually active for at least SOME of their lifetime, so they might as well learn how to do so safely and sanely. Why not, then, introduce economics at comparable age-cohort/cognitive-abilities the same way -- because, after all, it is CERTAIN that VIRTUALLY ALL OF US will engage in marketplace activities for MOST of our lives?!

  • Big Little Feathers

    THEFT? http://hearingvoices.com/news/2011/08/hv096-crow-...

    The Native Americans know theft