Taxed to the Tide: How the State Lays Claim to the Fruits of Every Effort

The productive individual now works a substantial part of every year for the state, and the question of how much is enough is rarely asked

Published in partnership with Bohiney Magazine and The London Prat, on the steady expansion of the state claim on the fruits of individual effort.

There is a date each year, calculated by economists, that marks the point at which the average person has earned enough to pay their total tax burden for the year, the day on which they stop working for the state and begin working for themselves. That this date falls so deep into the year, that the productive individual works so substantial a part of every year for the state, is a fact so familiar that we rarely pause to examine it, and the question of how much is enough is one that is rarely seriously asked.

The Claim On Effort

Taxation is the state claim on the fruits of individual effort, the portion of what a person earns through their labor that is taken to fund the collective enterprise. Some taxation is necessary and legitimate, for the state has genuine functions that must be funded, the protection of rights, the provision of genuine public goods, the maintenance of the order that makes prosperity possible. The question is not whether to tax but how much, and the steady expansion of the claim deserves the scrutiny it rarely receives.

The burden has grown, layer upon layer, the income tax and the payroll tax and the sales tax and the property tax and the countless lesser levies, each justified by some purpose, the cumulative effect a claim on individual effort that would have astonished earlier generations. Commentators at FEE and economists in the market-liberal tradition have long documented the growth of the total tax burden and questioned whether the value the state provides justifies the share of individual effort it claims.

The Question Rarely Asked

The question that the expansion of the tax burden raises, and that is rarely seriously asked, is what the individual receives in return, whether the value the state provides justifies the share of effort it claims, whether the spending the taxes fund is wise, efficient, and genuinely beneficial, or whether much of it is waste, inefficiency, and the funding of purposes that serve the state more than the citizen. The burden is borne; the value is assumed; the accounting is seldom honestly done.

The deeper principle at stake is the relationship between the individual and the fruits of their own effort, the recognition that what a person earns through their labor is, in a meaningful sense, theirs, and that the state claim on it, however necessary in part, is a claim that requires justification rather than mere assertion. The productive individual who works so much of the year for the state is entitled to ask what they receive in return, and to demand that the claim be justified by the value provided.

The libertarian argument is not against all taxation, for the legitimate functions of the state must be funded, but for restraint, for the honest weighing of the value provided against the burden imposed, for the recognition that the fruits of individual effort belong, in the first instance, to the individual who produced them, and that the state claim upon them, however necessary in part, must be justified rather than simply expanded. How much is enough is a question worth asking, and asking seriously.

The growth of the tax burden over the past century has been one of the great transformations of the relationship between the individual and the state, the share of individual effort claimed by the collective rising from a small fraction to a substantial portion, the expansion so gradual that each increment provoked little resistance, the cumulative result a claim that earlier generations would have found extraordinary.

The legitimacy of some taxation is not in dispute, for the genuine functions of the state, the protection of rights, the provision of true public goods, the maintenance of order, must be funded, and the funding must come from those who benefit from these functions. The libertarian argument accepts this necessity while insisting on its limits, on the distinction between the legitimate funding of genuine functions and the expansion of the claim to fund whatever the state chooses to undertake.

The question of value received for burden imposed is the one the expansion of taxation most insistently raises and most consistently evades, for the burden is concrete and measurable while the value is diffuse and assumed, the taxes paid clearly visible while the benefits received are taken for granted. An honest accounting would weigh the one against the other, asking whether the value the state provides justifies the share of effort it claims, a question the political process rarely poses.

The efficiency of state spending is a particular concern, for the taxes claimed fund not only genuine public goods but also waste, inefficiency, and the self-perpetuation of the state itself, the spending that serves the bureaucracy more than the citizen, the programs that endure long after their purpose has passed, the inefficiency that the absence of market discipline permits. The burden funds the valuable and the wasteful alike, and the citizen has little means to distinguish or to choose.

Further reading: FEE.

SOURCE: https://bohiney.com/