Why Taxes aren’t Theft: A Legal Perspective
Words by: Lawrence Hull
With the contest for the presidential nomination of the Democratic Party heating up, many policy issues are being put forth, with fiscal policy becoming a pivotal talking point.
Both Elizabeth Warren and Bernie Sanders are proposing various tax reforms to pay for their proposed ideas of Medicare for all, government funded college education, and the cancelling of student debt.
The cry of ‘communism’ and ‘socialism’ are issued vociferously from the conservative side. The fervent right wing of the U.S, and other parts the world, has touted the ‘taxation is theft’ and ‘they’re going to steal your wealth’ lines with dismay and furore. The ‘taxation is theft line’ has been reverberating from the walls of the social media enclave.
So, are taxes really theft?
Let’s break it down and take a look from an Australian legal perspective.
First, what are the definitions of tax and theft? According to the Oxford English Dictionary, tax is defined as a compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services and transactions.
Theft is defined as the action or crime of stealing.
To take a nuanced and in-depth look at this…… what does it mean for someone to own something? Where does someone get the right to own any form of property? The answer to this can be convoluted. Essentially, ownership is a right enshrined in law, and property rights are born out of the enactment of law.
The High Court of Australia gave an example of what a property right was in Yanner v Eaton; “ ‘property’ does not refer to a thing; it is a description of a legal relationship with a thing. It refers to a degree of power that is recognised in law as power permissibly exercised over the thing. The concept of ‘property’ may be elusive. Usually it is treated as a bundle of rights”.
Essentially it is a right, or a bundle of rights, that give an individual ownership of a particular thing at law. It often gives rise to the right to enjoy the use of the property, exclude others from it and to sell and give it away.
It is important to also distinguish that possession is not ownership. Again, ownership is a legal concept, possession is a physical act. If a person drops their wallet in front of you and you pick it up, you are in possession of it, but you do not own it.
This is an important distinction to make when considering the ownership of taxable money. In Australia, the right to taxation by governments is enshrined in section 51(ii) of the Australian Constitution. Governments then enact taxation laws and regulation.
Therefore, if it is legislated that a particular percentage of an individual’s income is to be paid in tax, that percentage of the income no longer becomes the personal property right of that individual. It legally becomes a right that the government possesses to that percentage of income.
But I can hear you say, but I worked for that money, so therefore it’s mine. While that sounds correct, it is not legally true. Working for money and then being paid that money doesn’t automatically mean you own it. Your work is only the method by which you obtained the possession of money through a mutual agreement. The right to own it, and have legal rights attached to it, comes from law. The moral and philosophical validity of all this is a separate debate.
Remember, we are looking at the issue of whether taxes are ‘theft’, not whether they are right or wrong.
So, to put this practically, let’s say you earn $90,000 a year. You are taxed $30,000 which becomes the property of the government because the relevant legislation passed through parliament gave the government the right to take it.
But, is this not just legalised theft?
No, the argument is a non-sequitur. Theft by definition is a violation of law. Something can’t be illegal and legal at the same time. If you steal something, you have broken the law. If you take something in accordance with the law then it is not theft, nor is it stealing, because the law has given you the legal right of ownership of that property.
An act cannot be classified as theft if the law has not been broken. Conservatives like to point to the immorality of taxation in an attempt to smear the probity of their left-wing opponents.
However, we do not see anyone from the conservative movement seeking the abolition of all taxes. The left is seeking to remedy the negative effects of inequality and poverty through efficient and effective taxation. Conservatives adhere to neoliberalism.
We know that the free market doesn’t magically correct itself and produce an egalitarian and contented society.
Efficient taxation is necessary. It is not theft, no matter how loud people scream it.