Last week Danish authorities seized three Ferraris belonging to a large Copenhagen-based business allegedly seeking to avoid VAT. With the largest bank in Denmark—Danske Bank—also being embroiled in a tax avoidance scandal last year, it seems timely to explore the common libertarian and voluntaryist idea of taxation as theft. With money and valuable assets like cars being confiscated, many are asking who the real thieves are, and how these seizures can be stopped.
Taxation as Extortion
Extortion is obtaining something—especially property or money—through coercion. That is to say, through threats of violence or intimidation. The popular “taxation is theft” trope in voluntaryist and libertarian circles thus equates taxes with extortion. This is sometimes seen as a radical or extreme position by those who view taxation as a “necessary evil.” A basic and obvious duty upon which civilized society depends. All this notwithstanding, the phrase is worthy of closer examination.
In Denmark, three high performance sports cars were seized by the state last week. The Ferraris were associated with a Copenhagen business seeking to avoid Denmark’s 25% value added tax (VAT) which had decided to bend the rules, finding creative ways not to pay.
Why People Don’t Pay
Tax protestors and avoiders cite many reasons for not paying. Some, opposed to war, do not wish to put their hard-earned money towards assembling and dropping bombs on people they’ve never met. Others don’t wish to pay for abortion. Still others don’t wish to pay for an education system they view as subpar. They’d rather have more market options, but licensing regulations often prohibit this. Some think the police are not doing their jobs, and don’t wish to fund the violence involved in enforcing punishment for victimless crimes like cannabis use.
There are still others though who refuse to pay all or part of their taxes largely on principle alone. They claim that their money and the value they’ve earned is theirs to spend as they please, regardless of what anyone else thinks they should do. Ed and Elaine Brown come to mind. As does rapper and singer/songwriter Lauryn Hill. Hill, before beginning her jail time back in 2013, was told during sentencing that she needed to make the IRS “whole.” She crafted a blog post in response, saying:
Make the IRS whole, knowing that I got into these very circumstances having to deal with the very energies of inequity and resistance that created and perpetuated these savage inequalities.
There are activist groups all over the world whose goal is to help people learn how to more safely evade what they view as extortion or theft. Some likely imagine these groups to be full of suspicious-looking stereotypically “criminal” types. But the truth is that they are as normal in appearance as anyone else, and come from varied and diverse socioeconomic backgrounds.
Who Are The Lawbreakers?
The interesting thing about the tax evasion focus in Denmark is the wide cross-section of people it seems to include. Most know that big business interests, banks—like Danske Bank—and wealthy individuals often find creative ways to “write things off,” launder money, and bend the rules. But not so much thought is traditionally given to the “little guy.” However, tax avoiders run the gamut. From big business to mom and pop shop owners, issues like income shifting and cross-border commerce are both realities the Danish government is trying to tackle.
If consumers can pay less, of course they are going to try to do so. This is playing out currently in the U.S., in the state of Maine, albeit by way of a legal gray zone. Some state government officials are angry that residents of their states are going to Maine for cheaper vehicle registration. While governments often see these things as “problems,” libertarians and voluntaryists simply view them as natural market movements.
An Example Scenario: Neighbors Robbing Neighbors
There’s an important voluntaryist thought experiment illustrating the “taxation is theft” theme, and it goes as follows:
Imagine your neighbor knocks on your door, asking you to donate five dollars to help build a park for the neighborhood kids. For whatever reason you don’t want to pay, or cannot pay, and politely refuse. At this point, however, your neighbor becomes perturbed and produces a pistol. “I don’t think you understand,” he says, “this is for the children and I think you should help out.”
Most everyone agrees the neighbor here is acting immorally, unethically, and violently. To an extremely unacceptable and even illegal degree, no less. The thought experiment goes on for a few more iterations, where each time the neighbor comes back with more people who agree you should pay, and who menacingly brandish weapons just in case you try not to.
First, a few people from the neighborhood. Then a couple hundred from the town. Next, everyone in the whole state. Finally, everyone from the whole geographic landmass shows up at your door with the same threat. Is the proposition ever moral? The nature of the act itself is not changed, just because the mass of people now call themselves “government.”
Don’t Pay, and Pay the Price
Ed and Elaine Brown will most likely die in jail, separated from one another, simply for asking about legal proof regarding their supposed obligation to pay income tax. Larken Rose, a speaker and activist well-known in voluntaryist circles, spent time in a federal prison camp for a year, for asking similar questions. There are countless others. If the violence of the neighbor analogy above seems extreme, history and established precedents affirm its validity in tragically thorough and repeated fashion.
Stalked and surrounded by federal agents heavily armed and dressed in ghillie suits for camouflage, the Browns would have been killed had they resisted. Rose would have as well. Even formerly award-winning and highly successful IRS agents are not immune.
Sherry Peel Jackson battled illness in medically neglectful conditions during her four-year stay in prison for failure to file. Her crime was also asking to see the specific law that required her to pay. She had laughed at the notion that the income tax was illegal at first, only to later discover that she agreed with the many frustrated individuals who had approached her as an IRS professional with questions.
There is a popular claim that society couldn’t function without extortion or theft—without taxation—but the voluntaryist reply is fairly simple. If systematized violence against the non-violent is “necessary,” the rational, consistent, and logical foundations of any civilization disappear.
If violence against peaceful individuals is systematically “necessary,” this creates a society where justice is arbitrary, individual rights are not universalized but are afforded only to a select few, and those in power may take the fruit of other people’s labor (a body ownership claim) with no consequence. Extortion is a form of theft, and if theft is wrong, then it is wrong no matter what name is given to it.
Cryptographic Utility for Avoiding Slavery
Cryptocurrencies and sources of value based on sound economic principles, like bitcoin, have a unique capacity to afford their users opportunity of relative anonymity (if used properly), and easy transfer. So while the state attempts to tax the Ferraris of the rich and the income of the small business owner, crypto is an avenue by which peaceful, hard-working, honest people might be able retain at least some of the value they’ve labored so diligently for.
This is easier said than done, when cases like those cited in Denmark, Lauryn Hill, and Ed and Elaine Brown are so visible, and the hand of the state is so fierce and unforgiving. Some think the only real hope of avoiding extortion consistently is action and adoption of cryptos en masse, coupled with a refusal to be stolen from anymore. This last part is the real clincher though: one has to want to be free.
What are your thoughts on the idea of taxation as theft? Let us know in the comments section below.
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