How Governments Justify Theft is a Fallacy: Wealth Was Created before Taxation
By The Daily Bell Staff - April 17, 2017

Do we owe society taxes?

Tax day is tomorrow. Some people get excited because they will get money back which the government withheld–a clever trick that makes people feel less oppressed and plundered by filing taxes.

Something the regressive left likes to say is that taxes are justified because of the infrastructure of society, provided by the government, makes all earning possible. It is, therefore, only fair to share some of that wealth to continue funding the common property. They say the rich would never have gotten rich without government provided services, and that is why they owe the government.

An up and comer on the left who we will unfortunately not stop hearing from anytime soon has weighed in on why we owe taxes to society. This is an old but relevant quote since progressive champion Elizabeth Warren will probably be a White House contender soon enough. While running for Senate she said:

There is nobody in this country who got rich on his own. Nobody! You built a factory out there, good for you, but I want to be clear, you moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces the rest of us paid for. You didn’t have to worry that mauraduing bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did… But part of the underlying social contract is that you take a hunk of that, and pay forward for the next kid that comes along.

I think she slipped up there. Do you see it? Warren says that if the government didn’t provide security for the factory, the business owners would have to “hire someone to protect against” marauding bands. And she is correct in that.

What she leaves out is that their money is already stolen to pay for the police. So why on earth would they say no thanks to a service for which they were forced to pay? (Well, I guess because the police do a terrible job. Most factories do in fact hire their own security in addition to the police that “the rest of us” paid for.)

And this is the whole issue: Which came first, the government or wealth?

Clearly, a business first has to have money in order to be taxed. And it makes sense to think that since the infrastructure already exists, it helps people to earn money. And it does, but it was all paid for first by privately produced wealth.

Think about it, the very first tax payers were farmers that were conquered by herders and forced to pay a share of their yield to the nomadic invaders. The herders realized they could make this a regular thing if they didn’t murder all the farmers, and thus government was born.

Not murdering the people was the first service which government ever provided. Boy, are we lucky to have them!

Ironic that Warren says taxes are paid to basically prevent from happening the very thing which began the existence of government. It was extortion from the very beginning. The farmers paid protection money to their government.

Who was the main threat? The government. The mafia does the same thing.

But looking at the first taxpayers shows that they necessarily had to have earned something and created wealth before they were taxed on it.

And this means we are building on a stolen foundation. It means we didn’t need the government to make wealth creation possible in the very first place. Based on the very function of government, which only came into existence after the first farmers had created wealth, this proves that it is possible to create wealth without that magnificent infrastructure for which “the rest of us” paid.

Warren said it herself when she admitted the factories could simply purchase their own protection. But what they are really paying for, is protection from the people they are paying, the government.

So is taxation the price we pay for the society government has built around us? Without a doubt, certain things taxes pay for are used by everyone living in society and thus contribute to business, like roads for shipping.

And even though the government is used to providing these things, the question remains are taxes what we owe to society for the opportunity to do business? Or did wealth have to be created first before taxes could be paid?

Justifying the Upward Redistribution of Wealth

Everything government does is done with tax dollars, therefore first something of value had to be created before they could tax anything.

So then why do people argue that we owe the government taxes because they have made everything we earn possible?

We wanted to add a Bernie Sanders quote since he was vocally against the wealthy. He is one of the most powerful U.S. Senators at this point, with his unspent war chest of individual campaign donations, and an army of useful idiots.

But it turns out the man said remarkably little for how much he talked. It was all catch phrases and the same repeated lines about how immoral it is to be wealthy. The rich need to pay their “fair share” he says, but that doesn’t actually answer the question of why anybody should have to pay taxes. We all need to be robbed equally?

There are certain ways to become wealthy which are immoral, such as securing government contracts, government bailouts, government grants, government loans, and government subsidies. But Bernie’s support for higher taxes would only exacerbate that upward transfer of wealth.

Sanders actually never tried to justify why the rich owe taxes, his only criticism seemed to be that they were wealthy. He repeated over and over that they basically stole this wealth from the middle class, but offered no real examples other than the Wall Street bailouts (which yes, were theft on their part, but again that was a government transfer of wealth, which giving the government more power would only increase).

Turns out what Bernie was doing has been done since the beginning of government. Jared Diamond explains the origins of Chiefdoms in his book Guns, Germs, and Steel:

These noble and selfish functions are inextricably linked, although some governments emphasize much more of one function than of the other. The difference between a kleptocrat and a wise statesman, between a robber baron and public benefactor, is merely one of degree: a matter of just how large a percentage of the tribute extracted from producers is retained by the elite, and how much the commoners like the public uses to which the redistributed tribute is put…

Make the masses happy by redistributing much of the tribute received, in popular ways. This principle was as valid for Hawaiian chiefs as it is for American politicians today.

Clearly, Bernie is a big fan of the redistribution method; his free college proposals sound pretty good to his young target demographic.

So basically, these “progressive” stars are actually regressing to the oldest forms of government which always looted and tricked the masses into supporting their power grabs and wealth confiscation.

The government didn’t create the wealth in society, and they didn’t even make that wealth creation possible. They simply stole the wealth that others created and redistributed it in obvious and popular ways. They monopolized mechanisms like roads and security in order to make it seem like the government is the only method of laying the infrastructure to create wealth.

But clearly wealth came before taxation, otherwise, there would have been nothing to tax! The premise of their justification for theft is a fallacy.

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  • Praetor

    Yep! Regressive retrogrades chiefs of their little kingdoms. Looking at videos of the fighting in Berkley would make you think we are live in the first and second centuries, instead of the 21st century. The lords of the land rely on emotionally crippled individuals. They will rip what they sow as they always have.!!!

  • robt

    Bernie also once said that bread lines in Nicaragua because of food shortages (caused by socialist/communist economic policies) were a good thing, because it prevented the rich from having all the bread. The sad thing is that demagogues like Bernie, and various degrees of Bernie base their communications wholly upon catchphrases and slogans, purposely as simple as possible so the mob can chant them.
    Motto of the left: envy, sloth, and treason.

  • Libertarian Jerry

    What it really boils down to is this question: Why should I pay my “fair share” when I never get my “fair share?” In essence,I can buy my “fair share” but the Bernies and the Elizabeths have to steal theirs.

  • “…… this proves that it is possible to create wealth without that magnificent infrastructure for which “the rest of us” paid.”

    Yes, it is true that wealth (or an initial part of it) was created before taxation. However, in order to develop this wealth and prosper IMHO we do need collective infrastructure to facilitate this process, i.e. to progress toward a complex society with highly differentiated factors of production. Having said that, to preserve this initial wealth we need defence which in days past was provided by the barons who ask for tribute in return (a not unreasonable request). QED, taxation in some form is required for the growth of economies and protection of the wealth thus generated?
    PS I do love the book though, an extraordinary work and helped in my understanding of the human condition.

    • Col. Edward H. R. Green

      There is nothing whatever about the nature of the construction and maintenance of infrastructure that necessitates government to develop and maintain it at everyone’s forced expense via coercive taxation. All roads and highways, bridges could be privately built and adequately maintained and secured with the funding obtained via tolls and commissions charged by their owners to the users and businesses along the routes.

      Likewise there is nothing inherent in the nature of personal and property protection that necessitates government providing it via coercive taxation.
      One can secure one’s life and property oneself by the force of one’s own firearms, as is one’s right. If one cannot or does not want to handle one’s own security, or desires more security than one can provide oneself, private sector security services can offer security under contract with their clients to provide them with whatever level of security they are willing to pay for. Private security services have proven to be far, far more efficient, cost-effective, responsive, and accountable to those whom they protect than government’s security personnel have ever been.

      • Good points, and a valid alternative from what you say, the choice is between privately funded infrastructure and defence as opposed to collective (almost socialist) funding by coercive taxation. So I agree that both work to some degree, but as you say, private enterprise is generally much more effective and efficient. I hadn’t considered this choice in depth of thought before so I will cogitate further. On balance, initially my gut feeling is that of an economic model favouring private means. We are even now witnessing space travel by private enterprise so I guess many other services may be included in future and this is a means by which our economies might evolve?

  • Q46

    Prior to industrialisation none of the infrstructure existed.

    It was built by private enterprise, with private capital to facilitate the transport of raw materials to manufacturing sites and distribution of finished goods to market.

    Policing, education, health insurance, utilities and other services were all pivately funded or paid outbof voluntary public subscription or private charity.

    Government merely nationlised these things then claims it created them and only it can sustain them. People believe these lies because they were born into the status quo and have no experience of a time before Government ran everything, and have been fed the propaganda of the need for Government since they were in the cradle.

    The only difference between Government and the Mafia is the spelling: both are protection rackets and use extortion.

  • I’ll take the other side of this debate, in the general scheme of things. The author makes a kind of theoretical argument that wealth exists prior to State involvement, and that the State has to first take things in order to give anything back. So what is wealth prior to State involvement? Property, real, monetary, & intellectual is a big part of that…Who owns what? In our society, that is governed by the laws of the State and the enforcement of the State. If every individual has to argue with their neighbor about what share they should get and resolve disputes with their own individual abilities to make war – then you have a poorer, more unpleasant, less safe society than the one’s we are all used to experiencing. Giving up State support for property and relying instead on some combination of shared belief in natural law with survival of the strongest at the margins isn’t an attractive recipe for civilization, in practice. In practice, “libertarians” want State support for all sorts of property rights. So what responsibility comes with State support for a super sized serving of those properties? It’s got to be some kind of material give back, and it’s fair to argue about how to do that and how much, when, etc.