A classic 1954 essay by Frank Chodorov. Read it here.
This is just a snip, read the full essay at, foundation for economic freedom...
Yours Is Not Your Own
THERE ARE taxes and taxes. All are alike in two respects: they are compulsory and they are part of production. “Taxation, says the Encyclopedia Britannica, is “that part of the revenue of the State which is obtained by compulsory dues and charges upon its subjects.”
Nevertheless, the “compulsory dues and charges” are usually divided into two major categories: direct and indirect. The reason for the classification is the method of collection; but the effect of direct taxes on public affairs makes them different in kind.
Indirect taxes are so called because the government does not get them directly from the payer; they are collected for the government by manufacturers and merchants, who recoup their outlay from their customers in the price of goods and services. All indirect taxes are added to price.
The most important of these indirect taxes are tariffs and excise levies. Tariffs are paid by the importer, who transfers the charge to his customer, who in turn adds the cost to the price he charges the next processor, and so on down until the ultimate consumer absorbs the original importer’s outlay, plus all the profits that have accrued to each handler. Excise taxes, like those paid on tobacco and liquor, are collected through the sale of stamps and licenses. Sales taxes are likewise found in the price of goods.
Indirect taxes are mere money raisers; there is nothing in the character of these taxes that involves any other purpose. In levying them, the government does not call on any principle other than that the citizen must pay for the upkeep of his government, in proportion to the amount of goods he consumes. It is as if the government were saying to the citizen: “Sorry, old man, but we need money with which to carry on this political establishment, and we don’t have any other source of money but you; we will, however, ease the pain of payment by hiding these taxes in the price of the goods you buy.” The government does not question the right of the citizen to his property. The citizen need not pay these taxes; he can go without.
This alternative does not apply to direct taxes. The principal direct taxes are those levied on inheritances and incomes. (Another is the tax on land values, which we shall disregard because it has no bearing on the thesis of this book.) Except for payroll deductions, which is a device employed by government for the easy and certain collection of taxes on wages, direct taxes are paid directly to the government. They are not charged against the consumer in price, although, as we shall see later, they affect his standard of living even more materially.
Income and inheritance taxes imply the denial of private property, and in that are different in principle from all other taxes.
The government says to the citizen: “Your earnings are not exclusively your own; we have a claim on them, and our claim precedes yours; we will allow you to keep some of it, because we recognize your need, not your right; but whatever we grant you for yourself is for us to decide.”
This is no exaggeration. Take a look at the income-tax report that you are required by law to make out, and you will see that the government arbitrarily sets down the amount of your income you may have for your living, for your business requirements, for the maintenance of your family, for medical expenses, and so on. After granting these exemptions, with a flourish of generosity, the government decides what percentage of the remainder it will appropriate. The rest you may have.
The percentage of the appropriation may be (and has been) raised from year to year, and the exemptions may be (and have been) lowered from year to year.1 The amount of your earnings that you may retain for yourself is determined by the needs of government, and you have nothing to say about it. The right of decision as to the disposition of your property rests in the government by virtue of the Sixteenth Amendment of the Constitution, which reads as follows:
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.”2
The amendment puts no limit on governmental confiscation. The government can, under the law, take everything the citizen earns, even to the extent of depriving him of all above mere subsistence, which it must allow him in order that he may produce something to be confiscated. Whichever way you turn this amendment, you come up with the fact that it gives the government a prior lien on all the property produced by its subjects.
In short, when this amendment became part of the Constitution, in 1913, the absolute right of property in the United States was violated.
That, of course, is the essence of socialism. Whatever else socialism is, or is claimed to be, its first tenet is the denial of private property. All brands of socialism, and there are many, are agreed that property rights must be vested in the political establishment. None of the schemes that are identified with this ideology, such as the nationalization of industry, or socialized medicine, or the abolition of free choice, or the planned economy, can become operative if the individual’s claim to his property is recognized by the government. It is for that reason that all socialists, beginning with Karl Marx, have advocated income taxation, the heavier the better.3
So then, when the Sixteenth Amendment became part of the Constitution, the American political order, which rested on the axiom of inalienable rights, underwent a major operation. The great debate in the Constitutional Convention of 1789 was over the question as to whether this country should have a republican or democratic form of government; the question was finally resolved in 1913, when the door was opened for the introduction of the socialistic forum.
As our inquiry leads us to consider the institutions that have become fixed in the American pattern, we see how far America has gone along the road of socialism. We shall also see that many institutions, such as states’ rights and free enterprise, that were long considered peculiar to our political and social order, have lost value with the American citizen. Even the abhorrence attached to the word “socialism” in this country before 1913 is wearing off, and an increasing number of the citizenry (perhaps the majority) use it as the symbol of a great ideal. All these changes in our culture are directly traceable to the abandonment of the doctrine of private property—that is, to the Sixteenth Amendment.
So long as the confiscation of private property is legalized, this country is not immune to the advent of ultimate socialism, which is communism.
The basic tenet of communism is the vesting of all property rights in the state. Already nearly one third of our national income is being taxed away from us.4 One or two more national “emergencies” can well bring about the confiscation of the other two thirds, and thus effect the final transition to communism. We could slither into it quite without being aware of it.
Any effort to reverse the trend must begin with the reestablishment in the American culture of the inviolability of private property. If Americans were again to put that right at the pinnacle of their values, the repeal of the Sixteenth Amendment would follow as a matter of course. Therefore, it is necessary that we digress in this inquiry for a moment to consider the philosophic support of the axiom—that the individual has an inalienable right to his property.
Even a thief will justify his way of life. The human being must have a moral code of some kind to ease the difficulty of living with himself. And there is no difficulty in making up a code to fit any given condition, language being as rich as it is, if one hits on an axiom as a basis; an axiom needs no proof.
The axiom of socialism is that the individual has no inherent rights. The privileges and prerogatives that the individual enjoys are grants from society, acting through its management committee, the government. That is the condition the individual must accept for the benefit of being a member of society. Hence, the socialists (including many who do not so name themselves) reject the statement of rights in the Declaration of Independence, calling it a fiction of the eighteenth century.
In support of his denial of natural rights, the socialist points out that there is no positive proof in favor of that doctrine. Where is the documentary evidence? Did God hand man a signed statement endowing him with the rights he claims for himself, but denies to the birds and beasts who also inhabit the earth? If in answer to these questions you bring in the soul idea, you are right back to where you were in the beginning: how can you prove that man has a soul?
Those who accept the axiom of natural rights are backed against the wall by that kind of reasoning, until they examine the opposite axiom, that all rights are grants or loans from government. Where did government get the rights which it dispenses? If it is said that its fund of rights is collected from individuals, as the condition for their membership in society, the question arises, where did the individual get the rights that he gave up? He cannot give up what he never had in the first place, which is what the socialist maintains.
What is this thing called government, which can grant and take away rights? There are all sorts of answers to that question, but all the answers will agree on one point, that government is a social instrument enjoying a monopoly of coercion. The socialist says that the monopoly of coercion is vested in the government in order that it may bring about an ideal social and economic order; others say that the government must have a monopoly of coercion in order to prevent individuals from using coercion on one another. In short, the essential characteristic of government is power. If, then, we say that our rights stem from government, on a loan basis, we admit that whoever gets control of the power vested in government is the author of rights. And simply because he has the power to enforce his will. Thus, the basic axiom of socialism, in all its forms, is that might is right.
And that means that power is all there is to morality. If I am bigger and stronger than you, and you have no way of defending yourself, then it is right if I thrash you; the fact that I did thrash you is proof that I had the right to do so. On the other hand, if you can intimidate me with a gun, then right returns to your side. All of which comes to mere nonsense. And a social order based on the socialistic axiom—which makes the government the final judge of all morality—is a nonsensical society. It is a society in which the highest value is the acquisition of power—as exemplified in a Hitler or a Stalin—and the fate of those who cannot acquire it is subservience as a condition of existence.
The senselessness of the socialistic axiom is that there would be no society, and therefore no government, if there were no individuals. The human being is the unit of all social institutions; without a man there cannot be a crowd. Hence, we are compelled to look to the individual to find an axiom on which to build a nonsocialistic moral code. What does he tell us about himself?
In the first place, he tells us that above all things he wants to live. He tells us this even when he first comes into this world and lets out a yell. Because of that primordial desire, he maintains, he has a right to live. Certainly, nobody else can establish a valid claim to his life, and for that reason he traces his own title to an authority that transcends all men, to God. That title makes sense.
When the individual says he has a valid title to life, he means that all that is he, is his own; his body, his mind, his faculties. Maybe there is something else to life, such as a soul, but without going into that realm, he is willing to settle on what he knows about himself—his consciousness. All that is “I” is “mine.” That implies, of course, that all that is “you” is “yours”—for, every “you” is an “I.” Rights work both ways.
But, while just wanting to live gives the individual a title to life, it is an empty title unless he can acquire the things that make life livable, beginning with food, raiment, and shelter. These things do not come to you because you want them; they come as the result of putting labor to raw materials. You have to give something of yourself—your brawn or your brain—to make the necessary things available. Even wild berries have to be picked before they can be eaten. But the energy you put out to make the necessary things is part of you; it is you. Therefore, when you cause these things to exist, your title to yourself, your labor, is extended to the things. You have a right to them simply because you have a right to life.
That is the moral basis of the right of property. “I own it because I made it” is a title that proves itself. The recognition of that title is implied in the statement that “I make so many dollars a week.” That is literally true.
But what do you mean when you say you own the thing you produced? Say it is a bushel of wheat. You produced it to satisfy your desire for bread. You can grind the wheat into flour, bake the loaf of bread, eat it, or share it with your family or a friend. Or you give part of the wheat to the miller in payment for his labor; the part you give him, in the form of wages, is his because he gave you labor in exchange. Or you sell half the bushel of wheat for money, which you exchange for butter, to go with the bread. Or you put the money in the bank so that you can have something else later on, when you want it.
In other words, your ownership entitles you to use your judgment as to what you will do with the product of your labor—consume it, give it away, sell it, save it. Freedom of disposition is the substance of property rights.
Interference with this freedom of disposition is, in the final analysis, interference with your right to life. At least, that is your reaction to such interference, for you describe such interference with a word that expresses a deep emotion: you call it “robbery. “What’s more, if you find that this robbery persists, if you are regularly deprived of the fruits of your labor, you lose interest in laboring. The only reason you work is to satisfy your desires, and if experience shows that despite your efforts your desires go unsatisfied, you become stingy about laboring. You become a “poor” producer.
Suppose the freedom of disposition is taken away from you entirely. That is, you become a slave; you have no right of property. Whatever you produce is taken by somebody else, and though a good part of it is returned to you, in the way of sustenance, medical care, housing, you cannot under the law dispose of your output; if you try to, you become the legal “robber.” Your concern in production wanes and you develop an attitude toward laboring that is called a “slave” psychology. Your interest in yourself also drops because you sense that without the right of property you are not much different from the other living things in the barn. The clergyman may tell you you are a man, with a soul, but you sense that without the right of property you are somewhat less of a man than the one who can dispose of your production as he wills. If you are a human, how human are you?
It is silly, then, to prate of human rights being superior to property rights, because the right of ownership is traceable to the right to life, which is certainly inherent in the human being. Property rights are in fact human rights.
A society built around the denial of this fact is, or must become, a slave society—although the socialists describe it differently. It is a society in which some produce and others dispose of their output. The laborer is not stimulated by the prospect of satisfying his desires but by fear of punishment. When his ownership is not interfered with, when he works for himself, he is inclined to develop his faculties of production, because he has unlimited desires. He works for food, as a matter of necessity, but when he has a sufficiency of food he begins to think of fancy dishes, a tablecloth, and music with his meals. There is no end of desires the human being can conjure up, and will work for, provided he feels reasonably sure that his labor will not be in vain. Contrariwise, when the law deprives him of the incentive of enjoyment, he will work only as necessity compels him. What use is there in putting out more effort?
Therefore, the general production of a socialistic society must tend to decline to the point of mere subsistence.
The economic decline of a society without property rights is followed by the loss of other values. It is only when we have a sufficiency of necessaries that we give thought to nonmaterial things, to what is called culture. On the other hand, we find we can do without books, or even moving pictures, when existence is at stake. Even more than that, we who have no right to own certainly have no right to give and charity becomes an empty word; in a socialistic order no one need give thought to an unfortunate neighbor because it is the duty of the government, the only property owner, to take care of him; it might even become a crime to give a “bum” a dime. When the denial of the right of the individual is negated through the denial of ownership, the sense of personal pride, which distinguishes man from beast, must decay from disuse.
The income tax is not only a tax; it is an instrument that has the potentiality of destroying a society of humans.
1 In 1913, a single person, not entitled to any exemptions for dependencies or anything else, paid a tax of $20 on an income of $5000. A person similarly situated in 1951 paid $964. The comparison is even more striking when the purchasing power of the dollar in the two years is taken into consideration.
2 The apportionment of taxes among the states according to population was originally put into the Constitution in order to prevent a combination of states from forcing through a levy that would hit the more opulent states harder than themselves. Also, it prevented the more populous states from raiding the citizens of the sparsely settled states. In both instances, this provision compelled the levying of taxes on individuals equally, according to their consumption, and prevented the levying on citizens according to their wealth or, for that matter, according to their religion, political affiliation, or other personal identification. This provision was a bar to the introduction of the income tax.
3 Progressive income and inheritance taxation was first advocated as a means of destroying private property by Karl Marcx, in the Communist Manifesto, published in 1848. Thereafter, every socialist party platform included this plank.
4 This estimate is based on figures published by the United States Treasury. It includes local, state, and federal taxes. Exactness of computation is made difficult by the method of arriving at the “national income.” The government figure includes income of all kinds, that earned by the worker or the corporation and that paid to the government official. The latter’s salary is of course paid out of taxes taken from producers and is therefore a duplication. This is the same as computing the family’s income by adding to the breadwinner’s wages the amount he gives his wife for household expenses. The official “national income” includes the subsidies paid to the farmer and the taxes paid by the farmer to make these subsidies possible. If government handouts and government salaries were deducted from this official figure, and only income from production were included, the “national income” would be far less than the official figure, and the percentage taken by taxes would be greater.