I would like to write a book someday titled Ethics of Taxation. You bet it would begin with the American Revolution, which commenced as a tax revolt here in our own beloved city of Boston. Others joined the rebellion for their own reasons, but no one disagreed with the primary one: you cannot treat English subjects who live overseas as an ATM. They rightly demanded a say in the matter.
Driven to it, Bostonians dumped a shitload, I mean a shipload of tea in the harbor to avoid paying tax on it. They wanted to communicate a message to King George, in English parlance – ‘piss off’. They succeeded. You could say the path to war was irretrievable after that. Both sides wanted to teach the other a lesson. The protesters dumped about a million dollars worth of tea, in today’s currency.
More recently, financial traders London stand accused of theft, in the amount of sixty billion dollars. The charges say these villains ‘raided the coffers’ – that is, the treasuries – of countries like Germany ($30B), France ($17B), and several smaller countries. They used Europe as their playground for cum-ex trading, a technique traders use to avoid paying taxes on their trades.
Their evasion schemes succeeded for a decade and a half, which tells you something about governments’ tax enforcement efforts.
So you find out, far into the article, that the illegal activity in question is tax evasion, not theft. Revenues that governments consider their due did not reach their treasuries, as traders used inconspicuous methods to withhold money from governments’ revenue streams. Their evasion schemes succeeded for a decade and a half, which tells you something about governments’ tax enforcement efforts. Now those treasuries want to collect their money, past due, probably with interest.
Clearly, the case sounds a lot stronger if sovereign states say they want money that robbers stole from them, rather than admit that clever people outsmarted them. Of course, some people think all taxation is theft, even as some government officials believe all tax revenues belong to them. If citizens authorize a tax, pay it voluntarily, and ensure that officials spend it as intended, that is not theft. That occurs when townspeople contribute to build a new school for their children, or a new library for the entire town.
Governments should remember that tax revenues do not belong to them even after they collect the money. It still belongs to the people they collect it from.
All too often, government officials use their power as King George did. When citizens hand over their own cash during a police shakedown, for example, that is clearly theft, no matter how police use the money they swipe. They take something that does not belong to them, with no justification in law. They call it civil asset forfeiture, and they say it deters crime. Crimes always beget lies.
Modern European governments might say, “That tax money belongs to us. When you divert it from our accounts, you are stealing it. So give it back.” Creative tax evasion becomes theft when governments feel entitled. Governments should remember, though, that tax revenues do not belong to them even after they collect the money. It still belongs to the people they collect it from.
The people they collect it from pay them to administer the funds, to expend them as they direct. The money never actually belongs to the government, as the treasury holds it in trust. Therefore no one can steal taxes from the government. If you find a way to take money from the public treasury, you take it from your fellow citizens. If you find a way to withhold money from the public treasury, your fellow citizens may or may not admire you, but they will not regard you as a thief.