Alternatives to Taxation 

Auberon Herbert, the founder of voluntaryism, famously claimed not to be an anarchist, saying that anarchists do not understand themselves, and that government would continue to exist even in an anarchy.

Thus, Herbert advocated what he called the “Voluntary State.”  Nevertheless, many anarchists often call themselves voluntaryists and, as did Benjamin Tucker, cite Herbert as a fellow anarchist.

Can we make heads or tails of this?

The state is classically defined as an institution that maintains (or attempts to maintain) a monopoly on the use of force within a given region.  All states either (A) raise money through exproriation (taxation); (B) enforce, at gun-point, regulations that would not spontaneously arise on the free market (or would arise in a manner wholly different from that which arises under a system of institutionalised force); or (C) maintain a monopoly on the administration of justice (monopoly policing and monopoly courts).

Yet Herbert’s “Voluntary State” would do none of these thing.  Thus, the form of “government” that Herbert supported was not, properly understood, a state at all!  It is, instead, a voluntary organisation that raises money without coercive taxation; that refrains from telling consumers, workers, and entrepreneurs how to run their businesses and their lives; and that does not prevent competitors in the fields of arbitration and protection services from competing with itself on the free market.

It is, in short, the only sort of “government” that anarchists can comfortable support, for it is the only form of “government” that does not violate the non-aggression axiom.

But then the question arises, how would such private organisations fund themselves if they have no power to force people to surrender their savings?  There are three general ways a private or voluntary organisation can raise revenue, and they are as follows:

  1. User fees
  2. Lotteries
  3. Endowments or general donations

User Fees

It is my general belief that any function of government that we believe is vital to civilisation can be provided for by the free market, so let us first consider user fees.  Of course, if there’s demand for a certain service, then there’s money to be made.  Someone will naturally create a supply.

Let’s take for instance something most people generally agree is a necessary service of government: police protection.  Could the free market handle this?  In fact, the free market has already handled this in some areas where the government was doing an overly poor job.  Protection agencies can easily be created, since there is undeniably a demand for protection from rape, theft, and murder.  And, it’s quite arguable that such a private system would function even more efficiently than out current system.

Consider what happens in our current system if the police do a poor job and crime rates rise:  People say, “We need to give the police more money.”  If you were to get paid more when you don’t do as well, what incentive would you have to improve?  Competing protection agencies, for example, know that if they don’t do a good job, they’ll lose you as a customer, that you’ll purchase the safety provided by another agency.  So, to ensure they get as much money as they can, they’ll provide the best police protection they can.

Desire for profit (what some decry as “greed”) is an amazing motivator.

User fees can be applied to all sorts of areas, in fact.  Take for instance roads.  Currently, with government ownership of the roads, we find pot-holes everywhere.  When the government does try to fix these things, the construction crews they hire often take their sweet time getting the job done.  And then there is the traffic conjestion caused by the same forces that led to long lines at the gas pumps back in the 70s.  By allowing private roads to charge user fees, we can alleviate these problems.  (Most road companies would want to offer some sort of E-ZPass system to make driving more convenient for customers, since those roads without such a system will be much more likely to drive customers away.)  And where private roads, bridges, and tunnels have been adopted, they have far outperformed government-controlled roads.

Lotteries

Lotteries are easy to understand.  People buy lottery tickets in the hopes of winning a cash prize.  The government or organisation pays out the cash prize to the individual that wins, and the rest of the money collected goes toward funding the activities the organisation or government wishes to pursue.  People, of course, have an incentive to play even if they do not care about the organisation’s operations because playing affords them the opportunity to win some amount of money.

Endowments or general donations

In his book Libertarianism in One Lesson, David Bergland writes that one way to pay for national defence without having to resort to taxation is to set up a National Defence Endowment.  (Personally, I am more pursuaded by the War Destruction Insurance idea that Bergland also discusses, but I digress.)  With such an endowment, people could donate to the cause of national defence and know that their money will be spent on that purpose, and not diverted to other government activities.

But would people donate if they are not forced to do so?  Ignoring that a system of donations does not rule out the possibility of also employing user fees and lotteries, I still must say yes.

Certainly, if the only means an organisation or “government” uses to fund itself is through voluntary donation, it will very likely be the case that said organisation or government would take in far less money than it would with a compulsory tax, if for no other reason, the free-rider effect.  But, this is no reason to believe that a compulsory tax is necessary.  After all, there is no reason to believe that the state “needs” to be taking in as much money as it does now, or really any money at all (considering that the free market can provide all demanded services currently provided by the state).

But more importantly, I see no reason why even those who believe a state is necessary must also believe that the government cannot take in as much money as it needs to perform its few “vital functions” through purely voluntary means.  After all, for those things in which people believe very strongly, campaigns invariably do grow, and they grow because people are willing to donate money to this or that cause.

For example, let’s say Californians are very much in favour of government-provided education.  In such a scenario, there will then be a handful of Californians who will work very hard to get people to donate periodically to the cause of funding Californian public education.

This would function in the same way that any special interest group functions today.  The ACLU, for instance, does not, unlike the state, get money by forcing us to surrender our money to it; rather, it raises revenue by encouraging donations from voluntary contributers.  The ACLU sends out emails periodically about the campaigns they’re working on, why said campaigns are important for this or that reason—and it works!  People donate because they believe in the cause, and the organization thrives.  The same would be true of any programme the government offered.

Such a set-up, coincidentally, provides a good citizens’ check on government.  Let’s say the teachers in California start slacking off and the grades of student begin to suffer as a result.  Some people may choose to stop donating to that cause, perhaps for a specified length of time, perhaps indefinitely.  Because teachers want to make sure their jobs are secure, they’ll work all the harder to educate the children.  And because the public-school supporters don’t want to see the school system lose money, they will apply pressure on whichever teachers are dropping the ball to either get their act together or resign.

The people of another state, let’s say Montana, may choose that public education simply isn’t worth it when there are private schools which can handle the function of educating their children.  In this regard, the people would have more control over what their government does and does not do.

Of course, there’s also the matter of how government functions will themselves work with less money.  Let’s say New York has a welfare programme.  Whereas their welfare programme currently probably focuses on getting as many people on welfare as possible (as doing so ensures jobs for bureaucrats), the new voluntary welfare, because the funds are limited, will have to give out their funds more efficiently.  In this set-up, instead of trying to get people onto welfare, their primary job would be to help get people off of welfare, to help people become more self-sufficient.

Thus, there are a variety of benefits for everyone which would be derived from rendering taxation voluntary.

Conclusion

Not everyone who supports the abolition of taxation is an anarchist.  Objectivists, for example, correctly argue for the abolition of taxation, recognising it for the unethical violation of property rights it is.  However, they usually do not draw the conclusion that the state itself necessarily violates natural law (with the notable exception of the anarcho-Objectivists such as Roy Childs, the Tannehills, and Angela Keaton).

Ultimately, the anarchist’s primary goal qua anarchist is to abolish the entire state apparatus.  The state, as I have defined it in this piece, is any organisation that requires the use of aggression (the initiation of force) in order to exist and attempts to maintain a monopoly on the use of force within a given region.  Such an organisation is necessary criminal, even if it is voluntarily funded, for the same reason a voluntarily-funded gang of rapists is naturally criminal.  Merely abolishing coercive taxation will not alone, therefore, abolish the state, although it is certainly a desirable interim measure nonetheless.  Thus, it stands to reason that the anarchist libertarian naturally supports the replacing of taxation at gunpoint with voluntary alternatives such as user fees, lotteries, and endowments.

But there is good reason why all libertarians, not simply the market anarchists, ought to be critical of the existence of taxation.  After all, taxation is the aggressive taking of the fruits of a person’s labour without her consent—in other words, theft.  It sets up the precedent that it is lawful and just for the state to engage in aggression against the individual and the voluntary collective.  And if this weren’t bad enough, tax collection agencies tend to be wasteful to boot.  In conclusion, I encourage all libertarians, of all stripes, to consider the issue of taxation.  Perhaps in so doing, you will find even better alternatives (in addition to user fees, &c.) to this evil institution.

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