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Tax Codes Reflect Moral Codes

Tax Codes Reflect Moral Codes

August 26, 2010

June 2003 -- On April 15 the news is always full of stories about taxpayers standing in long lines at post offices to file their returns on time. Occasionally, they are accompanied by sidebar stories about some proposed tax cut or reform that might help the economy—stories that usually disappear by the next day's news cycle.

Perhaps tax stories would remain in the headlines—and tax policy on the front burner—if reporters realized that those stories involve moral questions and not merely economic issues.


Why should we acquiesce when governments take our money? We would be upset if thugs stole our wallets at gunpoint or thieves broke into our homes and carried off our possessions. That is because we understand that the only moral way for individuals to deal with each other is through mutual consent, respecting the equal rights of others rather than initiating force.

In a free society, the moral purpose of government is to protect the life, liberty, and property of the citizens. It is their agent, with the exclusive right to use coercion in order to secure them against thugs, thieves, and foreign aggressors. It does these things through objective laws, police, courts, and a military. Collecting taxes is the way governments cover the costs of providing those services. Bills of rights, separation of powers, checks and balances, and federalism are meant to confine the federal government to its proper functions, as enumerated in ARTICLE 1, SECTION 8 of the Constitution, and keep it from providing "services" that do not belong to society's coercive institution.


Unfortunately, most government expenditures are simply wealth transfers, taking money from some taxpayers and giving it to others—taking from the rich to give to the poor, taking from adults to give to students, taking from businessmen to give to artists. If these expenditures were private, the transactions might or might not be good ones. But that is irrelevant. Such transfers are not legitimate functions of government. Each individual should have the right to decide how he spends his own money. Using tax money for these purposes is an expropriation of wealth as surely as it would be if a poor person, student, or artist mugged you in a back alley. It's immoral!

And there is a Catch-22 here. Since the federal government takes almost one-quarter of most people's incomes, with state and local governments taking another 10 percent, few individuals have sufficient money to fund the charitable or personal purposes they would like to support. In this way, the heavy tax burden on potential benefactors makes life harder for individuals and organizations that might have otherwise received money from private sources. Deprived of private charity, these individuals and organizations then claim that they must succumb to the temptation, offered by politicians, of receiving money taken by force from their fellow citizens.

It gets worse. Having thus created a felt need for subsidies, many politicians see themselves as personally moral exactly to the extent that they provide subsidies by handing out other people's money. With astonishing arrogance, they act as if the wealth produced by private citizens were their own, to do with as they please. They make citizens feel that they must justify keeping their own money. In effect, these politicians act like feudal lords who are the ultimate owners of the realm, and they then treat citizens as peasants upon whom they bestow blessings—using the wealth they have seized from their subjects.

Perhaps worst of all, though, the tax code that impoverishes citizens is based on the morally impoverished principle of punishing the most productive citizens. Under the so-called progressive tax code, the more goods and services an individual produces, as measured by income, the larger proportion of his income he must turn over to the government—not the larger amount of his money, but the larger proportion of his money. The impulse inherent in that policy is envy—punishing individuals for their virtues, in this case, their productivity. In some cases wealth is taxed twice. When a company makes a profit, that money is taxed as income for the company and then, when the remainder is distributed to shareholders, it is taxed as individual income.


Too often, when tax cuts or reforms are proposed, critics cry: "You're greedy," or "You just want to help the rich," or "How does this proposal help the poor?" The usual response—that cuts or reforms will produce economic growth and create jobs—is true, but it is not the main point. The moral answer is that money belongs to those who have earned it by producing goods and services and trading them with others on the basis of mutual consent—not to the government, the poor, the recipients of corporate welfare, or anyone else. Proper government functions must be supported, but taxation that funds activities beyond the legitimate sphere of government should be denounced as immoral expropriation. How great or little the effect of such taxation may be on the interest groups looking for handouts is irrelevant. How great or little the effect such tax money could have if spent by government is irrelevant. Theft is theft.

In addition, those who suffer disproportionate tax burdens under punitive taxation should claim the moral high ground and demand their right to equality under the law, as loudly and proudly as any other minority group would do. Only then will we be able to reestablish a just social order and return government to its rightful, limited functions.

This article was originally published in the June 2003 issue of Navigator magazine, The Atlas Society precursor to The New Individualist.

Edward Hudgins


Edward Hudgins

Edward Hudgins is research director at the Heartland Institute and former director of advocacy and senior scholar at The Atlas Society.

Edward Hudgins
About the author:
Edward Hudgins

Edward Hudgins, former director of advocacy and senior scholar at The Atlas Society, is the founder of the Human Achievement Alliance and can be reached at ehudgins@humanachievementalliance.org.

Regulation and Taxation