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Why we don't need
Boise, ID – Whenever
Albert Einstein, Sir Isaac Newton, and many of the greatest thinkers of the
past – including America’s Founding Fathers such as Benjamin Franklin and
Thomas Jefferson – bumped up against “unsolvable” problems, they typically
took a giant step back, re-thought the basic premises and then discovered or
created a simple solution. E=mc2, F=ma, and “When in the
course of human events…We hold these truths to be self-evident, that all men
are created equal, that they are endowed by their Creator with certain
unalienable rights, ... "
So here we are in
Idaho in 2006 stumbling around with a seemingly “unsolvable” problem:
skyrocketing property taxes. Like the great thinkers of the past, we need
to step back and re-think everything about why we’re paying property taxes
in the first place.
- What is the
function of any tax?
- What is a property
- Is there a better
method, financially and morally, to pay for services than using property
taxes – or any taxes?
Instead of incessantly arguing about
everybody’s personal preferences for inflicting property taxes upon their
neighbors while creating exemptions for themselves, we need to question our
What is the function of a tax?
A tax is
simply a set of rules for the government to take money from individuals or
corporate entities for some stated government purpose, such as building
state schools or redistributing income from Peter to Paul for real or
imagined “equality” or other “altruistic” reasons.
A property tax is
the set of tax rules using “property” as the basis for the confiscatory
tax. The function of a property tax is the same as for any tax: payment
for communal services or goals.
Now comes the
thinking that separates geniuses from the average Joe Doe: questioning why
we have chosen the method called “taxation” to try and achieve our common
goals. For example, the thinker will ask, “If our goal is to provide great
low-cost cars, computers, schools, farm crops, and yo-yos for everybody as
cheaply and efficiently as possible, what method should we implement?” A
free market, socialism, fascism, a dictatorship or what? The non-thinker
will not ask this basic question and, in fact, has little patience with
anybody who does. The non-thinker does not see a connection between basic
premises and the results. Also, there are those who don’t want to change
because they benefit greatly by the status quo – often because they set up
the current system the way it is to benefit themselves.
Back to the
premise of taxation. What’s the most efficient and moral – i.e. fair, just,
adhering to individual rights – method for a community to pay for each
service? Is it private enterprise and the free market or heavy taxation
with lots of governmental intervention and controls?
Let’s ask this
important question within the framework of two basic concepts.
What’s best according
- Empirical evidence,
(observable historical facts) and
(conceptual theory that brings about empirical facts).
In other words,
what does history and current facts plus theory of human action show us
about using taxation to achieve our stated common goals in the economy?
history and the current structure of most economies in the world today show
us that heavy taxation does not achieve our stated common goals of services
such as education, health, energy, or agriculture. Dictatorships, wars and
individual rights violations are the direct result of moderate to heavy
taxation, which means heavy governmental intervention.
nations with little or no taxation typically achieved their stated common
goals through a free market or limited governmental intervention. The U.S.,
Hong Kong, and other free markets (mostly) are obvious examples. The
U.S.S.R., China, South America, the mid-East and the entire history of
mankind are obvious examples of taxation and government intervention that
has failed miserably. Simply put, free markets and individual freedom
works. Heavy taxation and governmental interventionism doesn’t work.
So what are the
philosophical or conceptual reasons that explain these empirical results
that taxation doesn’t work while free markets do work?
anthropology shows us that individuals compete for survival. Since
governments are instituted with the power of the collective coercive power
of force, if a culture routes individual competition through the government
– i.e. heavy taxation and governmental intervention – then we end up with
competition for survival embedded within the bureaucracy of the government.
Which means Kings and Queens and Dictatorships and Pork Barrel U.S. politics
with paid-off politicians. Power politics rule; individual rights and free
markets are sacrificed when competition is re-routed through the government.
Note what we now
have at the local Idaho taxation level: the Governor pays 41-cents per acre
in property taxes ($5.72 for 14 acres in 2005) in Valley County near
multi-million dollar Tamarack Resort while others in Valley County pay
thousands of dollars in property taxes – and for much less property. In Ada
County, the Friends of the Ada County Judicial System, Inc. (judges and
lobbyist lawyers) paid ZERO property taxes in a fake lease-purchase of a $4
million piece of property in downtown Boise which they unconstitutionally
obtained (at taxpayer expense, by the way) to build their Court House.
Meanwhile, Boiseans pay thousands of dollars per year for residential
property taxes. At the national level, the Jack Abramoff lobbyist scandal
of political contributions buying Congressional votes plus the over 14,000
pieces of pork-attached legislation last year show that taxation and its
corollary hidden tax, deficit financing, represents competition for survival
routed through government institutions. Clearly, empirical examples show
what happens when competition for survival is routed through taxation and
From a purely free
market economics theory, the destruction of the free market pricing
mechanism through taxation and government intervention while attempting to
obtain the stated common goals of creating and exchanging goods and services
for education, newspapers, cars, computers, groceries, and all other market
goods, will ultimately cause market dysfunctions and dislocations. Without
qualitatively determined prices (i.e. free market prices without government
intervention) tied to real supply and demand, business and government
planners have no means of true economic calculation and thus no means for
future planning. In a controlled environment, controlled markets stagnate
and go into recessions. Raising taxes or increasing government intervention
as a “solution” simply throws more gasoline on the already-created
government bonfire. That’s why fascism and socialism – the ultimate in
taxation -- doesn’t work: both systems destroy the means, true market
prices, to their ends, the stated goals of the common good (such as public
education or nationalized airlines). The U.S. does not have a true free
market; it is more like a highly government controlled market,
unfortunately, much like Italy’s economic fascism under Mussolini in the
1930s. (Stay tuned for Part II next week) -- FM Duck
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