Tax Day is tomorrow. All Americans should calculate how much of their income is going to the government — federal, state, and local — and ask themselves: am I willingly giving up this money?
When a robber takes your property, this is classified as theft. Many libertarians argue that taxation is legalized theft, theft by the voting majority. If voters and the government decide to tax you (take your property), you have no choice but to pay. People often complain about eminent domain, but at least the property owners are legally required to be paid fair value for their property.
Are Americans getting fair value for the property we are giving to the federal government in income taxes? Now, many Americans willingly pay taxes as a part of our nation’s social contract, and almost all Americans are willing to pay for some levels of service. Very few people believe in no taxes.
But, the question becomes, if the government is taking much more of your property than you believe is necessary for an effective government, is that legalized theft?
In almost every circumstance, Americans’ largest share of taxes goes to the federal government, despite almost every tangible government service (schools, roads, public safety, libraries, parks, environmental protection) being primarily funded and operated by local governments. Most Americans agree on the need to fund these local services we all use.
Are average Americans getting a reasonable return for their massive personal investments in the federal government?
In most instances, the answer is no — and for many millennials, the answer is hell no.
For young Americans, the FICA taxes we pay for Social Security and Medicare are almost entirely going to service current users of those programs. The financial future of both programs is shaky and will require either more taxes or fewer benefits to become sustainable.
Most generations before us are actually a huge return on the money they invested in Social Security and Medicare; some estimates show recipients getting more than three times as much as they paid in. For the younger generation, the opposite could be true.
That’s why it’s almost impossible to argue that these FICA taxes are not generational theft, or at least partial theft. If the government promises to save your money for you for retirement, then gives it to other people with no sustainable plan to return it to you, that seems pretty close to legalized theft.
But what about services from the rest of the federal government?
Outside of entitlement programs like Social Security and Medicare (which millennials may not get), the average American sees very little benefit from the federal government in their day-to-day lives. Can you name what you get from the federal government? In most cases, what Americans believe is being done by the federal government is actually being done by the states and localities.
Schools? Funded almost completely by local taxes and state taxes. In most areas, schools are funded through property taxes, sales taxes, and/or local income taxes. This is directly from the federal Department of Education website, “ED’s share of total education funding in the U.S. is relatively small.”
Roads? Built and funded almost entirely by states and localities. The federal government’s investment in roads has been shrinking with the diminishing gas tax revenue, which further illustrates the point. Americans pay federal gas taxes to invest in roads, so practically none of your income taxes go to roads.
Helping the poor? All levels of government invest in this, including the federal government, and welfare makes up around 10 percent of the federal budget. Outside of welfare, there are also federal programs to feed low-income children, Medicaid for healthcare for low-income Americans, and Veterans’ aid and benefits. All combined, this is well under 20 percent of federal spending. Most Americans are okay with this level of assistance, although conservatives wish the aid wasn’t managed by the federal bureaucracy and instead block-granted to the states; this would result in more money for the aid and less for the high administrative costs to manage it.
National security? This is one almost entirely handled by the federal government. 16 percent of our budget goes to national defense and national affairs. Almost all Americans are willing to pay for safety, but they don’t want it to be a blank check. A Pentagon study showed they could easily save $125 billion over five years, just by cutting waste. $25 billion per year is almost 1 percent of the federal budget. Imagine if there was an external audit of the Pentagon.
Protecting the environment and upholding health standards? Every state and most localities are already doing this, and they are much closer to potential problems. Some problems cross jurisdictions and need federal coordination.
The federal government does many, many other things, and if you cut those programs, someone will inevitably be upset. The reality is that they can either be done privately through charity or by local governments, who are much more likely to be more fiscally responsible.
Unless you are willingly giving up your money to the government for every one of these programs, on some level, it is legalized theft. Our form of government can’t please everyone, and people will disagree on spending priorities. However, it’s important for politicians to remember it is not their money. It’s not their property. It’s our property we give up to fund those programs and policies which we cannot easily do alone or with private industry.