The Sociology of Taxation

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As tax time rolls towards us this article by Professor of Economics Hans-Hermann Hoppe is appropriately pointed. Dr. Hoppe is on the faculty of University of Nevada - Las Vegas, and author of an important book on private property, listed below.

The Sociology of Taxation
by Hans-Hermann Hoppe

[Posted on Saturday, February 25, 2006]

* Introduction
* Two ways to acquire property
* What does not limit the size of government?
* What does limit the size of government?
* The general public's conception of justice
* How could government accomplish such a feat?
* Backed by nationalism, states begin on their expansionist course.
* What if the Western states fight each other?
* How to fight statism: the private property ethic
* Notes

[This essay, which follows "The Economics of Taxation," is excerpted from Chapter 2 of Economics and Ethics of Private Property, newly published by the Mises Insititute.]

There can be no doubt, then, that taxes invariably reduce production and with this the consumer's standard of living. Whichever way things are put, there is no escaping the conclusion that taxation is a means of obstructing the formation of wealth and thereby creating relative impoverishment.

This brings me to my second subject: the sociology of taxation. If taxation is an instrument for the destruction of wealth-formation, then the question immediately becomes pressing of how it can be explained that there is taxation; that there is ever more of it; that we have experienced, in particular during the last hundred years, a steady increase not just in the absolute but also in the relative level of taxation; and that the institutions which lead the way in this process, the tax-states of the Western World, have simultaneously assumed ever more powerful positions in the arena of international politics and increasingly dominate the rest of the world.

With these questions one leaves the realm of economic theory. Economics answers the question "What is the consequence if taxation is introduced?" It deduces its answer from an understanding of the meaning of action and the meaning of taxation as a particular type of action. Why there is taxation is the subject matter of psychology, history, or sociology. Economics, or rather praxeology, recognizes that all actions are determined by ideas, correct or incorrect, good or bad. But it does not attempt to explain what these ideas are and how people come to hold or change them. Rather, it assumes them to be given and aims at explaining the logical consequences that flow from acting upon them, whatever they are. History and sociology ask what these ideas are, how people come to entertain them, and why they act the way they do.[16]

On a highly abstract level the answer to the question why there is steadily increasing taxation is this: The root cause for this is a slow but dramatic change in the idea of justice that has taken place in public opinion.

Let me explain. One can acquire property either through homesteading, production, and contracting, or else through the expropriation and exploitation of homesteaders, producers, or contractors. There are no other ways.[17] Both methods are natural to mankind. Alongside production and contracting there has always been a process of nonproductive and noncontractual property acquisitions. Just as productive enterprises can develop into firms and corporations, so can the business of expropriating and exploiting occur on a larger scale and develop into governments and states.[18] That taxation as such exists and that there is the drive toward increased taxation should hardly come as a surprise. For the idea of nonproductive or noncontractual appropriations is almost as old as the idea of productive ones, and everyone - the exploiter certainly no less than the producer - prefers a higher income to a lower one.
"Taxation is a means of creating relative impoverishment."

The decisive question is this: what controls and constrains the size and growth of such a business?

It should be clear that the constraints on the size of firms in the business of expropriating producers and contractors are of a categorically different nature than those limiting the size of firms engaged in productive exchanges. Contrary to the claim of the public choice school, government and private firms do not do essentially the same sort of business. They are engaged in categorically different types of operations.[19] READ THE REST OF THE ARTICLE