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Why does tax feel like theft to some of my clients and not to others?

Harpreet Kaur Grewal Contributor
· 5 replies · 171 views
Power & the stateAnalyticIndianIslamicIbn KhaldunRobert NozickThomas Hobbes#legitimacy#property#sikh-ethics#taxation
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I do tax returns for small businesses in Surrey, British Columbia. Two of my clients run nearly identical businesses: same size, same bracket, similar families. Every April one of them tells me, only half joking, that the government is robbing him. The other says, with no irony, that tax is the membership fee for living somewhere decent.

Same numbers. Completely different experience. I've started wondering what is actually going on.

Robert Nozick wrote in Anarchy, State, and Utopia that taxation of earnings from labour is on a par with forced labour. My first client would frame that sentence. On the other side, I've read Murphy and Nagel's The Myth of Ownership (2002), which argues that there is no such thing as your pre-tax income in a morally meaningful sense: property rights are created by a legal system that includes the tax system, so you can't be robbed of something that was never yours before the rules defined it.

My own background is Sikh. Guru Nanak's teaching is usually summed up as honest work, sharing what you earn, and remembering God. Many Sikhs give a tenth of their earnings, dasvandh. For me sharing is part of what earning is, so tax doesn't feel foreign, though I don't enjoy it.

Is the difference between my two clients a disagreement about philosophy, or about trust, or about whether they see where the money goes?

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5 replies

  1. Ethan Mercer

    Contributor

    I'm the resident libertarian-sympathiser in my economics course, so let me speak for your first client. Nozick's claim depends on there being property rights before the state. Murphy and Nagel deny that, and I find their argument hard to answer. But it seems to prove too much: if nothing is mine until the legal system says so, then no tax rate could ever wrong anyone. Surely a 95 per cent tax on one disliked minority would be wrong, and wrong partly because it takes what is theirs.

    Helpful · 1
    1. Javier Morales

      Fellow

      Ethan, Murphy and Nagel would say the 95 per cent tax is wrong because it is unjust, not because it violates pre-legal ownership. Justice judges the whole system, including property law.

      Interestingly Hobbes is on their side: for him there is no "mine and thine" before the sovereign establishes it. And Ibn Khaldun adds the economist's warning: late dynasties raise taxes to pay for luxury, revenues fall, and the state collapses. So the ethics may be conventional while the limits are very real.

      Helpful · 2
  2. Akosua Mensah

    Contributor

    Our cooperative takes a levy on each bag we sell. Some years we grumble a lot, and some years not at all. The difference is simple: the year the levy built a borehole that everyone could see, nobody called it theft. The year it disappeared into an office in town, everybody did. I think your second client sees the borehole and your first does not.

    Helpful · 3
  3. Nur Aisyah Rahman

    Fellow

    In Malaysia, zakat paid through the state religious authorities can be set against income tax. So many Muslims experience two kinds of obligatory payment side by side: one understood as a religious duty owed to the poor, the other as a civil duty owed to the state. In my experience people resent the second far more, even when it is the smaller amount. Being able to name who it is for seems to matter as much as the amount.

  4. Harpreet Kaur Grewal

    Contributor

    Akosua and Nur, you both point to the same thing: we accept a payment when we can see whom it serves. Maybe my first client is not making a philosophical claim at all. He is saying he doesn't trust where it goes. That's a complaint about legitimacy, and a fair one to argue about, but it's different from Nozick's theory. Ethan, I like that you argued his side properly. I'll tell him next April.

    Helpful · 1