Taxation is Theft

Theft is defined as “the taking of another person’s property or services without that person’s permission or consent.” Almost invariably, governments pass tax laws and set tax rates without any consultation with the citizenry. Further, no final approval is sought by the citizenry that they consent to the tax or the rates. It is simply imposed. Most of us tend not to regard taxation as theft, yet, by definition, that’s exactly what it is.


But some countries, notably the US, go further in disguising the theft, by stating that the payment of tax is “voluntary.” I personally am not aware of a single instance in which an individual or corporation decided not to pay a tax and, if discovered, was allowed to go unpunished. A typical penalty is a fine equal to the tax amount, plus compounded interest on both the tax and the fine. Such a condition is anything but voluntary.

The US also has a tradition of treating the payment of tax as being “patriotic.” Avoiding tax is deemed unpatriotic—therefore, citizens should take pride in paying tax and, in fact, many Americans do claim that they’re proud to pay tax. It would also seem likely that some resent taxation, but want to appear patriotic, whilst others truly wear taxation as a hair shirt with pride.

However, if we define taxation as what it is—theft—it would be far less likely that either of these factions would be taking this position. After all, no one takes pride in being robbed.

Some countries (again, notably the US) describe tax havens as jurisdictions that seek to undermine the tax regimes of other jurisdictions. As such, the havens are harassed and threatened by the latter and referred to as criminal money-laundering centres.

Well, let’s clear the air on that one while we’re at it.

A tax haven is quite simply a jurisdiction that has a low-tax or no-tax regime. It either steals less of people’s money than high-tax jurisdictions, or steals none of their money.

It’s ironic that the US is at the forefront of persecuting tax havens, as the US came about in 1776 as the result of abusive taxation by King George of England. (At that time, the king was demanding a whopping 2% in tax, and colonists were outraged.)

The US is most certainly no longer the home of the American ideal. In fact, it’s slowly morphed to become the exact opposite. If any of the American founding fathers were to re-appear today, they could be forgiven if they were to say, “I don’t think we’re in America anymore, Toto.”

Yet the US, along with the EU, OECD (Organisation for Economic Co-operation and Development), and others, has repeatedly applied pressure to tax havens and has threatened or imposed economic sanctions against them.

But, why should this be? After all, most tax havens exist in small countries where depositors are simply being offered a good deal. And, it’s important to note that what they offer is in no way criminal. So, why are the larger, tax-oppressive jurisdictions so vexed with the tax havens?

Well, first off, it’s important to understand that governments do not exist for the purpose of serving the people, as they so often claim. Their real business is to scalp the populace to as great a degree as possible, short of creating an uprising.

When viewed in this light, it’s easier to see that they’re not seeking fairness or opportunity for their people, they’re seeking to strip them of their wealth—plain and simple. Ergo, any money that flows from their citizenry to a tax haven, even though it’s done 100% legally, is money that the government failed to steal… and they want to get their hands on it.

In addition to this, the very existence of a country that has a low-tax or no-tax regime shines an unfavourable light on the larger country. Tax havens serve as a reminder that direct taxation is not even necessary to run a country.

If that seems like an impossible concept to Americans today, they only have to be reminded that income tax was introduced a mere one hundred years ago, in 1913. The US went through the industrial revolution and covered the map with railroads from coast to coast—the country’s most productive period—with no income tax.

Of course, if you stop robbing people, they’ll prosper and be more productive.

Therefore, it’s understandable if the government doesn’t wish for its populace to be reminded that a government (even in a very large country) need not rely on direct taxation.

Finally, the US is the home of the world’s foremost tax havens. (Andrew Penney from Rothschild & Co described the US as “effectively the biggest tax haven in the world”.)

The banking standards in Nevada, Delaware, Montana, South Dakota, Wyoming and New York are far below what the US demands of havens such as Jersey, Panama and the Bahamas.

In fact, the US has steadfastly refused to comply with the FATCA (Foreign Account Tax Compliance Act) reporting that it demands of other countries… even though it implies that not complying suggests criminal behaviour.

But, there’s a significant difference in the US tax haven states and the tax havens overseas. Overseas havens are open to anyone, including the local populations. The US-based havens are open to anyone except Americans.

In essence, what this says is, “If you’re from France and feel that your government is stealing too much of your money through taxation, we’re happy to help you escape its clutches. But, if you’re American, we fully intend to continue robbing you.”

Benjamin Franklin was famous for saying, “In this world, nothing can be said to be certain except death and taxes.”

This is quite true, but it’s unfortunate that the statement was ever uttered, as it’s resulted in people accepting any type of tax, to whatever degree it might be imposed. Since such a guiding light as Mister Franklin accepted the concept, it’s created a blanket acceptance of any imposition of tax.

This is most unfortunate. There are some countries in the world where any new tax and/or any increase in a tax rate is fought fervently—and the population often wins. A refusal of acceptance of direct taxation, in particular, has resulted in at least one jurisdiction being 100% free of any direct taxation in all of its 500+ year history. (In fact, a sure way for a politician to be voted out is to suggest the introduction of direct taxation.)

Therefore, theft by one’s government should never be taken as a given. In many countries, the individual has no hope of escaping the government’s theft. And it’s undeniably true that Republican or Democrat, Labour or Tory, all politicians seek to rob their minions through taxation.

However, the victim should never become complacent or apathetic. Whenever an elected government robs a constituent, the act should be identified as what it is.

After all, it’s that very identification of taxation that brought freedom to the American colonies in the first instance.