First, while most of us would happily make some voluntary contribution to essential services, it is only the threat of prison that makes us stump up taxes at today’s eye-watering levels. Tax is extracted by force – and the use of force is an evil we want to minimise. That puts an awesome responsibility on governments to ensure that every penny they extract through coercion is spent wisely. Waste and bureaucracy are not just a drain on the economy – they are a moral outrage.
But not only is taxation a form of confiscation by coercion. It is confiscation by groups who believe their values and priorities are superior to other people’s – a breathtaking moral claim. It forces families to pay for things they fundamentally disagree with. People with deep moral objections to abortion or foreign wars or mixed-sex schools have to live with the dismal thought that they, unwillingly, help pay for those things. That should give politicians the utmost discomfort, though I doubt it does.
Tax reduces people’s ability to act morally. They might prefer to spend their money on helping their children become good citizens, caring for their elderly relatives, or supporting good causes. Instead they see it taken and going on bank bailouts or expensive prestige projects. Though we wish to see individuals, families and local groups taking more responsibility for their own lives and welfare, high taxes leave them less able to do so.
And when the authorities usurp our choices, we cease to be morally sovereign and responsible individuals, and become mere agents of the state. A society cannot be considered “generous” or “caring” when its care and generosity is funded on money forced out of people, rather than freely given. Giving that comes voluntarily, through the public spirit of private donors, is far more laudable morally than support that is extracted by coercion.
Americans give almost twice as large a proportion of their earnings (1.67 per cent of GDP) to charity than does the UK (0.73 per cent). In large part, that is because the US government absorbs a much smaller part of its citizens’ income, leaving them space to make their own giving decisions. Within that space, Americans have become the largest philanthropic givers in the world, with libraries, orchestras, hospitals, schools and medical research all funded by private donations.
By contrast, we in the UK pay so much in tax that many of us convince ourselves that we have no outstanding social obligations at all. We are told that our taxes do wonderful work paying for education, welfare and policing. So we see it as teachers’ jobs, not ours, to ensure our children are literate and well behaved. We see the duty to help others as a matter for the welfare state rather than accepting that duty on ourselves. We even walk blindly past crime, vandalism or neglect, reassuring ourselves that these are things for officials to deal with.
And when people believe the state will provide, they see less reason to contribute to philanthropic causes. Why support good causes when the state already supports them? A classic example was the Royal National Lifeboat Institution (RNLI), which was created independently in 1924, but later fell on hard times. In 1854 it started accepting government grants. But for every pound the government put in, the RNLI lost thirty shillings (£1.50) in voluntary donations. So in 1869 it cut loose again – and has flourished ever since.
Remember too that our politicians and officials have their own interests, which inevitably colour how they spend our money. Ruling politicians steer tax revenues to their own supporters and pet causes. Interest groups vie against each other for grants and subsidies. The only group not represented in this carve-up of taxpayer funds is, unfortunately, taxpayers themselves.
Taxation, then, rests on force. It undermines morality, crowds out charity, rewards power, undermines personal responsibility, promotes group conflict and turns governments and the public into cheats. Taxation may be a necessary evil – but it is still an evil.
Eamonn Butler is director of the Adam Smith Institute and a contributer to the 2020 Tax Commission.