Taxes are a big deal. America fought for their sovereignty from Britain over them. Individuals go to great lengths, risking jail time to avoid paying them. This may seem illogical, but it cuts deep into human instincts of not wanting to be parted mandatorily with something they own. With that said, are taxes theft and extortion?

What are taxes?

In the context of finance, the Internet Oxford Dictionary defines taxes as a “compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions.”

To further clarify the above definition, taxes are income for local and federal governments. It is mandatory, so there are only a few exceptions to not paying taxes that are specific to circumstances and individuals. In other words, some people and organizations are exempt from paying taxes due to certain situations. Addressing the final aspect of the definition, not only are income and business profits taxed, but also goods, services, and a variety of transactions.

The “compulsory” aspect of taxes and the fact that it is assigned to almost every economic action, with a few exceptions, gives the impression of amorality. But does that mean it is theft and extortion? 

What are theft and extortion?

Theft is taking someone’s property without permission or legal right. The “legal right” aspect of the definition of theft is what makes taxes not stealing or illegal. Generally in a democratic process, taxes are voted into law by lawmakers and the voting population. Depending on the government or the locality, they will decide on the type of taxes, on what it will be on and who, and how much as a measure of percentage. The benefit of the democratic process of determining taxes is that everyone gets a say. In the case of theft, the victim rarely gets a say, and if they do, it is usually by force. Which brings us to our other question: is taxation extortion?

Extortion

Extortion is taking something by force and threat. Victims of extortion have no say in the matter, and if they do, they are met with some form of aggression. You may be thinking, how is that different from not paying my taxes and then being faced with the consequence of possible jail time? There are several differences. The first difference is the democratic process–that is mentioned earlier–that gives every individual a say in the process, of creating laws. Secondly, everyone has the right to due process where they can present their case and defend themselves in a court of law. The fact that if a person chooses not to pay taxes, they will not be thrown in jail without having their day in court is evidence that tax is not extortion. Finally, if we are not happy with our current tax system, we can vote and petition our lawmakers to change them.

The Purposes of Taxes

There are many ideologies that view taxes as unjust and would prefer there to be little or no taxes. This is not practical. We live in a communal society where many of the benefits we enjoy would not be possible without taxes. A society’s infrastructure is a capital-intensive undertaking that would not be possible without taxes.

Expecting bridges, highways, and dams to be the responsibility of private companies would make the use of these facilities exuberantly expensive. Only those who can afford the price of the infrastructure would be able to use them. That would not be many, because the cost would be too high due to the fact that companies would price their cost to recoup their expenses. Also, building infrastructure is a risky endeavor for a business, which would then lead to the need for assistance from the government. Which, in turn, would bring us back to the need for taxes. 

The above scenario is just one example of the usefulness of taxes. There are many more uses of taxes, which brings us to another controversy, which is improper usage and mismanagement. Many taxpayers are dissatisfied with the management and application of their taxes. Taxpayers need to know that they also have a say in the allocation and management of their taxes. They have the ability and the right to know how their tax dollars are being spent. It is also everyone’s responsibility to hold lawmakers and those responsible for managing tax dollars accountable. Individuals are not powerless in such an endeavor and should take the opportunity to make use of their rights.

FINAL THOUGHT

Taxes are not theft or extortion. Even though it is mandatory and comes with the consequence of jail time if a person refuses to pay–giving it a feeling of amorality–it is still not theft or extortion. Taxes are lawful because they are enacted by lawmakers representing the will of the populace. A population has the right to vote to have laws changed, and taxes are not an exception. Taxes serve many purposes, such as providing a salary for civil servants and building and maintaining society’s infrastructure. The improper management and allocation of tax dollars in some cases has threatened the confidence people have in the system. With that said, it’s the populace’s responsibility to hold lawmakers and those that are responsible for managing tax dollars accountable.