Perception changes Everything - Is Taxation really theft?

As an voluntarist I believe that everyone should interact on a voluntary (non-violent) basis. This generally means I support concepts such as property rights and abhor theft and its socially acceptable counterpart, taxation. I am also very much a believer that whether or not we “suffer” when we pay taxes depends entirely on how we choose to perceive the “payment”. The question of whether or not taxation is theft depends entirely upon how we perceive property rights.

I write this today as I struggle with the reality of writing large checks to the government. It is one thing to have your taxes withheld from your paycheck (you never saw the money), it is another thing entirely when you must write the check after getting to see the money in your bank account for a couple of weeks. Hopefully this article will help others feel better about writing their own checks to pay taxes.

Why Perception Matters

In order to perceive something as theft you must first believe something is yours. This is something that manifests in ego. The concept of “me” and “mine” depends upon the perception that others are “separate”, ie not me. If you choose to live in the now, to love your neighbor as yourself, practice generosity, and see the world through the lens of abundance then there is no need to “cling” to property.

It is the ego that attributes things to our identity. We see ourselves as our story and our possessions. The ego is driven by fear and it fears death and sees possessions as a means of securing life (and status).

There is a certain amount of truth associated with the need to secure, food, shelter, and clothing. It is also true that the drive for increasing our quality of life makes all of society better off. We all benefit when economic incentives are properly aligned and we all see a lower quality of life when they are out of alignment.

Any suffering we experience while paying taxes is based entirely on how we choose to perceive “gain” and “loss” which depends only on our own ego and choices.

Is Property a Social Construct?

All property is an abstract idea that is generally agreed upon by all. Absent any legal framework possession is the law. This law is engrained in all of us and intuitively understood by children and even many animals.

Obviously possession does not scale; you cannot maintain active control and defense of all your possessions all of the time. So people adopted contractual agreements. In these agreements one person possesses things on behalf of another individual. This would be like hiring someone to house sit while you are at work. The individual house sitting would be in physical possession of the house, but has agreed to return possession to you upon your return.

It would be a logistical nightmare for everyone to ensure all of their property is physically possessed by someone they have hired at all times. Assuming you had a small island with just two people on it, they would quickly reach an agreement on “who owned what” that extended beyond physical possession.

In the event there was a disagreement about who owned what, physical possession will become the default law.

Possession is nine-tenths of the law

Although the principle is an oversimplification, it can be restated as: "In a property dispute (whether real or personal), in the absence of clear and compelling testimony or documentation to the contrary, the person in actual, custodial possession of the property is presumed to be the rightful owner. The rightful owner shall have their possession returned to them; if taken or used. The shirt or blouse you are currently wearing is presumed to be yours, unless someone can prove that it is not.” — wikipedia.org

There are three ways for someone to have their rightful property returned to them:

take it back without violence
take it back with violence
social pressure (negating contracts)

When something is physically taken it is enforcing the law of possession and doesn’t involve any violence. The property might be taken and retaken over and over all without any violence. This should be permitted in an entirely voluntary society because there is no coercion, aggression, or violence. There is simply a property dispute being settled in a nonviolent manner.

Take it with Violence

Usually those who suffer from perceived thievery employ increasing levels of physical security until eventually violence becomes the only direct means of retaking stolen property. This is what happens when two kingdoms go to war over a territory. This violence is what voluntarists wish to do away with because it is perceived as unnecessary and uncivilized.

Social Pressure

When social pressure is used there is also no violence. Instead, anyone possessing property of the perceived thief may simply claim ownership of the thief’s property in their possession. They will either reimburse the victim of the thief, or keep it for themselves. The concept being that a thief forfeits the benefit of having their contracts enforced when they are found to violate others property rights.

Anyone attempting to employ social pressure is also subject to being judged by their peers. To make effective use of social pressure, everyone needs to have consensus on who owns what. Without this consensus, attempting to negate a contract with a thief exposes your own contracts to being negated by others. This is where things get tricky.

Nonviolent Government Consensus is Social Pressure

Government is a consensus process whereby most people “agree” that certain judges appointed by “elected politicians” get to decide consensus. The masses are unable to evaluate every contract and/or property dispute so they defer to a governmental process.

If we assume that the government was denied the right to physical violence and restricted to making judgment calls, then the people could use those judgments as the consensus basis for applying social pressure without worrying about social retaliation.

Voluntary “Taxation” in Nonviolent Government

Once people adopt a consensus driven by government, then all non-physical possession becomes subject to the judgments made by government. This means all bank deposits, all real estate that you do not physically occupy (and defend), everything except the clothes on your back, coins in your pocket, and private keys in your brain.

Your ability to contract with others depends upon being able to trust others. If you hire someone to house sit (to prevent government recognizing another squatter), you are at risk of the government recognizing the person you hired as the “rightful owner”. Your hired house sitter is also at risk of having his own house (which he isn’t occupying) being repossessed by someone else. Everyone else has deferred to the “government’s opinion” of who owns what.

As soon as people give up their individual judgment to a system of governance everyone becomes vulnerable. They become prisoners in a dilemma of their own creation. The only way to change the system without the system’s permission, is if the majority can reach consensus “outside the system” and then change at once. Any minority that defects faces extreme risks of having all their property and contracts nullified.

Once government becomes the arbiter of property rights, it becomes the de-facto owner of everything that is not directly possessed and physically controlled by its rightful owner. Whether this is “good” or “bad” depends upon your perception. Is it bad that Bill Gates owns assets worth billions of dollars? If Bill Gates can have effectively unlimited wealth (from perspective of the average man), then why can’t someone else, like a king, have even more?

If you perceive government as the owner of everything not in your physical possession, then there is no reason to feel stolen from when taxes are paid. It is only in our resistance to the reality that government “owns” everything not in our possession that we suffer.

Contract Law

The real issue boils down to resolving contract disputes in a way that doesn’t give the judge arbitrary power. If the judge gains arbitrary power over all contracts then all individuals give control (and therefore de-facto ownership of) their property to government consensus.

All property rights aside from physical possession are derived from the power to contract. What is the power to contract?

The right of property implies the right to make contracts about that property: to give it away or to exchange titles of ownership for the property of another person. Unfortunately, many libertarians, devoted to the right to make contracts, hold the contract itself to be an absolute, and therefore maintain that any voluntary contract whatever must be legally enforceable in the free society.

Their error is a failure to realize that the right to contract is strictly derivable from the right of private property, and therefore that the only enforceable contracts should be those where the failure of one party to abide by the contract implies the theft of property from the other party.

— The Ethics of Liberty by Murray Rothbard

Rothbard makes a clear distinction between contracts that create “promises” or “expectations” from those which are purely conditional. A mere promise is not enforceable.

The basic reason is that the only valid transfer of title of ownership in the free society is the case where the property is, in fact and in the nature of man, alienable by man. All physical property owned by a person is alienable, i.e., in natural fact it can be given or transferred to the ownership and control of another party. I can give away or sell to another person my shoes, my house, my car, my money, etc. But there are certain vital things which, in natural fact and in the nature of man, are inalienable, i.e., they cannot in fact be alienated, even voluntarily.

Specifically, a person cannot alienate his will, more particularly his control over his own mind and body. (Read more on Rothbard’s Theory of Contracts and Property Rights)

How Nonviolent Government can result in absolute Despotism

Based upon this theory of property and contracts we can draw the following conclusions with respect to contract law and property rights:

1. Physical possession is the foundation of property
2. Contracts are required to secure title to property not directly possessed
3. Social pressure is required to enforce contracts
4. Social pressure requires societal consensus to have meaningful power
5. Individuals are physically unable (time, space, energy) to directly evaluate all evidence to reach independent consensus.
6. Therefore, individuals choose to defer to judgment of 3rd parties
7. Society uses elections to directly select the “most trusted judge”
8. Judge’s rulings become law which is enforced by social pressure
9. Unchecked power over interpretation and enforcement of contracts makes Judge de-facto owner of everything not in physical possession of true owner.
10. Influence over all indirectly held property gives Judge leverage over all property and people
11. People become enslaved by the social pressure controlled by the Judge (king)

All of this is possible without initiating violence against individuals, but comes at the expense of effectively nullifying the very concept of contracts. The nonaggression principle must be applied to the interpretation and enforcement of legitimate contracts. A biased interpretation of a contract is an aggression by the judge against everyone else. The challenge is how do people reach a consensus that the judge acted in bad faith and what consequence does the judge face?

If the king owns everything (due to his power to set social consensus on dispute resolution), then all contracts among men a mere suggestions that the king may bias his judgment toward in the event the king has no preference. This is neither good nor bad. It is merely a reflection of “all the people on the island” choosing to recognize the king as the ultimate owner of everything.

Cognitive Dissonance

The problem most voluntarists, anarchists, and libertarians suffer from is a belief that they own something they do not. They feel offended when the government prints money that “devalues” their federal reserve notes. The federal reserve is the one entitled to issue its own notes and the rest of society is free to accept them as payment. They feel cheated when they work for a company incorporated under the laws of a government and then that company withholds part of “their pay”. They feel cheated when their bank accounts are frozen and/or seized when the terms of their contract stipulated the interpretation of the bank deposit contract was subject to interpretation of the government.

It is our belief that we “own” these assets and are entitled to certain “interpretations” of contracts that is the cause of our mental anguish. It is our denial of the reality that societal consensus is that government owns everything that causes us to suffer.

Changing Societal Consensus

If men are to be free to create legitimate contracts involving their property, then they require a means to reach consensus on who owns what. This means they require a means for dispute resolution in contracts. This can largely be managed by tracking all property of meaningful value in a public ledger and then defining “smart contracts” that transfer ownership.

These smart contracts would allow for any number of judges, appeals, and oracles. Any smart contract that does not carry provisions for dispute resolution is likely vulnerable to changing circumstances in the chaotic world we live in.

A robust smart contract platform would hold the judges and oracles liable to continuous public scrutiny. This is the opposite of today’s government where officials are effectively immune to any liability for their actions while in office.

Society needs Consensus outside of Contracts

Lastly society needs a means of resolving disputes among people whom have no contract and no money. This means a system where everyone is always subject to public consensus to some extent whether they want to be or not. This consensus is known as reputation and it is something that is incredibly valuable to us, but something owned by everyone else.

Reaching a consensus on reputation is perhaps the most challenging problem faced by voluntarists looking to setup a free society. If this nut can be cracked, then I believe everything else will fall into place

Conclusion

We live in a society that has deemed the government owner of all property. Anything you receive by contract comes with strings attached and is not your property. It is impossible to have real property rights and contracts while society at large believes everything belongs to the government and is willing to let government edicts dictate property rights.

If we are to have a free society, then we need a consensus algorithm that can enforce contracts where judges and arbiters do not have unlimited power of reinterpretation and selective enforcement. The algorithm must consist of decentralized judges by a jury of peers and be completely free from hierarchy. The judges and jurors themselves must be liable for their judgments.

It is only through decentralization of our courts that we can ever hope to have a system that enforces contracts without effectively giving all property over to an elected king.

Until such a system can be developed, I highly recommend sparing yourself unnecessary mental suffering caused by operating under the belief that you can own anything. Instead, be grateful for what the government lets you have and invest your time, money, and sacred honor into creating and supporting systems that may one day let you truly own property for the first time.