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Taxation – challenging everyday libertarianism

TaxingBooksIn his Left Futures article on the 7th April, Intense Relaxation, David Osland took John McTernan to task for advocating tax avoidance as a ‘basic British freedom’ and for making reference to the political theorist Robert Nozick and his argument for freedom from taxation in Anarchy, State and Power (Basic Books, 1974).

The ideological libertarianism of theorists such as Nozick is rejected by those on that wide spectrum of political thought we know as social democracy, whether left or right leaning. However the discourse and principles of such an approach are much more commonplace and pervasive in wider society, an ‘everyday libertarianism’. This everyday libertarianism overshadows our political debate on tax and needs to be addressed by Labour politicians and progressive campaigners if we are to win support for a more redistributive tax system and for a Government with enough resources to support those in need and to rebuild our economy after the financial crash of 2008 and Tory ‘austerity’.

It is a hard thing to do but we have to critique the everyday libertarian assumptions that taxation is a drag on creativity, innovation and enterprise. This is really just a populist representation of the neo liberal view of taxation. To challenge these assumptions we have to counter the underlying moral justification for this view which is that we as individuals are entitled to our money (earned or unearned). This view exists amongst many working people who do not have access to anything like the levels of income or inherited wealth of David Cameron or Boris Johnson, or indeed those listed in the Panama papers. It is a view that justifies a ‘minimal State’ and fuels a sceptical attitude to the Government’s right to collect tax, thereby leaving the super-rich and unscrupulous corporations untroubled.

We need to be clear that the libertarian approach to taxation promoted by Nozick and others is, in the end, ethically incoherent. It is based on the assumption that pre-tax market outcomes are just, that we have an unqualified moral entitlement to what we earn in the market before government ‘interferes’. In the real world of advanced capitalist production however Government laws on regulation, competition and other commercial practices are necessary for a market system and have a direct bearing on the rate of profit. There is no such thing as a just or justifiable conception of a fair pre-tax income in such a system.

The everyday libertarian approach to matters of taxation is based on the myth that my money is mine in some innate or natural sense. In their book The Myth of Ownership – Taxes and Justice (OUP 2002) the philosophers Liam Murphy and Thomas Nagel articulated a moral and political case for a social justice model of taxation. This case directly challenges libertarian conceptions of private property rights presumed by Nozick both in theory and in practice. Murphy and Nagel maintain that in order to establish the appropriate design and implementation of a taxation system (and the associated benefits and welfare systems), we have to consider the socio-economic context of taxation policy and challenge the assumption that aspects of the economic system are ‘natural’.

Rather than a solely rights based approach they argue that the ethical justification for a taxation system should instead be based on more general principles, such as what actually constitutes entitlement to property and pre-tax income in a complex and interconnected society. A taxation system should take into account the equity of the distribution of the social product between the private control of individuals and Government. But to consider tax justice in such a way we have to be clear about the correct role and scope of the State, and be prepared to defend this.

The central issues of taxation are not about how the State should appropriate and distribute what its citizens already own, but about how the State decides what is private and what is public. So a taxation system cannot be founded in any fundamental way on the concept of individual rights claimed against the State, as in libertarian political theories, because the State is the very framework within which the individual entitlement to property or income is to be determined.

It follows then that the scope of Government cannot be limited by individual rights, though the role of Government maybe. The political issues of the nature and range of public services, and therefore the level of taxation needed to pay for these, become questions to be asked after it is accepted that the State is entitled to determine the framework of ownership rights. Murphy and Nagel accept that individual liberty and personal autonomy have value in any objective standard of human priorities, but maintain that Government is a necessary ethical framework for both personal life and civil society.

As Murphy and Nagel explain:

If political debate were not over how much of what is mine the Government should take in taxes, but over how the laws, including the tax system, should determine what is to count as mine, it would not end disagreements over the merits of redistribution and public provision, but it would change their form. The question would become what values we want to uphold and reflect in our collectively enacted system of property rights – how much weight should be given to the alleviation of poverty and the provision of equal chances; how much to ensuring that people reap the rewards and penalties for their efforts or lack thereof; how much to leaving people free of interference in their voluntary interactions. (Nagel and Murphy, The Myth of Ownership, p 177).

This approach still allows for a broad range of views on the justification of taxation policy, but fundamentally re-orientates the ethical issues to be considered.

At present the power of Government in the UK (national and local) to act effectively to promote a balanced and sustainable economy and provide support for those most vulnerable in our society is threatened by the most extreme cuts in public spending for a century, announced in George Osborne’s budget. Whilst some inroads have been made on his budget plans we are still on course to have public spending slashed to only 35% of GDP by 2020. We can expect greater inequality and continuing attacks on working class incomes and living standards. Without a decisive and successful fight back against these inhuman and cruel cuts in collective provision of health, education and social services there will be almost inevitably be a regression in our common consciousness of what Government is for, and what financial support we are entitled to expect from our fellow citizens.

Everyday libertarianism about taxation aids the shift in public consciousness at the centre of the Tory project, that is an individualistic, everyone for themselves, sink or swim ethos which divides working class people against each other. This is evidenced in the demonization of benefit claimants, the increase in hate crime against people with disabilities, and of course immigration, racism, immigration, racism. This division allows the Conservative Party to deliver for their backers, the owners of capital.

Osborne and Cameron, and indeed any future Tory leadership team must be challenged on their tax policies by a Labour Party sure of its moral principles. They need to be exposed for their extreme and illogical ideological view of the individual’s relationship to the State by all rational people. If this Conservative Government gets off the hook on the ethical matters at the heart of taxation policy it will allow them to put into practical effect Thatcher’s vision that ‘there is no such thing as society’. We cannot afford to let that happen.



  1. David Pavett says:

    I found Maria Exall’s argument convincing but perhaps a tad too complicated. If we start from the understanding that we are through and through social beings then the Nozick case won’t bear much examination. Our language, our culture, our rights and all the things that make for a specifically human life are all social creations.

    Over two thousand years ago Aristotle treated ethics as a branch of politics on the basis that ethical questions are fundamentally questions about what should we do before they are questions about what should I do.

    That insight, it seems to me, is a lot simpler than

    This case directly challenges libertarian conceptions of private property rights presumed by Nozick both in theory and in practice. Murphy and Nagel maintain that in order to establish the appropriate design and implementation of a taxation system (and the associated benefits and welfare systems), we have to consider the socio-economic context of taxation policy and challenge the assumption that aspects of the economic system are ‘natural’.

    If I wanted to turn to later treatment of this issue I think that I would turn to Marx rather than Nagel and Murphy. Marx understood better than anyone before him (and most since) that our deepest nature is a social phenomenon and that idea is the key to all his work.

    The trouble, for me with Nagel and Murphy is the abstract nature of their concept of government which appears to be seen as some socially cohesive body sitting astride society and keeping it together. In fact government’s as representatives of the interests of a particular section (class) of society rather than of society as a whole. In that capacity governments can be agents for social fragmentation – don’t we know it!

    As I said I think the arguments of this piece work but I feel that they could be made easier and more powerful by being less on rather thin abstractions.

    1. Jim Denham says:

      I’m not entirely sure what David means by “Marx understood better than anyone before him (and most since) that our deepest nature is a social phenomenon and that idea is the key to all his work”, but I presume he’s regurgitating the old Althusserian canard to the effect that Marx rejected the notion of human nature.

      Norman Geras, in his book ‘Marx and Human Nature: Refutation of a Legend’ convincingly demonstrates (IMHO) that Marx did *not* reject the idea of human nature, and was right not to have done so.
      Geras places the sixth of Marx’s Theses on Feuerbach under rigorous scrutiny. This ambiguous statement is widely cited as evidence that Marx broke with all concepts of human nature in 1845 But his later writings are formed by an idea of a specifically human nature that fulfils both explanatory and normative functions. The belief that Marx’s historical materialism entailed a denial of the conception of human nature is, Geras writes, ‘an old fixation, which the Althusserian influence in this matter has fed upon…Because this fixation still exists and is misguided, it is still necessary to challenge it.’

  2. Mervyn Hyde (@mjh0421) says:

    This debate goes a long way to explaining how macroeconomics functions in a modern context.
    Although I follow MMT and support most of what they say, Warren Moseler is speaking in terms of the American private sector economy and not a European Mixed economy; but amplifies the difference between an interventionist against the Libertarian Austrian school who advocate non intervention.

    The difference between the two advocates is the Libertarian theorist and Warren Moseler who talks in terms of empirical knowledge gained working in the financial sector.

    This becomes clear throughout the debate and I think most will deduce that the Libertarian is weak on evidence and in fact knows it.

    Fundamentally the Libertarians that I have challenged all fall at the same hurdle, they talk in terms of setting the framework and individuals will adjust themselves to the circumstances they are confronted with. Also forgetting where these theories were first practised, actually crashed their economies and only recovered when governments actually intervened.

    Libertarians would have us believe that the individual always knows best and collective responsibility doesn’t, where I would use the Engine analogy to highlight the difference between the two arguments.

    In order for an engine to work, we need oil and petrol, the oil lubricates all the moving parts and the petrol provides the fuel that gives the engine it’s energy. The engine of itself is pretty useless if someone is not controlling it, that is it needs someone to control the acceleration and deceleration in order that produces worthwhile work. Left to it’s own devices is utterly irrational.

    Whilst saying that also, in order to keep the engine working in good order, it has to be maintained, if the spark plugs start to fail the logical conclusion would be that new ones would replace the old, restoring the engine back to it’s original condition.

    Libertarians would have us believe that society is a perfect system and doesn’t need regulating or intervention when things go wrong, Hayek himself said, that because they set the framework for macroeconomic activity, that government only needs limited powers to intervene, what he also said was that they don’t accumulate data to record economic activity as it is unnecessary.

    Quite a neat idea if you don’t want to held accountable for the possible outcomes of this kind of insanity. Doctor Murphy shows by his lack of evidence just how vulnerable they are to genuine scrutiny.

    MMT state that money is printed into the economy and regulated by taxation and interest rate policies.

    I believe that the simpler we create the economy the easier it is to manage, the financial sector deliberately complicate matters in order to hide their activities and protect their own interests.

    In the 21st century, we should print money into the economy when and where it is needed; in order to provide for the needs of people; the financial sector is truly obsolete and serves no real purpose other than to make themselves rich at our expense.

    Our government does not have to borrow it’s own money, and is done purely to protect the interests of the financial sector, Poverty is a policy choice, not a fact of life.

    We can print money directly into the economy and destroy it with taxation.

    If we don’t take control of how money enters the economy, we can’t control the economy.

    We need to nationalise the Banks and fund our public services directly, the idea that we need to raise taxation to do this is a deliberate Neo-Liberal myth.

    1. Mervyn Hyde (@mjh0421) says:

      Sorry Here’s the Link:

  3. Bazza says:

    Someone once argued that Anarchism is a middle class ideology,”Me, I” and not too far removed from Thatcherism/Neo Liberalism.
    We really need a society where we all contribute according to what we can afford and the richer we all will be collectively.
    Meanwhile the rich and powerful legally nick the surplus labour of the working billions and perhaps we should be about getting our share of this wealth back.
    We, to paraphrase Mervyn are the engine but are not in the driving seat but hopefully with a left wing, grassroots, bottom up, democratic socialism we would be.
    It is the labour of the working billions which creates the wealth and makes societies work.
    This is the reality, but Right wing parties globally like the Tories need to win the popular vote (well 25% of it) so must pretend they rule for all.
    We just need to (with similar forces Worldwide) wake people up to this reality and to promote democratic collectivity WITH and not FOR.
    We need to politicise and to be facilitators for this.

  4. Bazza says:

    Just an afterthought but we on the Left passionately debate, care, think deeply and philosophically about issues and almost emotionally torture ourselves and fall out at times over issues but the Tories just appeal to the lowest common denominator.
    Whilst we appeal to a sense of Commnity the Tories appeal to selfishness and people vote for them for low taxes and low Council Tax so they can grab and keep as much for themselves and their families.
    Neo-Liberalism is about the marketisation of everything and making people pay for everything – their ‘choice’ is pay or don’t get – some choice.
    It could be argued the Tories know the price of everything and the value of nothing.
    Perhaps we should consider the new concept of having some things for free such as public transport and we could have democratically publicly owned utilities paying a community dividend which people could take as money or offset against bills which could help address fuel poverty and people may feel it was theirs.
    And why don’t we guarantee top sporting events free on Freeview and at least 2 live football matches a week on Freeview just as examples.
    Again in reference to Mervyn’s analogy – working people are the engine of capitalism but we are not in the driving seat and perhaps the oil and petrol is the capital but doesn’t capital come from the expropriated surplus labour of the working billions and perhaps we need this back.
    So hopefully with grassroots, bottom up, participatory, left wing democratic socialism we all will all be in the driving seat and can redesign the carriages together so they meet our needs. Solidarity!

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