Taxes: Government Financing In A Free Society

[LaVache]

In principle, if the law lays down a set of reasonable rules... if it says that contracting parties should follow those rules to get certain protections... if it accomodates emergency situations where "post-facto compliance" may be the only practical approach....

Then, how can someone claim that the law is unfair when that person failed to follow the rational rules?

When someone fulfills their end of a business agreement they have a right to compensation. When the only way that you can get your rights respected is to pay upfront before you get wronged (are not allowed to pay court fees in order to get justice) justice turns into coercion. The situation where you can make a claim without paying upfront, but have a limit on what compensation the court can award you, is still a form of coercion, in that case.

You deserve a certain compensation for your product/contract fulfillment, and that amount shouldn't be influenced by anything but what the judge/jury see as just compensation.

[softwareNerd]

When someone fulfills their end of a business agreement they have a right to compensation.

How do they earn the right to have the judicial system (i.e. other people) enforce this right for them? Is it by being born in the same country? By paying some taxes? What is the basis?

I'm not saying they do not have such a right; but, I am asking what you assume to be the basis for them to demand such enforcement.

[tommyedison]

I would suggest first considering the worst case scenario.

Let's say a world war has started with quite a few major powers like China and Russia against the USA. All the assets of Americans and American companies in the hostile countries have been nationalized and the stock market has crashed. On top of it, the USA has been hit by a VERY bad season of hurricanes, tornadoes, forest fires and earthquakes. Prospects for investement don't look good. In addition, the government is facing internal problems from Muslims, Communists and the like. Because of the alliance of many oil producing nations like Venezuela, Iran and Nigeria with the hostile countries, oil supply has drastically dwindled and oil prices are soaring to rates of more than 200$.

In this scenario, can a voluntary government funding method work considering that it has to pay for the gigantic costs of war, for oil, mantain the existing infrastructure if private companies are unable to mantain for defense reasons, build nuclear shelters, reestablish infrastructure in devastated areas, mantain law and order, pay for the cost of espionage, produce nuclear bombs, etc.

Edited June 26, 2005 by tommyedison

[Captain Nate]

If American companies were on the verge of collapse, could the government even tax them for what they need?

>>>Edited to remove quote. Please do not quote the entire post directly above yours to add a one-line reply. ---Jennifer<<<

[softwareNerd]

I would suggest first considering the worst case scenario.

You're saying that if people saw clear and imminent danger, then they would not want to combat it voluntarily?

How do you conclude this?

[JMeganSnow]

Also, any individual or participant business could file a lawsuit in the civil courts against any business in society.  If the defendant business was a nonparticipant, then it would automatically lose in a summary judgement.  Any judgement would be fully enforceable against it.  So, in order to protect against being drained of its money through frivolous lawsuits, if nothing else, it would volunteer to participate.

It is not voluntary participation if they do so under the threat of being sued out of existence by any yahoo that wanders into the courtroom! This means that you don't have to present evidence of wrongdoing, you just have to want money from the company!

Rights, one of which is the right to your property are not a gift from the government, they are a principle which must be observed as an absolute.

In effect, we would all have 6% added to everything we buy, except for private party transactions.

Businesses ARE private parties, thank you!

[JMeganSnow]

In this scenario, can a voluntary government funding method work considering that it has to pay for the gigantic costs of war, for oil, mantain the existing infrastructure if private companies are unable to mantain for defense reasons, build nuclear shelters, reestablish infrastructure in devastated areas, mantain law and order, pay for the cost of espionage, produce nuclear bombs, etc.

In this scenario, can ENFORCED government funding work?! What is your complaint, that there are no "guarantees" that the government's "needs" would be fulfilled? There are no guarantees in life, period! Since when does filling the "needs" of government become the overriding principle?

This is along the lines of those bizarre disaster recovery plans my company is required to keep, so in the event that the entire North American continent is destroyed in a huge firestorm, we can keep drawing blood and all our records will be intact so if someone, somewhere, received a bad transplant, they will still be able to subpeona the records and sue us.

[JMeganSnow]

When someone fulfills their end of a business agreement they have a right to compensation. 

There is no such thing as a right to have people uphold their contracts; this would constitute the initiation of force against them. ALL you can demand is that if their breach of contract constitutes an initiation of force against YOU, i.e. they're sitting on a warehouse of your goods for which they haven't paid, you can get your goods BACK. This is a service provided to you by other people, the government, to whom you have delegated enforcement in the interests of a civil society. Are you saying that government officials should work unpaid? How will they eat?

Paying the government for enforcement services is just like paying someone to clean your house. If we were to apply this principle to house cleaners, everyone would have a "right" to have their house cleaned, regardless of whether they'd paid for it or not, and the house cleaners would be allowed to steal whatever they thought they "needed" (taxes) in recompense for their services.

Sounds like a lousy idea, doesn't it.

You deserve a certain compensation for your product/contract fulfillment, and that amount shouldn't be influenced by anything but what the judge/jury see as just compensation.

The amount shouldn't be anything other than what you deserve, determined objectively, i.e. what specific amount of damages were actually caused. Justice is not made up of the whims of judges and jurors, no matter how "well intentioned" they might be.

[LaVache]

There is no such thing as a right to have people uphold their contracts; this would constitute the initiation of force against them.  ALL you can demand is that if their breach of contract constitutes an initiation of force against YOU, i.e. they're sitting on a warehouse of your goods for which they haven't paid, you can get your goods BACK.

Paying the government for enforcement services is just like paying someone to clean your house. 

Sounds like a lousy idea, doesn't it.

The amount shouldn't be anything other than what you deserve, determined objectively, i.e. what specific amount of damages were actually caused.  Justice is not made up of the whims of judges and jurors, no matter how "well intentioned" they might be.

You are perverting my words. I have never said anything about forcing someone to fulfill a contract, and yes, getting one's goods back would be a form of compensation.

I have never said that you shouldn't pay the government for enforcement. I have claimed that only allowing payment before you are wronged may be a form of coersion. I in no way advocate non-payment, but suggest that a way to take the coersion factor out of the system would be to let a wronged person (in this case contract disputes) pay for the court costs (paying the government for enforcement) after they have been wronged if they do not wish to pay the upfront contract fee. Yes, they will no doubt be paying more for that one court case than many several years worth of contract fees, but they deserve to have that choice available to them.

I did not intentionally imply that the amount a judge or jury decided would be less than objective, and definitely not that it should be based on whims. If you got that out of my statement then I will assume that I did not state my opinion in a perfectly clear manner. What I was saying was in fact that you should get exactly what you deserved, determined objectively, and that the fact that you wish to pay for government enforcement after you have been wronged does not factor into what you deserve, "i.e. what specific amounts of damages were actually caused." I hope that clears up my assertation.

[DavidOdden]

Yes, they will no doubt be paying more for that one court case than many several years worth of contract fees, but they deserve to have that choice available to them.

As long as you recognise that the government has no obligation to offer the plaintiff a good rate. Contract fees are a form of insurance payment, and just as you can't expect an insurance company to cover an uninsured accident simply by paying the premium when you have an accident, you should expect the plaintiff to pay the full and actual cost of enforcement, up front. Of course the actual figure will not be known until after the fact so the plaintiff needs to put cost and then some in escrow. Here's a ballpark figure for any litigation -- $10 million. That might be a bit high, probably too high in many cases, but if there's a chance that the actual costs will go that high, then the government should demand up-front money of that order of magnitude. Because you definitely should not allow the situation where the costs go higher than the escrow or the plaintiff's worth ('cuz then I will have to pick up the slack, and I'm just not gonna pay for any free riders).

[LaVache]

Here's a ballpark figure for any litigation -- $10 million. That might be a bit high, probably too high in many cases, but if there's a chance that the actual costs will go that high, then the government should demand up-front money of that order of magnitude. Because you definitely should not allow the situation where the costs go higher than the escrow or the plaintiff's worth ('cuz then I will have to pick up the slack, and I'm just not gonna pay for any free riders).

I don't know much about litigation costs, but I definitely believe that if you didn't purchase the insurance/pay the contract fee you should cover all costs associated with the prosecution of the trial, and if the defendant is found to not be liable the defense costs as well. Other costs, such as paying salaries of judges and other court officials, compensating the jurors for their time, and general utilities, upkeep of courthouse would also need to be included and I'm sure that the tab would add up very fast.

I like your upfront escrow payment idea, but I'm not sure it would need be for the max cost of a trial. Requiring that the plaintiff maintain in escrow an amount equal to whatever an average monthly cost of a trial at the beginning of each month (say they cost 1.7 million a month on average, then at the beginning of each month the escrow balance must be at least 1.7 million plus the costs incurred up to that point).

I definitely don't want you or I to pay for any free riders either .

[DavidOdden]

I like your upfront escrow payment idea, but I'm not sure it would need be for the max cost of a trial.  Requiring that the plaintiff maintain in escrow an amount equal to whatever an average monthly cost of a trial at the beginning of each month (say they cost 1.7 million a month on average, then at the beginning of each month the escrow balance must be at least 1.7 million plus the costs incurred up to that point).

There are probably other ways to arrange it: what I think is important is that the plaintiff not be allowed to run up a tab that he won't pay. A monthly minimum balance is a good idea -- it distinguishes short and sweet dont in 3 days cases from events that drag on for years. If you don't feed the meter, the case will be dismissed (without prejudice, I suppose).

However, you raise the other issue (which isn't generally raised) of the cost to the defendant of defending himself. I also think it should be mandatory that you put up a separate (and certainly much larger) escrow to cover his costs, in case you lose, and that it not come out of any award of damages. Those costs can be very hard to compute, since there may be substantial requirements for out of court research. Maybe Groovenstein knows some actual figures.

[mweiss]

Have you read Ominous Parallels?  This is the Weimar Republic, only instead of one up-and-coming dicator (Hitler) we have a million (government officials).

Yes, I have. And yes, that is a good analogy. America's downfall will come from the ignorant voting masses.

About the rent issue, what makes it worse than renting, is that the owner not only pays 'rent' to the town, but is also responsible for ALL upkeep and repairs. What a sham. Why can't the people wake up and revolt?

Meanwhile, another massive assault on private property goes on in the courts regarding the New London, CT homeowners who face not only emminent domain eviction, but daily taunting and intimidation by the developers.

America is ripe for a revolution... the only problem is that the weapons available to each side are grossly mis-matched.

[tommyedison]

In this scenario, can ENFORCED government funding work?!  What is your complaint, that there are no "guarantees" that the government's "needs" would be fulfilled?  There are no guarantees in life, period!  Since when does filling the "needs" of government become the overriding principle?

This is along the lines of those bizarre disaster recovery plans my company is required to keep, so in the event that the entire North American continent is destroyed in a huge firestorm, we can keep drawing blood and all our records will be intact so if someone, somewhere, received a bad transplant, they will still be able to subpeona the records and sue us.

Fighting a war is not filling the needs of a government. Governments are instituted among men to protect their rights. When at war, the rights of each and every individual are in danger. If the government(as representative of the nation) does not have money, it cannot fight the war. The invading country will take over and would proclaim dictatorial rule (assuming our example country is a moral one).

There is no guarantee there won't be natural disasters during a world war. It is more than likely, there would be nuclear and EMP strikes during the war. Such scenarios may sound bizarre but they are possible even in today's world.

Edited July 10, 2005 by tommyedison

[nimble]

As long as you recognise that the government has no obligation to offer the plaintiff a good rate. Contract fees are a form of insurance payment, and just as you can't expect an insurance company to cover an uninsured accident simply by paying the premium when you have an accident, you should expect the plaintiff to pay the full and actual cost of enforcement, up front. Of course the actual figure will not be known until after the fact so the plaintiff needs to put cost and then some in escrow. Here's a ballpark figure for any litigation -- $10 million. That might be a bit high, probably too high in many cases, but if there's a chance that the actual costs will go that high, then the government should demand up-front money of that order of magnitude. Because you definitely should not allow the situation where the costs go higher than the escrow or the plaintiff's worth ('cuz then I will have to pick up the slack, and I'm just not gonna pay for any free riders).

I kind of came late into this discussion, but you think that each person who ever intends to have a contract enforced by the government ought to pay upfront fees of millions of dollars? I don't think a high percentage of people would be participating in your legal system. I can't think of a single transaction that I have encountered in MY life, where I stand to lose more than 10000 dollars.

If I didn't quite understand your point, or took it out of a larger context, because I have not read the thread in its entirety, then by all means correct me. And I will apologize in advance.

Edited July 11, 2005 by nimble

[DavidOdden]

I kind of came late into this discussion, but you think that each person who ever intends to have a contract enforced by the government ought to pay upfront fees of millions of dollars?

No, I think the insurance fees would be vastly smaller, more like $10, when collected at the time of forming the contract (a propos your expression "who ever intends"). The discussion regards what happens if a person does not pay the contract enforcement fee at the time the contract is made on the assumption that they won't need to have it enforced, and only later decides to call for enforcement -- do they have a right to contract enforcement, and at what cost?

[Dcyphyr_all_things]

To everyone who has helped make this idea more clear, I would like to extend my thanks. You are awesome, and your ideas for a proper funding of any goverment deserve much applause. Finally, we aren't saying - How should the goverment be paid for? - Somehow.

However, I face a new difficulty which I can see a few roads thru but would like your opinion on.

Explain to me, why any Objectivists would want to be in Objectivist goverment? Seriously.

Give me one compelling reason to govern you. How can I get rich as a policeman or soldier or judge? If I can't -Why should I spend my productive time defending a system that doesn't reward me for my time?

As goverment, I alone am not allowed to raise my price to reflect flux in my costs or value. Sure, I'm a monopoly - but that doesn't provide an encentive for a rational producer like me.

See, you can't just merely show the system is profitable to those who agree to it, it must be profitable to those who Are it.

I can, perhaps, think of a few limited responses to this. However I'd like to pose the question to you in case I've overlooked an obvious solution.

Thank you all ahead of time for any ideas on this.

[softwareNerd]

... How can I get rich as a policeman or soldier or judge?

How can I get rich as a waitress, a janitor, a short-order cook? Are you assuming that if most people were Objectivists, low-paid jobs would disappear?

One might want to be a policeman because Sherlock Holmes is one's hero

The bottom line is that salaries of waitresses, janitors, policemen, judges, doctors, and presidents will be whatever they "need" to be, based on the demand and the supply.

[Proverb]

Wouldn't it be better to talk about how an Objectivist government would come into existence.

Consider where government would arise out of the growth of Galt's Gulch.

At first with an amount of people that is easily assembled all would participate because proceedings would benefit all. But as population grows and assembly grows more difficult you would have to defer membership to a number of individuals (representatives) which would have to be compensated for representing more than just themselves. The function of the first assembly would be to make sure the rights of each member (provided for in a constitution) we're protected, again as population grows duties to that effect would have to be differed, again for just compensation.

As for non-contributors, they would not attend their local representative meetings. They would not be represented in government and would not be entitled to direct legal support from their peers but would be allowed to present the case for their rights as much as their knowledge can serve them.

Government would be a court for the people, by the people, under said constitution and run by each individual, even if by proxy.

This is a skeleton of a theory and only my own ramblings.

So what do you think?

My time grows short otherwise I'd have more.

Edited September 10, 2005 by Proverb

[Kurt M. Weber]

What I've always advocated:

1) Seizure of the assets of convicted (legitimate) criminals, to be held in escrow until the criminal's death so they can be returned to him should his conviction be overturned. This, of course, has the problem that if someone is planning on committing a criminal act, he can simply transfer the assets to another before he commits his act--but then, if the recipient is aware of his reasons for the transfer and accepts them anyway, he could be considered an accessory or even a conspirator.

2) Offering loans to private individuals and entities, provided that the initial capital is obtained noncoercively and government does not use the fact that it has lots of men with guns and tanks to bully itself into a better position in the loan market than it could otherwise obtain. If you've managed to prevent government from simply going out and collecting taxes in the first place then this shouldn't be too hard to do.

3) Government operating as a self-contained economy, mining for itself all the raw materials it needs and using those to produce what items it needs to operate, and selling the surplus for additional revenue.

Edited November 12, 2005 by Kurt M. Weber

[LaVache]

Only looking at the size of your future paycheck is an absolutely horrid way to choose a profession. I know of several people who have gotten themselves into chemical engineering for the lifestyle choices it could open up to them, but they ignored the fact that if you spend your days doing something you don't enjoy it will be more difficult for you to enjoy your evenings no matter how soft your couch or how large your home theater might be. The reason is most likely tied to how important productivity is psychologically, and that if you get payed to produce something you don't value and try to use your wage to buy those items which are of value to you it somehow cheapens the transaction. Also, just the thought of producing something you don't value for your whole productive life is abhorrant to me, and sounds like a kind of self-betrayal.

I've probably strayed off topic a pinch, but my point is that if you can make a living doing something that you love to do, it will make a worthier profession than another that may pay a higher material wage at the cost of the spiritual wage you get every day that you work to do something you truly love. Cashy money pales in comparison to self-fulfillment and self-actualization.

In other words, if someone loves governing, values a rational government, and has the capacity to govern rationally it would take a lot more than a low-wage to keep them away from the job.

[DavidOdden]

1) Seizure of the assets of convicted (legitimate) criminals, to be held in escrow until the criminal's death so they can be returned to him should his conviction be overturned.

How in the world is this a morally justified punishment? First, the punishment isn't proportional to the crime so it doesn't serve the purpose of justice (you might advocate such a punishment for some specific eregious crime, but not all crimes). Second, confiscation of assets can only be justified as a means of recompensating the victim of the crime, and never as a means of government financing. The current system where the government actuall does have and (over-)exercise the power to confiscate ostensibly crime-related property is corrupt enough, but adding to that the power to seize any and all assets will lead to a level of unfettered government abuse that has even less relation to the concept of proper government than exists now.

[Captain Nate]

Not to mention most criminals in the criminal justice system tend to be poor and seizing their assets and holding them until they die may end up being more costly than whatever gain is achieved out of it.

[Kurt M. Weber]

How in the world is this a morally justified punishment? First, the punishment isn't proportional to the crime so it doesn't serve the purpose of justice (you might advocate such a punishment for some specific eregious crime, but not all crimes).

It certainly is proportional. All (legitimate) crimes are morally equivalent to murder. Consider this:

Let's say I make $10/hour (I'm choosing nice round numbers so I can do the math in my head more easily). Let's say also that someone comes in and steals, say, a loaf of bread from me that cost $2.00. That's 12 minutes of my life that has been just rendered null and void. How is that any different than if, instead of stealing the bread, the thief had just killed me twelve minutes before I would otherwise have died? Sure, twelve minutes isn't that much. But why does the remaining life span of the victim affect the vileness of murder? If you accept that it does, you have to accept that someone who murders a 90-year-old Alzheimer's patient in a nursing home is morallly superior, however slightly, to someone who murders a 30-year-old in excellent health--a position utterly empty of any rational basis.

Furthermore, perhaps you might say that "Well, you could get the bread--or at least compensation equivalent to the value of the bread--back." But what if I couldn't? Perhaps I die of a heart attack, totally unrelated to this theft, before the thief is caught and convicted or restitution can be made. How am I supposed to get the value of those twelve minutes back then?

So if theft is equivalent to murder, then equivalent punishments are in order. An appropriate punishment for a thief/murderer is, of course, death (assuming the individual actually IS guilty; how one determines that with certainty is an important question, but not one that affects the validity of the principle). Once he is dead, he no longer has any use for his property; furthermore, since he has renounced his humanity by committing his particular crime he cannot claim the right to dictate how his property is disposed of--thus he is not entitled to will it to someone or give it as a gift before his death.

Second, confiscation of assets can only be justified as a means of recompensating the victim of the crime, and never as a means of government financing.

How so?

[softwareNerd]

This is not an answer. Just for the record, for any future reader: Objectivism does not advocate killing criminals for minor crimes. Among Objectivists, even capital punishment for murder is controversial. In other words, one has to actually build the case from the philosophy of Objectivism, to the practice of capital punishment, and in the process one ends up with a set of qualifications about rules and contexts, which should form the basis of objective law.

Edited to add: For those who are interested in a reference, see "Letters of Ayn Rand- Ch 7" (thanks the to Objectivism Research CD):

...you ask me what is the punishment deserved by criminal actions. This is a technical, legal issue, which has to be answered by the philosophy of law. ... ... ... What punishment is deserved by the two extremes of the scale is open to disagreement and discussion—but the principle by which a specific argument has to be guided is ... ...

Edited November 12, 2005 by softwareNerd