In Defense of Taxation

in philosophy •  last year

Previously, I said I would defend a topic even MORE unpopular than the eternal deprivation of human souls from seeing their all-good Creator. That time is now; that article is this. I am going to defend, as the title has already proclaimed, the collection of taxes.

That's right.

I'm defending these guys.

Exhibit A: Those Guys

The Absolute Taxation of the Hasharchy

I will not be the first to point this out, nor was this originally my idea, but I proclaim it now: simply by owning bitcoin, ether, steem, or any other form of cryptocurrency, you are participating in a system of taxation.

I don't refer to capital gains or the like. I mean that every block, you, personally, have a tax levied on your savings.

Take bitcoin for a simple example. Every ten minutes, more or less, close to fifty thousand dollars worth of bitcoin are minted and given to a random party, weighted by size, of the government. Your wealth is diluted, theirs is increased, just as if a tiny fraction was directly transferred. This government, the Hasharchy, has absolute discretion on what to spend these collected taxes, and need not consult you or anyone else.

And what does the Hasharchy actually spend it on? Quite likely, the maintenance of mining equipment, the purchase of more, rent on mining warehouses, employee salaries, or ultimately, profit. But in any case, this money did not come from the sale of goods or services, but simply an arbitrary transfer.

But wait! Isn't mining a useful activity, in the sense that it prevents attackers from destroying bitcoin? Well, yes. It's as if the Hasharchy is also a police and military force. One that uses its authority to demand payment, regardless of anyone's consent, explicit or otherwise. You cannot chose to pay your crypto-taxes to a different Hasharchy, except by liquidating your assets and moving to a different blockchain altogether.

Indeed, this is true of every crypto, regardless of governing algorithm. The moment the protocol assigns rewards, either by creating new tokens by fiat (AAIEEGH!!) or by enforcing transaction fees (essentially, sales tax) the governing body--the miners, stakers, witnesses, or what have you--has in an irrefusable and inescapable way collected taxes.

But what about taxation in real life?

It's ultimately the same thing. The governing body of a nation, through its various methods of law enforcement, orders you to pay, much ignoring your feelings on the matter. It collects taxes for, hopefully, the good of the nation, but quite possibly just for defense spending. Or even profit.

And, I note, there is no other place to remit one's taxes to in case one does not like the current government.

But despite this perhaps bleak picture, I've frequently noticed the following sort of complaints.

  • Government Program X is underfunded, or not funded at all.
  • The national debt is increasing.
  • Taxes are too high.

(And I speak not merely of the USA. I am certain that you can go to nearly any country and see the same complaints.)

These complaints are intrinsically related.

A formula for your consideration

All the governmental budgeting and planning in the entire world ultimately comes down to the following equation:

Revenue - Spending = Surplus or Deficit

Hopefully, we all know where Spending goes. Now, let's ask ourselves, where does the Revenue come from?

From... TAXES!?!?!?!

That's right. To reduce the deficit without decreasing spending requires more taxes. To increase spending without increasing the deficit also requiring raising taxes. To reduce taxes either implies increasing the deficit or decreasing spending. This is the math.

And are not all methods of government revenue taxes? Inflation is a tax on savings. Issuing bonds is a tax on the future. Fines are taxes on crime. Registration fees are taxes on activities. Tariffs and customs are taxes on trade. Even plundering other countries and reparations are essentially taxes--paid by other nations.

In fact, the only method of revenue I can think of that is not a tax is voluntary donations to the government.

What if tax paying was voluntary?

Really, let's think about it. Heck, the US Treasury accepts donations!

Is a purely voluntary donation system possible? Well, there's certainly no physical or philosophical reason such a society could not exist. But in the real world, could it? Would not the free rider problem strike immediately? Why pay for policemen when you can count on someone else paying for policemen? But if everyone thinks that way...

I argue the only stable government is one where everyone is forced to participate in its upkeep. In fact, if some paid and some did not, would it not be unjust to the former?

For a government to exist, it must tax.

But does it have the authority to do so? Of course, insomuch as a government has any authority at all. If it is morally unacceptable to dump trash on your neighbor's lawn, because the city ordinance says so, then it is morally unacceptable to refuse to render unto Mayor Joe what is Mayor Joe's, also because an ordinance says so.

I would even argue that a government has this authority by default. Once the people of a nation have established a rulership, it is not just to change it, simply because a few disagree with its policies. But a true defense of the State must wait for another article.

I have heard the Argument Ad Somali before, and do not intend to use it here. Yet the arguers perhaps touch on something profound. Is it really morally just to use a road made by the government without paying for it? Or to enjoy police protection without paying for the police's salaries? Indeed, this is the basis of a just taxation system in and of itself.

But what if they spend it on teh evulz!?

I am dead certain that you cannot find a single US Citizen who agrees with every expenditure of the US Treasury, myself included. In fact, some things are not merely disagreeable, but evil.

Is it still morally obligatory to pay taxes?

I answer yes. The collection of taxes and the spending of them on evil are two separate actions. The government could spend its revenue on anything, but it simply choose wrongly. It would be as if you could blame anyone who held bitcoin for the evils of the Hasharchy, because their taxes paid for some sort of crypto-Gozoltry.

In Conclusion, BRING IT!

I realize a segment of my audience has been waiting with clenched teeth to let loose their opinion of the taxman. Go ahead! I never said my opinion was popular, only correct. I welcome disagreement!

Appendix: Hey! You didn't really defend those guys!

It's true. Although this article defends taxation, does it actually defend the Internal Revenue Service and the present US tax code? That, my friends, is another article.

The IRS Logo is in the public domain; this article's copy was taken from Wikimedia Commons

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I loved every minute of this article. I also have no issues with paying a fair share of tax, it is the only way that society can operate.

For me, I like to challenge what is a public good now and what should not be a public good. I can't avoid taxes but I would like to see spending to go down in order to lower the taxes ( one possible way to offset revenue reduction in your formula as discussed above).

There's so much pointless spending at Federal and State level, very complex tax code and not enough clear guidance it leaves room for interpretation and sometimes people take the most aggressive interpretation. The combination of this contributes to the deficit.

I also worry about taxing to death stimulators of the economy. I understand the need for a marginal rate but I think when you count state taxes on top of federal taxes people are giving up more than half of what they make it's overkill. Don't give me wrong I do not shed a tear for the high net worth individual, I just would like to see the government stimulate spending on jobs that benefit the normal 99% (the rich will always be ok).



I agree on spending, more or less. As I mentioned, everyone has spending cuts they'd like to see. The problem in a democracy (or more accurately, a republic) is agreeing on them. Although I suppose you can find agreement even then in government waste. No one wants to see their tax dollars go nowhere.

My next article, as I mentioned, will be on complex tax codes. I don't know if I can defend the entirety of the current US tax code with a straight face, but I can at least argue any fair tax code is inevitably complex. (Unless we're talking FairTax, but I don't have the chops to talk about that.)

I have some hope that the GOP/Trump tax reform (if it actually happens) will reduce some complexity, and hopefully make life easier for businesses. For example, I'd personally love full expensing, and treating capital gains as normal income (but deducting half) would make the math much simpler. Although most people probably just use tax software at this point.

Indeed! "Render unto Caesar what is his." People also seem to forget that the singular reason for any national currency having any representation of value, or the measure there of, is taxation. Without taxation, the digital blips on the computer screen will become worthless. The reason for merchants accepting a national currency is because the government accepts these currencies for taxation purposes.

The crypto-fiends sometimes forget that without the ability to exchange cryptocurrencies for a national currency, the cryptocurrencies become an dd curiosity at best. Recently, the crypto-markets experienced this harsh reality, when China prohibited free exchange of crypto-coins to Yuan. While the West forgot the first rule of governance (control the courts and coin) the East rules with an iron fist.


Great post the IRS left an interesting note in their notice 2014-21. It is "convertible virtual currency" which can somehow get back to USD fiat that is taxed. A crypto currency perhaps could be designed to fall outside the definition of taxed property, but then people would have no way to cash out and become millionaires in the Fiat world. How about them apples.


Arguably, a national currency that is backed by a precious metal has some value aside from taxation. But any backing other than "the currency is literally made of the stuff" relies on the government ordering the gold (or whatever) window to exist. If the government snaps its mighty fingers--then it's purely taxation and legal tender laws.


It is quite interesting how so many still believe in the traditions regarding gold and silver. Even the term, "precious metals" indicate this faith, maybe the Faith, in these worthless metals. Historically, the king of Lydia used gold alloy coins, that were readily available in his region, as means of exchange. He convinced his subjects to accept the coins by accepting taxes only with the coins. For whatever reason, the trend was mimicked by other states. Gold has no intrinsic value, as it is functionally useless. Only by sheer intransigence of tradition, do people still hold to these as currency.

All money is "made up." The belief in the system gives value to currency.


I suppose here we see the difference between natural and artificial wealth.

Natural wealth, such as trees, cars, fancy paper, and gold, is valuable because you can do something with it. For example, make shiny jewelry from gold, or drive a car around. Every form of currency aside from digital blips (as you put it) has some physical value, however little.

But artificial wealth, dollars, bonds, contracts, etc, is created sheerly by human whim, and rises or falls in value based on that whim. The government's whim, in the case of money, is absolute, most directly because of taxation.


Wealth is an extension of a man's emotional state, fluctuating with circumstance and desire. Indeed, men are blessed with the resources of this globe, but like the desert nomad who believes two jugs of water more valuable than a lake, we impoverish ourselves via arbitrary quantification and divisions.

tax is useful if country has lot of socialism involved in democracy (well, there is almost no real democracy left today....but anyway...). Our health insurance ( most of all European health insurances have almost same price) price is 10% of US health insurance and it covers way more. What I want to say is, if you have to pay 500$ or more for health insurance, why would you pay taxes?

Before you go any further, see my post

and then tell me if you feel the same way as you do now! Up-Voted and Followed!


That's a pretty big post! (I read it all.)

I still think the same way. Taxation isn't necessarily about making everyone equal, although it can, and often is, used in that fashion. Whether or not the government is enacting socialist policies, someone still needs to pay the police. But I do realize I use the phrases "just" and "unjust" frequently in my post, implying that there is such a thing as fair and unfair, which apply to everyone, like it or not.