Taxes and Collective Ownership of the Earth


In Anarchy, State and Utopia, Nozick proposes an interesting argument against taxation, it goes like this:

“Taxation of earnings from labor is on a par with forced labor. Some persons find this claim obviously true: taking the earnings of n hours labor is like taking n hours from the person; it is like forcing the person to work n hours for another’s purpose. Others find the claim absurd. But even these, if they object to forced labor, would oppose forcing unemployed hippies to work for the benefit of the needy. And they would also object to forcing each person to work five extra hours each week for the benefit of the needy…

The man who chooses to work longer to gain an income more than sufficient for his basic needs prefers some extra goods or services to the leisure and activities he could perform during the possible nonworking hours; whereas the man who chooses not to work the extra time prefers the leisure activities to the extra goods or services he could acquire by working more. Given this, if it would be illegitimate for a tax system to seize some of a man’s leisure (forced labor) for the purpose of serving the needy, how can it be legitimate for a tax system to seize some of a man’s goods for that purpose? Why should we treat the man whose happiness requires certain material goods or services differently from the man whose preferences and desires make such goods unnecessary for his happiness? Why should the man who prefers seeing a movie (and who has to earn money for a ticket) be open to the required call to aid the needy, while the person who prefers looking at a sunset (and hence need earn no extra money) is not? Indeed, isn’t it surprising that redistributionists choose to ignore the man whose pleasures are so easily attainable without extra labor, while adding yet another burden to the poor unfortunate who must work for his pleasures? If anything, one would have expected the reverse. Why is the person with the nonmaterial or nonconsumption desire allowed to proceed unimpeded to his most favored feasible alternative, whereas the man whose pleasures or desires involve material things and who must work for extra money (thereby serving whomever considers his activities valuable enough to pay him) is constrained in what he can realize?”

The argument, as is very often the case with Nozick’s arguments, is extremely interesting and works by shedding a different view on taxation - his claim is: we would not force hippies to give hours of work to help the needy, so why should we force those who work to give a certain number of hours from their work total to help the needy. Are we benefiting the lazy here?

This argument is interesting at several different levels. It raises many questions. What is work? What is paid work and how is it different from other types of work that are not necessarily paid? What are taxes and why do we have them? Are taxes just a charitable way to help the needy in our society? Or are there other deeper justifications for taxation?

First, regarding the notion of work. Why do we get paid for doing certain things and not others? Surely it is not because only the things we do and get paid are valued by others. One example is raising children. It is an extremely important activity for society as a whole, yet we don’t get paid for it.

When we are paid for certain types of work, this happens because someone or some company finds that using our labor will allow them to make a profit. The hours we devote to paid labor and the amount we are paid for them are a result of that profit that is being made by the enterprise. If this is so, taxation can be understood not as taking hours from our work and redistributing that to help the needy without our consent, but as taking part of the profit from the enterprise as a whole and redistributing that (of course we may discuss if that profit should be shaved off at the workers’ end rather than the owners or the company’s end, but we can put that aside for now).

If we assume taxes are shaved off the profit of the whole enterprise, is there a fair justification for doing this? The idea that we have a collective ownership of the Earth would justify such a practice (although I think a large part of the Earth should be left out of human ownership and kept separate because of it’s intrinsic value, but we can agree that a certain section of it can be explored by humans in a fair sustainable way).

If we all have a natural share of the part of the Earth that humans can claim, and if an enterprise uses more than it’s natural share, then it makes sense for them to pay the rest of the population in taxes. Ideally, this would be equally divided by everyone, however, we can imagine reasons to redistribute to those who have less since they are probably the ones who are left out when certain others take more than their fair share.

If this makes sense, then Nozick’s argument that we are taxing hours of a person’s life does not stand. We are taxing profits and redistributing by assuming that we all have the right to a common ownership of the Earth. Maybe we shouldn’t be taxing those profits on the workers’ end as much as we do. But we are not simply taxing hours.

What do you think?

p.s. I was inspired to write this entry by this entry on the The Bully Pulpit blog. Great blog to follow!