Saturday, April 17, 2010

Ayn Rand and Taxation

It's occasionally said (and I believe I said it) that Ayn Rand thought that taxation should be voluntary, or more accurately, that she believed government should be funded by voluntary contributions.

That, however, is somewhat misleading. Look at what she said in "Government Financing in a Free Society":

As an illustration (and only as an illustration), consider the following possibility. One of the most vitally needed services, which only a government can render, is the protection of contractual agreements among citizens. Suppose that the government were to protect--i.e., to recognize as legally valid and enforceable--only those contracts which had been insured by the payment, to the government, of a premium in the amount of a legally fixed percentage of the sums involved in the contractual transaction. Such an insurance would not be compulsory; there would be no legal penalty imposed on those who did not choose to take it--they would be free to make verbal agreements or to sign uninsured contracts, if they wished. The only consequence would be that such agreements would not be legally enforceable; if they were broken, the injured party would not be able to seek redress in a court of law.

Such an arrangement would hardly be voluntary. A makes a contract with B for a million dollars. A is afraid that B might default or otherwise refuse to pay. The only way A may enforce his contract is by paying a fee to the government. Even if the contract contained an arbitration clause, the arbitration agreement could not be enforced (as such agreements are today under the American Arbitration Act) by enforcing it in court.


Michael M said...

There is nothing involuntary about a system that requires a fee for a service. But for the impossible logistics, all government protections could be on a fee for service basis without violating any rights. And there are other ways to enforce a contract like turning over collateral to secure it. One could also enter into agreements with other individuals/associations/companies who would boycott anyone who violated a contract of one of their members.

Rand was perhaps thinking that given the enormous number of contracts for which a fee would be paid that income alone could finance most necessary government services. Remember also that the need to design a voluntary system requires a nation of men more in tune with Objectivist morality. In addition to the expense of government being much smaller, contract violations would no doubt decrease exponentially too.

That said, my personal view is that her idea is merely one from that pre-cyber age before we discovered just how much the voluntary purchases of some could finance heretofore unimaginable services to billions of people practically free of fees of any significant amount.

I can also easily imagine that the major corporations would compete to pay the government's costs on behalf of themselves and the public at large that contains all of their actual and potential customers. The advertising and good will benefits would be of incalculable value.

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FreeZoneThetan said...

Rand's idea of 'voluntary' was skewed by her republican Statolotry, she was plain inconsistent. That's why half of the Objectivists/Rand-influenced philosophers, outside of the ARI-camp, are anarchists now.

Rand basically had a dual fantasy, 1) that voluntary market societies could be reconciled with the State; and 2) that limited government was possible. Both of these are ridiculous, and increasingly unpopular in libertarian circles.