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Voluntary taxation is a theory that states that taxation should be a voluntary act. Under the theory, people should have the option to pay taxes instead of being forced to pay taxes by their government. Under this theory, people would control how much they pay and where they spend it. The theory is a part of Objectivist politics and many libertarian ideologies. Proponents of some studies assert that individuals will give to government, paying voluntary taxes to support specific functions. Donations average 22 percent of an endowment to government, and 27 percent to private nonprofits, and are influenced by their cause, level, and perceptions of effectiveness and efficiency. State lotteries are an example of a voluntary taxation system.
The American federal income taxation system is sometimes called a "voluntary" taxation system. Marjorie E. Kornhauser writes, "Most people never pay their taxes voluntarily, in the ordinary sense of the word. Rather, they are generally anti-tax, in that they usually would prefer to keep any income they receive than pay it to the government in taxes. Voluntary, in the context of taxation, simply means that people do not have to be compelled to pay their taxes through actual enforcement actions by the state." The "income taxes are voluntary" argument has not prevented U.S. residents who did not file tax returns or pay taxes from being prosecuted and convicted for tax offenses.
Lysander Spooner stated, "It is true that the theory of our Constitution is, that all taxes are paid voluntarily; that our government is a mutual insurance company, voluntarily entered into by the people with each other; that each man makes a free and purely voluntary contract with all others who are parties to the Constitution, to pay so much money for so much protection, the same as he does with any other insurance company; and that he is just as free not to be protected, and not to pay tax, as he is to pay a tax, and be protected. But this theory of our government is wholly different from the practical fact. The fact is that the government, like a highwayman, says to a man: “Your money, or your life.” And many, if not most, taxes are paid under the compulsion of that threat. The government does not, indeed, waylay a man in a lonely place, spring upon him from the roadside, and, holding a pistol to his head, proceed to rifle his pockets. But the robbery is none the less a robbery on that account; and it is far more dastardly and shameful. "
In Second Treatise of Government (1690), John Locke took the position that all rights come from the people, and that the people must give their consent to be governed by elected representatives. L.K. Samuels extended John Locke’s assertion under the “Rulers’ Paradox” to illustrate why the collection of taxation could be seen as voluntary. Samuels contends that the Lockean “consent of the governed” only applies to rights that people possess, which are then loanable to a governing body, under the social contract. In cases of torture, kidnapping, wiretapping, theft, and assassination and other such transgressions, Samuels asks: “Where and how does a representative government acquire authority to perform such coercive acts, acts disallowed for individual citizens?” Under this interpretation of John Locke, Samuels maintains that taxation would have to be voluntary since people cannot loan rights to others that they themselves do not already have.
Locke argued in a quote attributed to him that “the people cannot delegate to government the power to do anything which would be unlawful for them to do themselves.
Thomas Jefferson lent weight to a voluntary society, writing that "No man has a natural right to commit aggression on the equal rights of another, and this is all from which the laws ought to restrain him.” During his administration, President Jefferson abolished the whiskey excise and all other federal internal taxation on U.S. citizens, which was one of his campaign promises. The U.S. Federal government had no direct internal taxation for nearly 80 years.
Like many of the Founding Fathers, George Washington was an admirer of John Locke. He was vocal about the concept of consent of the governed, writing: “The Parliament of Great Britain hath no more Right to put their hands into my Pocket without my consent, than I have to put my hands into yours, for money.
Here is an example of how a voluntary taxation system could function.
A state would distribute tax forms that could be filled out by recipients. The forms would describe options which the recipients could designate preferences as to how the recipient would like his or her money spent. For example, there could be a section for military spending, or separate sections for defense in general and specific conflicts in particular. There would also be sections to be for elected officials (who would still be necessary to carry out the wishes of the people) and also sections for charities.
The form would be divided into more and more sections so that people could specify their decisions. The entire form would be under the category of general. Then there could be a section for education and then even further for elementary school education. People could choose which sections they wanted and contribute to those sections. For example, they could contribute different amounts to each section of education or to the section of education in general, allowing their elected officials to decide the best way to allocate the money.
The arguments for this theory are as follows:
- It allows greater freedom.
- It performs both the function of collecting money for the government and allowing the population to decide where money should be spent. It is similar to allowing everyone to vote on government spending except that it is in a different format.
- It allows government officials to easily keep track of the wants of their voters and the nation as a whole.
- It allows people to vote directly in a sense. For example, they can decide that everyone should have health care by contributing to that section.
The arguments against this theory are as follows:
- The government would suffer because it would not receive enough money.
- There is a chance that few, if anybody would pay taxes resulting in a lawless society.
- People with money would have a greater say in government than those without money.
- The forms would be difficult to create to adequately have every option that everyone would like. An option for "other" could become out of control in large nations.
- This would give the public a greater share in the legislation process, which could lead to what has been called "mob rule".
- The extent of freedom is relative to amount of money one has and as disproportionate wealth insures greater freedom, oppression is likely to occur to maintain that system for the sole benefit of the wealthy at the expense of the poor.
- Payne, James L. "The end of taxation?", National Affairs
- Rothbard, Murray N. Man, Economy, and State (with "Power and Market"), Ludwig von Mises Institute, 2004. Textbook with a section that describes most of the theory of Voluntary Taxation
- Li, Sherry Xin, Eckel, Catherine C., Grossman, Philip J. and Larson, Tara (May 31, 2009), Giving to Government: Voluntary Taxation in the Lab, SSRN 1422143
- DE Miller; PA Pierce (Winter 1997), State and Local Government Review, 29 (1), pp. 34–42, JSTOR 4355168
- Legitimacy and the Right of Revolution, 50, Buffalo L. Rev., Fall 2002, p. 819
- Spooner, Lysander, No Treason
- Samuels, L.K. (2013), In Defense of Chaos: The Chaology of Politics, Economics and Human Action Review, Apple Valley: CA: Coden Press, pp. 308–309
- This quote is apparently a paraphrasing of Locke’s ideals, since its exact wording is not found in his major works. Earliest publication of the statement in this form seems to be one made in Oversight Hearing on the Columbia River Gorge National Scenic Area Act, 1997
- Thomas Jefferson (1816), letter to Francis Gilmer
- Wood, Gordon S. (2010), Empire of Liberty: A History of the Early Republic, 1789–1815, Oxford University Press, p. 293
- Bailey, Jeremy D. (2007), Thomas Jefferson and Executive Power, Twenty-First Century Books, p. 216
- Washington, George (July 20, 1774), letter to Bryan Fairfax