Violence, Penury and Modern Society
June 11, 2008 Taxation

Suppose my wife and I owned a plot of land. On our land we harvested timber, grew our own food, processed our own food, made our own clothes, and fashioned our own tools.

Setting aside the issue of property taxes, in such a world, my wife and I would largely be left alone by government. Since we generate no income, we would pay no income taxes, nor would be be responsible for any payroll taxes. Since we hire no employees, we would pay no employer payroll taxes, or be forced to make contributions into other social safety net programs. Since we sell no goods or services we would not be liable for excise taxes. Also since we sell no goods or services, we can in no meaningful way earn a profit, and hence we are not charged a corporate income tax.

Of course, under such an arrangement, Rachel and I would be extremely poor, we would be extremely lonely, we would be extremely tired, and we would not be able to enjoy the millions of modern conveniences that we have come to rely on today. To simplify matters, suppose we could live on just bread and clothes – and that we spent all of our time making these two goods.

If we woke up one day and realized that if both of us dedicated our time to producing food, instead of one of us making clothes and the other growing wheat to make bread, not only could we grow a wider variety of food, but we could generate enough food so that we could exchange it with our neighbors who were particularly gifted clothes makers – but whom, because they also grew their own food, had little time to produce their fine threads for others. The moment that Rachel and I walked down the road with fresh baked bread and exchanged it for the clothes our neighbors decided to make for us, that transaction is suddenly penalized by the state. Each family would be liable for sales taxes on the transaction. And, each family would be liable for income taxes (personal or corporate) based on the profitability of such transactions. And if each family was able to grow enough food and make enough clothes to be really profitable, and hire workers, we would each be liable to even more taxes because we hired help.

In fact, even if by specializing each family was not able to produce any meaningful surplus, but still decided to exchange a portion of each of their own production with their neighbors, the transaction would be subject to all of the above taxes. So, our modern society has advanced so far as to make it entirely clear that:

  • self-sufficiency is virtuous. Any attempts to specialize and trade with neighbors is to be penalized. Hence, if we believe policymakers enact policies in order to shape the direction of a country, we can only conclude that the best possible outcome in the U.S. would be for us to be a nation of self-sufficient producers, all living at or below levels required for subsistence.
  • interaction with neighbors is dangerous. What is the moment that the hand of the state reaches into our pockets? Precisely when we wander down the road to interact with our neighbors. Hence, our current policies encourage us to treat our neighbors as lepers – to be kept far away as possible. This is a recipe for violence and war, not peace and prosperity.
  • working for wages is frowned upon. Once our family could get past the first two obstacles above, numerous roadblocks are put into place to prevent us from hiring workers (similar if we were on the other side of that transaction). This creates more rigid class distinctions than Marxists often bemoan – and perhaps far worse.

Where is the virtue in any of this?

Question to the readers: what are the actual tax implications for today’s societies in America that approximate these lifestyles (e.g. the Amish)? I genuinely don’t know.

"3" Comments
  1. What if they took those taxed dollars and built a road between you and your neighbors to make interaction easier, quicker and more efficient for both families. Or if they built roads from other families to broaden the market and thus help the families earn a surplus?

  2. Amelio:
    There is nothing stopping the neighbors from deciding of their own accord to build better roads to connect the comunity.
    I’m confident that a road built, or more likely contracted, by the producers in this comunity would better approximate the comunity’s actual needs-instead of the road system designed according to external government assessment.

  3. Sidenote: I’ve been reading your articles and I must say, its nice to see someone who doesn’t have their head up their own ass. Keep up the good work.

    @Amelio: It would be nice if that was the only thing they would do with the money. But in reality, and don’t kid yourself, they would take 65% of the money for themselves and their workers. Then they would use 20% just to inform you of their decision leaving a small portion for actual construction of the road. And while this is not an exact percentage, it serves the point of relaying my message.

    Because even if an establishment, like a government, is founded on good ideals, it eventually gives way to corruption. It is the human condition.

    Onto the posters questions…

    To be perfectly honest, there are no virtues in it.

    And the Amish do their own thing and are left alone, as far as I know anyway. I’ve never heard them complaining about government harassment but I imagine that is only because there is no money to be made from them. Why would they bother anyone who couldn’t deliver the cash they want?

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