Good Texas Common Sense
A series of articles concerning what the new government of the Republic of Texas should be and do, what the Constitution for the Republic of Texas should be and say, and the philosophical (common sense) reasons behind these statements.
Copyright at Common Law 1996, Donald Dale Henson, sui juris. This article may be reproduced and distributed using any media as long as the article, the author's name, and this copyright notice remain together and unchanged.
Article 3
Financing Government
by Donald Dale Henson,
sui juris
All governments need funding. I don't think anyone would disagree. The question then becomes what is the best way for a government to obtain funds.
The method used by most governments in the world today is taxation. We have income taxes, sales taxes, property taxes, social security taxes, license fees, inflation, etc. The list seems endless and is one of the driving forces behind the patriot movement in the United States and is threatening to tear that country apart. This is a pretty good indication that taxation is not a good idea. On the other hand, many say that taxation is ok in principle but there is just too much of it. But is this true? Is taxation ok in principle? Let's examine that question more closely.
Let's start with a simple scenario. Let's say that a man comes up to you on the street and asks you for some of your money. You refuse and the man pulls a gun and says that if you don't give him the money, he will shoot you. Would you say that the man performed a moral act? Of course not. Not even if he told you that he was going to use the money for some good purpose such as helping the poor. Let's say that the same thing happens only this time there are ten people demanding your money. Does this change the act into a moral one? How about if there are one hundred people? A thousand? A million? It doesn't matter how many people demand your money and use force to get you to comply. It's still an immoral act. Right?
So how does this relate to taxation? Taxation is simply a large number of people organized as a government demanding you give them a part of your money and who are willing to use force to get you to comply. So what changed the immoral act into a moral one? You say that a government is different in that 'the people' voted to have taxation so everyone can be morally forced to comply? How does this change anything? If 'the people' voted to kill and eat every other baby in town, would you consider that to be a moral act? Of course not. Voting on an action does not change an immoral act into a moral one. Saying that it does means you are in favor of mob rule. (This is usually called democracy. According to the ancient Greeks, it is the worst form of government.) So if demanding money from someone is an immoral act, it remains an immoral act no matter how many people voted for it. Since taxation is nothing more than legalized theft, taxation is and will always be immoral and cannot be countenanced in a government that dares call itself a republic.
There are practical reasons for not having taxation as well. Taxes are given to a bureaucratic organization (the government) so they can decide where and how to spend it. Even if it gets spent on something that you want, and this is by no means a sure thing, it still must go through the bureaucracy which is probably one of the most inefficient organizations ever invented. First, we have several layers of supervision which must be paid for out of the taxes that are collected. We have to have a large bureaucracy to make sure everyone complies with tax laws (ala the IRS). This also must be funded out of tax revenues. Then there are rules to be interpreted and followed, such as getting three bids in a specific format, evaluating the bids, etc. All of this increases the number of people that must be involved in the process and increases the cost of the process which must be paid for out of tax revenues. Since the government is doing the buying, they will probably be buying a large quantity which means that small businesses cannot compete and we end up with more large inefficient businesses than the free market would support. The bottom line result is that it will require significantly more money to have the government do something than if the same thing was done by a large number of individuals participating in the free market. Some think tanks have estimated that a bureaucracy wastes as much as two-thirds of the money it has just due to the inefficiencies and not counting the probable graft and corruption going on in the background.
So it appears that taxation is not a good way to fund government either morally or practically. So how does the government get funded? I have heard some people say that we should have a small import/export duty to fund the government. It's true that the US government used this technique to fund itself for over a century and it is also true that such a duty is authorized in the 1836 Republic of Texas Constitution. But is it the best way? First, import/export duties are taxes and we have already addressed the morality and practicality of taxes. So we already know that import/export duties are immoral. But how about practicality? Are import/export duties different enough from other types of taxes and practical enough that we, as a free people, might be willing to allow a small amount of legalized theft to get the job done?
Let's examine the effect of a one percent import/export duty on the daily lives and overall well-being of Texans. Suppose that you want to purchase an item that would normally sell for $100 but since it is an imported item you will have to pay $101 for it. This means that you will be one dollar poorer than you would otherwise have been and that is a dollar's worth of something that you cannot now buy. This means less demand for goods and services which means that somewhere in Texas someone will not get a job that they otherwise would have or that a business that might have gotten started will not. Let's further suppose that this is a very popular item and everybody in Texas wants one. This means that there is now $18,000,000 less in the economy of Texas than there would otherwise have been. Now, of course, the government will spend this $18,000,000 so it's really not out of the economy but remember that it will be spent by a bureaucracy which will dilute the effect of the $18,000,000 by a significant amount due to it's inherent inefficiencies plus it may be spent on something that you disagree with. However you look at it, the duty will slow the growth of the Texas economy, reduce the number of jobs available, and reduce the goods and services available.
The situation with the export duty is much the same. Let's say you want to export an item that you can sell for $100 but because of the export duty you only get $99 for it. This means that you will be one dollar poorer than you would otherwise have been and that is a dollar's worth of something that you cannot now buy. This is now the same situation as occurred with the import tax. And if you multiply the effects of the duty on every product that gets exported or imported, you can see what a large effect such a duty can have.
Also, an import/export duty requires a large bureaucracy just to ensure that the duty is paid. We will have to have inspection stations at all border crossings and all docks. We will have to install some type of metering equipment on oil and gas pipelines. Someone will have to inspect all of this. Accountants will have to be hired to track everything. And then there is the problem of determining the value of items being imported or exported. Let's say you want to export a trainload of automobiles. Is the value the cost of manufacturing them? If so, how is this cost determined? Is the value the selling price? How will we know if the automobiles are actually sold for that amount? Will the government now have to develop and promulgate rules and regulations about how to account for everything? Do you see where this is leading? Is this what we want in our republic?
The import/export duty suffers from another disadvantage in that it is unrelated to how much money the government needs. If the economy is poor and not much importing or exporting is being done, the government may not get enough money to operate. On the other hand, when the economy is strong, the government may get way too much money. And what does a government do when it has too much money? Why it figures out a way to spend it of course.
Since we have thoroughly trounced the idea of using taxation to fund the government, how can the government be funded? I see only two ways that is both moral and practical.
The first way to fund government both morally and practically is to use a fee for service system. For example, if you want to file a complaint in a Common Law court, you could be required to pay a fee to cover the expected costs of the action. This has the advantage of keeping the court system efficient since you could only expand the system if there was enough 'business' to pay for it. However, a major disadvantage is that it is difficult to charge a fee for all services. For example, how would you charge for the service of providing militia cadre and team-operated military equipment? Another major disadvantage is that it can prevent people who really need it from using the court system plus charging for court services seems sort of 'seedy' to most people. So a fee for service system has some disadvantages but could be used in some cases to provide partial funding for government.
The only other way to fund government both morally and practically is by voluntary contributions. Now remember that the government of the Republic of Texas will have a considerable amount of wealth at its disposal in the beginning (due to public property accruing to it) so there will be a period of time during which no additional funds will be needed. However, at some point, more funds will be required. At that point, there are several ways to ask for voluntary contributions and I suspect that a motivated treasurer could come up with several more. The most obvious method, of course, is to ask for it. The government could send out a mailing (just like the IRS does today) asking for voluntary contributions, advertise in various media, start a word-of-mouth campaign, etc. Another way would be to have government officials speak at events for a fee, have $1000/plate dinners, etc. It would be a little more work and require a bit more creativity than passing a tax hike but I see no fundamental reason why voluntary contributions would not work. And it has the advantage of being a moral system that does not enslave the population.
So. We can fund the government with an immoral tax which means we have given the government the authority to force us at gun point to give up some of our property or we can fund the government with moral fees for service and voluntary contributions. Given a choice between a moral system and an immoral system, which one would you choose?
Does this make sense? Good Texas Common Sense?
Copyright at Common Law, West El Paso Information Network, 1996