Taxation, or Confiscation?

Time for another helping from Ludwig von Mises century-old book Socialism, many parts of which read as though he had Elizabeth Warren, Bernie Sanders, and AOC specifically in mind. This time, on the idea for high income tax rates and wealth taxes:

Not for one moment does it occur to the advocates of this popular taxation policy that direct taxes and taxes on trade may start a chain of events that will force down the standard of living of the very classes whose alleged interests they claim to represent. . .

More and more the policy of taxation evolves into a policy of confiscation. The aim on which it concentrates is to tax out of existence every kind of fortune and income from property, in which process property invested in trade and industry, in shares and in bonds, is generally treated more ruthlessly than property in land. Taxation becomes the favorite weapon of interventionism. Taxation laws no longer aim exclusively or predominantly at increasing State revenues; they are intended to serve other purposes besides fiscal requirements. Sometimes their relation to public finance vanishes completely and they fulfill an entirely different function. Some taxes seem inflicted as a punishment for behavior that is considered injurious; the tax on big stores is intended to make it more difficult for big stores to compete with small shops; the taxes on stock exchange transactions are designed to restrict speculation. The dues become so numerous and varied that in making business transactions a man must first of all consider what the effect on his taxation will be. Innumerable economic projects lie fallow because the load of taxation would make them unprofitable. . .

Nothing is more calculated to make a demagogue popular than a constantly reiterated demand for heavy taxation on the rich. Capital levies and high income taxes on larger incomes are extraordinarily popular with the masses, who do not have to pay them. . .

The destructionist policy of taxation culminates in capital levies. Property is expropriated and then consumed. Capital is transformed into goods for use and consumption. The effect of all this should be plain to see. Yet the whole popular theory of taxation today leads to the same result.

Now amazingly, one person von Mises thought grasped this point was . . . Karl Marx! He goes on to point out:

Marx has spoken unfavorably of efforts to alter the social order by measures of taxation. He emphatically insisted that taxation reform alone could not replace Socialism. His views on the effects of taxes within the capitalist order were also different from those of the ordinary run of socialists. He said on one occasion, that to assert that “the income tax does not affect the workers” was “truly absurd.” “In our present social order, where entrepreneurs and workers stand opposed, the bourgeoise generally compensates itself for higher taxation by reducing wages or raising prices.”

This suggests the delightful possibility of screwing with liberal heads by assigning them to read Marx more closely!


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