Here’s a Rorschach Test

by Don Boudreaux on October 31, 2009

in Current Affairs, Debt and Deficits, Other People's Money, Politics, Taxes

I sent the letter below to the Los Angeles Times:

Although California’s government hasn’t formally raised tax rates, starting tomorrow it will withhold “10% more than it already does in state income taxes” (“California to withhold a bigger chunk of paychecks,” Oct. 31).  You call this move by Sacramento “a forced, interest-free loan” from taxpayers to government.  Forced it is – a fact that makes taxpayers not lenders but, rather, victims of theft.

Suppose your neighbor seizes some of your weekly income while promising to return the funds to you later.  Even if he eventually repays you with interest, he’s a thief.  Nothing – not his profligacy, not his “need” for more money, not the manner in which he spends the money he filches – excuses his thievery.

It’s fashionable today to accuse private businesses of being greedy, duplicitous, and larcenous.  But no business could get away with such audacious seizures of other people’s property – seizures that governments, such as California’s, are escalating to a dreadful new level.

Sincerely,
Donald J. Boudreaux

Be Sociable, Share!

Comments

comments

27 comments    Share Share    Print    Email

{ 27 comments }

Justin P October 31, 2009 at 4:24 pm

That is just awesome! I’m so glad to away from that place. I don’t know if I should feel sorry for the Californians or a sense of ironic justice. The people of California voted for all those losers in their Legislature. They voted for all the increased spending, now they are paying the price.

The lesson here, there is no free lunch. Do you think Congress is learning anything from this fiasco?

Justin P October 31, 2009 at 4:24 pm

That is just awesome! I’m so glad to away from that place. I don’t know if I should feel sorry for the Californians or a sense of ironic justice. The people of California voted for all those losers in their Legislature. They voted for all the increased spending, now they are paying the price.

The lesson here, there is no free lunch. Do you think Congress is learning anything from this fiasco?

mark October 31, 2009 at 5:39 pm

I just opened up my paycheck to look at my withholdings. The addittional withholding will be less than $40/month.

so it is not going to break my monthly budget, but I am still disgusted by it.

mark October 31, 2009 at 5:39 pm

I just opened up my paycheck to look at my withholdings. The addittional withholding will be less than $40/month.

so it is not going to break my monthly budget, but I am still disgusted by it.

silvermine October 31, 2009 at 5:24 pm

And those of us who live here remember all too well how we got our refunds *months* late this year, because the state just decided to hold that interest-free loan extra long. The NYT may think we’re all fine and dandy because we know we’ll get it all back, they claim — but we really honestly *don’t* know that.

I’m sure anyone with half a clue already adjusted their withholdings to may sure they don’t owe this year. Therefore, the government must increase withholding to make sure they get those loans…

silvermine October 31, 2009 at 5:24 pm

And those of us who live here remember all too well how we got our refunds *months* late this year, because the state just decided to hold that interest-free loan extra long. The NYT may think we’re all fine and dandy because we know we’ll get it all back, they claim — but we really honestly *don’t* know that.

I’m sure anyone with half a clue already adjusted their withholdings to may sure they don’t owe this year. Therefore, the government must increase withholding to make sure they get those loans…

Sam Grove October 31, 2009 at 7:23 pm

The VTA in Santa Clara County is proposing cutbacks in service because of reduced sales tax revenues.

Subsidized transport makes a bite, then takes a bite.

Sam Grove October 31, 2009 at 7:23 pm

The VTA in Santa Clara County is proposing cutbacks in service because of reduced sales tax revenues.

Subsidized transport makes a bite, then takes a bite.

Rob Dawg October 31, 2009 at 7:31 pm

Professor,
When this ripoff of the productive class in California was first proposed I predicted that the result would be a reduction in short term revenues as the increase would incite wage earners to adjust their withholding. I await the data.

Rob Dawg October 31, 2009 at 7:31 pm

Professor,
When this ripoff of the productive class in California was first proposed I predicted that the result would be a reduction in short term revenues as the increase would incite wage earners to adjust their withholding. I await the data.

DG Lesvic October 31, 2009 at 10:57 pm

Great, great post, in the Boudreaux tradition.

DG Lesvic October 31, 2009 at 10:57 pm

Great, great post, in the Boudreaux tradition.

Gil November 1, 2009 at 3:04 am

What if your landlord raises the rent by 10% are you giving him a free loan? Is he being a thief?

Anonymous November 1, 2009 at 4:05 am

Are we to assume that there’s no lease agreement, Gil? And isn’t the rental of property a consideration? If one is getting the use of property in the arrangement, how is the rent paid — even if it is now 10% above the previous rate — a free loan?

Randy November 1, 2009 at 10:45 am

Joe,

I was just thinking about that the other day while out on a walk. Specifically, that the idea of a social “contract” is invalidated by the fact that one party has the right to change the terms at will and without the consent of the other interested parties. Thanks for reminding me.

Gil November 1, 2009 at 12:06 pm

So? It could be said that a renter can’t force a rental fee onto the landlord rather the landlord increases or decreases the rent depending on market conditions.

Anonymous November 1, 2009 at 12:23 pm

The distinction between the government and a landlord is the fact that the government has a monopoly on the legal use of physical force to seize one’s earnings, while no private landlord has any such power.

Thus, while a landlord may arbitrarily change the terms of a rental (outside of a legally binding contract, under which a renter could challenge any such change in court), the landlord has no power to compel the renter to accept these new terms — the renter can walk away without the landlord extracting another dime of his money.

Government, however, has the power to compel acceptance of any new “terms” it chooses to impose on the citizens, with jail sentences for any who try to “walk away” from its edicts.

Anonymous November 1, 2009 at 12:35 pm

Let’s now discuss the government’s role as thief rather than the supposed thievery that takes place between a landloard and his/her renter.

Anonymous November 1, 2009 at 6:47 am

…he can’t just raise the rent above the market. moot point.

Anonymous November 1, 2009 at 1:23 pm

Wow, they invented a new kind of taxation. And since it is not technically a tax, sky is the limit.

The Albatross November 1, 2009 at 2:31 pm

If I remember my history forced loans was one of the reasons we cut off Charles I head in 1649, but I guess it is ok this time since it is “the will of the people” or some better nonsense than Charles and his silly Star Chamber.

Anonymous November 1, 2009 at 4:24 pm

Californians can escape this increase in withholding by increasing the number of personal withholding allowances they claim on their employer tax forms.

Thomas A. Coss November 2, 2009 at 12:54 am

Dr. Boudreaux, succinct as always. Could you have imagined this in your wildless dreams? The trouble is, so many people are so focused on looking for work, this story doesn’t register. When they get one, it will.

Anonymous November 2, 2009 at 5:19 pm

Taxation is theft.

Gil November 1, 2009 at 3:42 pm

. . . for outstanding payments . . .

Gil November 1, 2009 at 3:42 pm

Yes a landlord can seize the renter for outstanding and yes the landlord can raise the rent if there’s an ongoing apartment shortages. Libertarians can’t show a historical magical Libertarian Eden of simple anarcho-Libertarians who were wonderfully wealthy and free only to have an outsider gang overpowering them and becoming a government. Governments have instead evolved from established families to aristocracies to monarchies to revolution to parliamentary democracy.

Anonymous November 1, 2009 at 6:00 pm

If you fail to pay your rent, yes, the landlord has legal recourse. The nature of that recourse is dictated by the terms of the lease agreement you signed voluntarily and by state (or other) real estate laws.

Here in Georgia, for instance, the recourse consists of evicting you (after giving appropriate notice), retaining your deposit and imposing whatever penalty is defined in the lease, commonly the rent for the remaining months of the lease.

And yes, if you refuse to pay, the landlord can go to small claims court (or state court if the amount is large enough) and sue to collect the debt.

Likewise, if the landlord breaks the terms of the lease, you, the renter, have legal recourse under the law as well.

But neither of you has the legal power to initiate the use of physical force against the other. All you can do is seek to get the government to use force in retaliation for the breach-of-contract by the other party.

Government, by contrast, can initiate the use of physical force against a citizen that has done no harm to anyone else, broken no contract, etc. That’s the distinction.

As to the rest of your statement, which begins with “Libertarians can’t show a historical magical Libertarian Eden of simple anarcho-Libertarians . . . ” — you seem to be employing a form of the standard muirgeo conflation fallacy.

This fallacy consists of treating any criticism of government actions, or any advocacy of freedom, capitalism or limited government, as if it is an advocacy of anarchy — so that you can then respond with the claim that since no functional anarchist “Eden” can be shown to exist, our arguments are refuted!

But this line of “argument” is so completely fallacious it‘s silly. Advocating capitalism, freedom and limited government is not all the same thing as advocating anarchy.

Capitalism is a social system based on the recognition of individual rights, wherein all property is privately owned and the role of government is limited to the (crucial!) function of protecting individual rights against those who initiate the use of physical force or fraud in any of its forms (which includes unilateral breach of contract). Now that’s not anarchy.

Previous post:

Next post: