Taxes determine incomes, not make up a part of them

The argument

For the proponents of the argument that taxation is a theft in that it siphons away money that doesn’t sufficiently reap the rewards for such payments, Matt Bruenig argues that our understanding of taxes as a fraction of a differentiating level of incomes is fundamentally skewed. The objection is not that the taking is justified but that there is no prior amount from which anything is taken. Bruenig argues that the gross tax income is the amount of money paid out to capital and labor without the subtraction of taxes. That figure is an accounting construction rather than a sum anyone ever holds: it describes what the arrangement would have distributed under a different set of rules, presented as though it were a quantity that existed first and was afterwards reduced. Bruenig argues that the government does not step in and tax a specific class of individuals. Instead, the government sets up institutions which direct factor income towards these classes of individuals. Property, contract, incorporation and the enforcement that makes them effective are all public arrangements, and it is those arrangements which settle who receives what from production in the first place. A tax schedule is one component of that apparatus rather than an intervention upon a distribution the apparatus had already completed. Through this logic, taxes in fact do not take away from a person’s income at all, and therefore cannot be construed as a theft; taxes are instead the factors that determine each person’s income. The charge of theft assumes precisely what is in dispute, namely that the pre-tax figure was already someone's property, so calling taxation theft begs the question rather than answering it.

Premises

Counter-arguments

The argument's content does not match the position it is filed under, and the mismatch matters. As reported, Bruenig's claim is that taxation cannot be theft because pre-tax income is not anyone's property to begin with — the distribution of factor income being itself a product of institutions the state establishes. That is a substantive answer to the theft charge, which is the sibling position that taxation is not theft. A charge of question-begging says the theft framing assumes what it needs to prove; this argument instead asserts the contrary substantive view, taking a side rather than exposing a fallacy. The reasoning also risks the defect it diagnoses. Defining income as whatever remains once distributive institutions have operated makes it analytically impossible for taxation to take anything, which settles the dispute by definition rather than by argument — the mirror image of the move it objects to. An opponent can concede that legal property depends on institutions and still hold that a particular institutional arrangement wrongs people, because the objection is normative rather than definitional. The account finally collapses distinctions that matter: gross factor payments are shaped by contracts, productivity and market conditions as well as by tax law, and the state's role in defining property does not entail that it authored every entitlement within it — otherwise no confiscation could be criticised at all, including ones the argument's own proponents would condemn.

Rejecting the premises

[Rejecting P1] The claim that gross factor income is set by institutions the state establishes is a substantive answer to the theft charge — the sibling position that taxation is not theft — rather than a demonstration that the question is being begged. [Rejecting P2] Defining income as what remains after distributive institutions operate makes it true by definition that taxation takes nothing, settling the dispute by stipulation and mirroring the move it objects to; an opponent can accept that legal property is institutional and still hold that a given arrangement wrongs people.