683. What Is the Deal with Taxes? Where Do Taxes Come From and Are They Really Necessary?

Hello, everybody. Welcome back to another episode of The Way the World Works. Today, I want to talk about everybody's favorite topic, taxes.

There's nothing good about taxes and they are, people call them like a necessary evil or a necessary burden because, oh, society needs it because without taxes, who would pay for the roads? We'd have no roads and there's a lot of hubbub and a lot of fear mongering about it. So let's get into it. Let's talk about the roots of taxation.

Let's talk about why they're one of the world's worst ideas ever. And let's start with a Benjamin Franklin quote that he wrote in a letter to someone in 1789. He said, and this is a famous quote, in this world, nothing can be said to be certain except death and taxes.

And what he meant by that is those are the two constants. No matter what happens in the world, no matter what changes for some reason, death and taxes are the two inevitable things. And that's unfortunate, but that is the way it goes because it seems as though wherever there is government, there is a, a, a system of taxation and it has always been that way.

In fact, taxes have very ancient roots, which we'll get into right now. A lot of times you'll hear, um, let's go back a little bit first. A lot of times you hear this, that like taxes are the sacrifice we all make to like live in a civilized society.

And it's funny because when you think about what taxes actually are, it's not really civilized at all, but people have just gotten this mindset that, that it's, it's the price we pay, right? That's how we live in a society without them. Everything would just go, you know, unravel and there would be chaos. But what is taxation really? So if I go to my neighbor's house with a gun and I say, you know, stick them up, give me your money.

And I, I robbed them. That is robbery, right? You could call the police. If it was your house, you would call the police and you could say, oh my goodness, I'm being robbed.

And the police would come and they would arrest the person robbing you because it is generally seen that theft is a crime, right? I mean, if we look at constitution and, and the, the foundations of it, life, liberty, property, well, property means you have a right not to have your stuff stolen. Don't take other people's stuff. So that is just a given.

I don't think there's anybody who would say, make a blanket statement that stealing is okay. Now, of course you're going to hear nuances like, well, what if you're hungry and you steal a loaf of bread? Or what if you do this? You know, there's, there's always, I'm just laughing at myself because I thought back to national treasure, one of my favorite movies where he's like, well, I have to steal the declaration of independence to save it. There always be some justifications, but for the most part, everyone can agree, stealing and taking what is not yours is not okay.

Okay. So I said the thing about me coming to your neighbor's house with a gun or to your house and taking your money. So what is taxation then? What taxation is, is instead of your neighbor coming to your house and holding you up a gunpoint and taking your money, they are essentially using the government to do it.

So the government is taking your money by force. Your paycheck is your, when you get your first paycheck, let me just tell you, your heart is going to break when you see how much money is being taken by the government for things that you might never even use or things that you morally don't believe in like war or, you know, a big welfare state. So it's used, it's stealing money for things you don't want, but people think that it's moral.

People think that it's, it's like a, you know, the dues you pay to society and that you tell them it's theft. They'll tell you like, that's ridiculous, but let's talk about it a little further. So if my neighbor wants a strong welfare state for whatever reason, they are essentially upholding a system if they think taxation is okay, where the government steals from my paycheck every single time I get paid.

Right. And it's like they, it's like my neighbor is stealing from me, but from a third party, they're just like paying a third party to steal from me. Now, if you tell them, if you tell people like, yeah, but they're doing it at a point of a gun, they're doing it by force.

They're going to say, that's so silly. No, it's not. Well, let me tell you if that's not true, what happens if you don't pay your taxes? I can tell you what happens.

You go to jail and it happens all the time. So we don't have an option. It is by force.

There's really no difference between a robber coming to my house and a government official, you know, the IRS taking the money out of my check every single time I'm paid. And it's, it's so funny because in some ways I respect the robber more because the, the guy coming to my house or whatever with a gun, at least as honest that they're stealing from me, the government will never call it stealing. They'll try to make it sound like it's some benevolent, some good thing because, oh, it's going for roads.

And without taxation, we wouldn't have anything in society. And it's just like, whew, that's not really true. And if you look at a lot of major revolutions, especially in our, um, Western way.

So in like the tradition of, of great Britain and, and the founding of our own country, what was that point that boiling point that made people so furious, they were willing to rebel. It usually came down to taxes and property rights, but hating taxes is a matter of property rights because your property is your, is your money. So John Locke, uh, we've talked about him a lot.

He's my favorite historical figure ever. You know, he famously wrote in the second treatise of government. He said that, that when you put your labor into something, uh, and you're getting paid for that thing, that the money that's the fruit of your labor, right? Just like if you plant a tree and then it grows, you're going to have the fruit.

That's money. Money is the fruit of your labor and you get to keep that and you get to decide what you want to do with that money. Now the government interferes in that and that all throughout history has led people to want to rebel because, you know, like, heck, they're going to take your property and your money.

And it's very infuriating. And that's how we got the Magna Carta. That's what we got.

The great charter. It's actually just, it's just, just Chata. I said it like I'm from Boston Magna Carta, not the Magna Carta.

There's some trivia I've given you before. It's just Magna Carta. So that's how we got Magna Carta and go back and listen to the episodes we did on that because that's my favorite part of history.

And that's how we got the founding of America, right? People were upset about taxes with the Magna Carta. The king kept coming and declaring more taxes and, and taking things that weren't his. And of course we know that with the American revolution, taxation was out of control and they had no representation.

There was no consent for those taxes. And it's just, um, it's crazy to me. And it's funny because Robin Hood, if you guys know the story of Robin Hood, you hear about it and a lot of people will frame it as, Oh, he was taking from the rich to give to the poor.

And you hear that. And to me, I think like democratic socialist, that's socialism, that's terrible, but that's actually not what Robin Hood is about. What is Robin Hood about? It's about a tax collector that's, um, the sheriff of Nottingham who's working on behalf of Prince John, which rumor has it is portraying the same king that led Magna Carta to being signed.

But I just read this thing that actually said, well, maybe it's not. So we won't say that as gospel truth, but it's fun to think maybe it is, especially if you think about the cartoon version of Robin Hood where King John is always like calling for his mom and sucking his thumb and crying. It's kind of funny.

Anyway, side note. So Robin Hood is about a sheriff of Nottingham who was entrusted to collect the taxes on behalf of Prince John and or King John, um, Prince John in the, in the movie. But, uh, and so then you have these people who barely have anything and the sheriff of Nottingham is coming and taking the last of what they had.

And what is Robin Hood doing? He's robbing the government. He's robbing the king and giving that money back to the people. And so I think Robin Hood is very misunderstood.

And for the parents out there, I know I grew up with the movie Robin Hood, Prince of Thieves, and I watch that back now and I'm like, this is such like an individual liberty type movie because what did they do when the taxes got too high? They went in the woods and they built like their own community, a voluntary community. And it's just like, ah, my brother messaged me the other day. I was like, oh my goodness, this is like a, a Liberty, you know, centered movie.

And I never understood it before. So fun fact about Robin Hood, it is not necessarily about robbing the rich to feed the poor. It is the rich, but it's robbing the government, but you're robbing them back from what they stole.

So that's a fun little side note. So taxes 100% make us less free. Let's be clear about that right away, because when you have to implement a rule by force, you're going to have to make the government bigger because you're going to have to enforce that rule because there's always going to be someone that says, Hey man, don't take my money.

Like don't take my stuff. And good ideas don't require force. Remember that if taxation was so great and everybody loved it, then they wouldn't have to make it a law.

People would just do it. And people do do it, right? But it's not taxation. People do give back, look at churches, look at, you know, voluntary charity.

That's a beacon or a, sorry, a staple of American way of life. I said a couple episodes ago how Alexis de Tocqueville came to America from France and was just like, Oh my goodness, their sense of private charity, of charity, of helping each other out is amazing. And that wasn't done through force.

It wasn't done through the government, it was done by individuals taking care of their own. So if we want to talk about taking care of people who need help, like what they say the welfare state is for, individuals do it better. And let's talk about roads now.

That is the biggest thing. I remember when I first got into to being political, people were always trying to challenge me by saying like, well, OK, but you know, if we don't have taxes, then who's going to pay for my roads? And first of all, communities would bind together, come together and find ways to do that because the income tax was only enforced in 1913. So there were ways beforehand for local communities to do that.

And it reminds me of one of my favorite stories that I wrote about years ago. This was kind of a PR campaign, but Domino's did a thing where, because you know, Domino's, they have to deliver pizzas and their drivers are on the road. And there was this, this thing where they were like, listen, we're going to fix potholes in the road to make it easier for our drivers.

So if you see a pothole in the road, call us and we'll have somebody fix it. And I do think they did fix a couple, but it was, it was mostly like a PR stunt. But I loved that because they did fix some potholes and it's like, wait a second.

Next time somebody tells me like, well, who's going to build the roads and who's going to fix the roads? I'm going to say, well, literally anybody and Domino's. And it's funny too, because the government doesn't own a road company or a concrete company or construction company. No, they're just paying our dollars to hire someone else to do it.

There is no government road builder, right? So it's so silly because those companies would exist either way. And there's a vast array of ways you could build roads. You know, you could do it by like your street comes together and says like, Hey, we're going to build this road.

And sure, you as a neighbor could say, I don't want to pay for it. And you probably wouldn't be very popular in the neighborhood. There'd be natural consequences for that, but you wouldn't go to jail.

And that is the big thing. So you know, there are, the government is not the only way they do not have some sort of magical wand, they wave to build roads. And if you've ever been in a construction, like road construction project or whatever that the government is heading up, it's always complete chaos anyway.

So they don't do it very well. So let's talk about the roots. I mentioned that there are ancient routes to taxation and there are, you know, as soon as there have been governments or as long as there've been governments, there's been some sort of taxation scheme and Egypt in Egypt, ancient Egypt, this was exactly the same thing.

So, but there was like surveillance, right? Because they wanted to tax as much as they couldn't get as much money from their people, which again, gave them an incentive to then spy on their people and make sure they were getting every single dime. So it creates, like I said, bigger government. So they would like come into the kitchens and say like, Oh, are you using oil? Where there's a tax on that oil? So we need to collect that from you.

And they would do, you know, they would audit and make sure that you didn't get away with not paying your taxes on anything, which kind of set the precedent for today. So it's, it's so interesting to me. So not only are, you know, the government, we don't need the government for welfare for private charity.

We already know humans are capable of doing that. We don't really need it for the road. We definitely don't need it if we want limited government because that grows government.

But let's talk about other things taxation is used for. It's used for war. It's used to fund endless war because the Pentagon has a giant piggy bank that just keeps getting filled by our stolen, you know, tax dollars.

And they can do all these things that are very unpopular or that we are morally opposed to. I don't like that my money is going to fund, you know, the death and destruction of people that, you know, the people themselves didn't do anything wrong. Even if we have some guff with their government, it's, it's not the people of that place, right? I don't want to fund wars.

And if wars were really so popular, if there was a need for it, then well, people would probably band together and pay for it, but they have to do it by force because their ideas aren't good and they're not popular. And so you have to think about that. Why would anybody try to do something by force? It's because people don't want to do things that aren't good ideas.

And, you know, who would fund the needless wars without the taxation? No one. And that's absolutely great. So it's, it's crazy to me that taxation has become this thing that is seen as a noble, you know, part of social order when our, our social order as, as Tocqueville noted, Alexis de Tocqueville, that we actually have, like we're morally elevated and we're a better people when we come together as communities and, and, and find ways to raise money for what we need or to take care of people in need.

So there's just so many better ways to do it. And that is where, when you look at the government as opposed to free market, like it's no contest who does things better. The market just does things better because it, it can actually do things for people and it knows what people want.

Government's going to do what government wants to do and they don't really care how you feel about it, which is why they have to steal your money. And it is for this very reason that taxation is included in this Heddleton's guide to the world's worst ideas. And let me tell you, taxes are just the worst.

So, you know, I would like to live in a world where Benjamin Franklin's quote about death and taxes being inevitable is not true, but unfortunately right now it is, but we will leave it there for today. If I keep talking about taxation too much, I'll get very, very angry. So as always, don't forget to like and subscribe to the podcast and until next time, guys, I will talk to you later.