By Paul Weiser
One of the hoary assumptions which underlies the New Deal and its legion of offspring is that government can favor one group or activity without disfavoring any other. This comes, by a winding road, to the debatable distinction between taxes and penalties.
Oliver Wendell Holmes, Jr., (in)famously asserted that the penalty for committing a criminal act is simply the tax for performing that act. Conversely, any non- voluntary payment government exacts, which does not apply equally to all, defines a crime for which that tax is the penalty. Holmes says your "fine" for possessing small amounts of marijuana in California is actually a tax; the IRS demands that for committing the act of earning money, you must pay a "tax" - which is simply your penalty for criminalized economic activity.
Remember, though: government produces nothing. It can only fund its activities by taxing someone - or by inflating the currency, which is also a tax on anyone caught holding money. So what happens when government "favors" someone by giving him something - a subsidy, or a "get out of jail free" pass for belonging to a favored group?
Government is a zero-sum game. If government subsidizes ethanol production, it taxes that money away from those who don't produce it. If government charges visitors less for use of national parks than park maintenance costs, it punishes non-visitors; if it charges more, it punishes visitors. A true neutral "service fee" identifies that rare bird, a government activity which involves neither penalty nor subsidy - and should, self-evidently, be accomplished by non- government free enterprise instead.
The only fair tax is therefore a poll tax which falls equally on every citizen, supporting a government where no subsidies exist and the only penalties are forfeiture of all or part of the criminal's life for committing a real crime.
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