Taxation Cato Encyclopedia.PDF

Above the entrance to the headquarters of the Internal Revenue Service on Constitution Avenue is chiseled the quotation from Oliver Wendell Holmes: “Taxation is the price we pay for civilization.” It is easy enough to see why state officials would want to put that quotation on display, for it counsels people to be pleased with the taxes they pay. It’s not so easy, though, to determine the accuracy or the moral force of that quotation. Taxation represents the replacement of the handshakes of commerce with the threat of rifles as an instrument for human governance. While some libertarians think rifles are totally unnecessary to human governance, others think some modest use, while unfortunate, is unavoidable. This makes taxation a form of Faustian bargain: some modest use of rifles is thought necessary to promote peaceful social order, but mere possession of the power to employ rifles will almost inevitably expand their use beyond their necessary limits.