“Taxation is theft,” per Murray Rothbard, has surfaced as the quintessential fiscal libertarian rallying cry. The purist form of this premise submits that because taxation is involuntary and necessitates coercion, it violates the Non-Aggression Principle (NAP), when applied meaning that “it shall be legal for anyone to do anything he wants, provided only that he not initiate (or threaten) violence against the person or legitimately owned property of another,” as Walter Block defines it. Distilled, taxation forcibly takes one’s lawfully earned property away, and because “all forms of wealth are produced by man’s mind and labor,” according to Ayn Rand, that act hearkens back to slavery and is antithetical to a free society.
This is a compelling argument, but what practicality does it contain; or in other words, what are the alternatives to revenue collection if there is no taxation? Many libertarians justify an abolition of the income tax with the NAP, but apply a double-standard in advocating Georgist property taxes to compensate for the revenue loss.
Rand, who advocates a minarchist, or night-watchman state, posits that people would donate, of their own self-interest and volition, to the government to fund police, courts, and a military. Rothbard and Block, who both consider these services ripe for privatization and a general government superfluous, say police and courts could be subscribed to by regular or deferred payments and fees. An individual not paying for police or courts would quickly recognize the harm this causes them via lack of protection and representation.
The military’s budget, meanwhile, would not collapse overnight if a single person opted out of donating to it. This mindset, however, would carry across whatever geographical area the military presides over, compounding into a gross dearth of funds, as Ethan Glover argues. To mitigate this effect, programs more sophisticated than basal donation forms must be used to fund a public good like the military.
These plans, of course, may be mixed and matched, and either applied to funding the Randian night-watchman state, or a more expansive government. The sole limit is the people’s will. If it is worth funding a public education system for example, and charities for some improbable reason are unable to make up the difference, these methods could be utilized for great success while still protecting the individual, who Rand called the greatest minority of all, and their liberty to opt-out of funding something they oppose, and in so doing, protecting their lawfully-held property.
The notion of voluntary taxation is an interesting mental experiment worth considering in public policy discussions for how to transition non-essential government programs into free market ones. Indeed, you do not necessarily have to affirm the NAP, or advocate abolishing all taxes to find value in the following proposals.