A Radical Idea: Tax Free Libertarian Territories

(Image Credit: Federico Respini/Unsplash)

Throughout this article, I will be using the term “libertarian” in reference to so called ‘American libertarianism’. It is worth noting that, as described, that is but one relatively new and questionable version of libertarianism.

doubt since I self identify as a libertarian socialist, American style libertarianism frustrates me more than most others. Not only do they routinely label left wing libertarianism as fake or impossible (despite the entire ideology being born from radical leftists, the first use of the word libertarianism attributed to French anarcho-communist Joseph Déjacque), but they barely comprehend the concepts of libertarianism for their own platform.

Check out the video below for a (very) brief explanation of the two types of libertarianism with one of the world’s greatest living intellectuals, Noam Chomsky.

A brief explanation of the two sides of the libertarian spectrum. (Credit: YouTube)

There’s perhaps no better example of the naivety of the libertarian right than one of their favorite slogans, “Taxation is theft”, which they’ve clung to since the “Tea Party” collapsed and picked a more legitimate sounding name — libertarian.

Many self described libertarians have adapted the belief that any and all forms of taxation are theft, immoral, unconstitutional, and unnecessary. They claim that government should be funded only by voluntary contributions. This would, they imagine, perfectly control the size of government, only able to grow when it’s adequately serving the people, who in turn are willing to donate more to show their support.

The Gadsden flag, another of libertarians’ more prominent brand icons. (Image Credit: Drew Angerer / The New York Times / The New Yorker / Redux)

It’s worth noting that this is a ridiculous concept for a society of any size, bordering on clinically insane when trying to apply it to 330M people.

It’s also worth noting, to the defense of some conservative libertarians, that “taxation is theft” is not, at all, in any way, an actual foundation of libertarian views. You won’t find it in textbooks, in scholarly materials, and no libertarian candidate for president has ever suggested it as a viable option.

On top of all of that, ‘taxation is theft’ falls apart as soon as you’re forced to admit that the United States has no laws on emigration — you’re free to leave at any time. It could well be argued that choosing to stay is your consent to be governed by the laws of the land, such as taxation.

As it happens, one way tickets are cheaper than round trip ones. (Image Credit: Nils Nedel/Unsplash)

(Amusing, also, that we can use another favorite libertarian slogan here: in response to any improvement one may suggest for American society, libertarians often suggest “If you don’t like it, you can leave”, but suddenly this becomes a suggestion to be dismissed when aimed at them.)

While many feel very passionately about the “taxation is theft” is both foolproof and a foundation of libertarianism, but neither is the case.

Valid Issues of Consent

That all said, at the philosophical heart of ‘taxation is theft’ is an interesting, and relatively valid issue: the consent to be governed. If I’m being honest, the “If you don’t like it, leave” line is almost always little more than a deflection from a person that’s run out of legitimate points to make. But it serves at least as an option to American taxation, making the idea its the literal same as theft quite dubious at best.

But it is at least a little interesting that there is no place an American can go to “opt out” of all taxation. No matter where you live, no matter how remote you get, you’re still bound by property taxes, or fines from squatting on someone else’s land. When did any of us agree to that? Many philosophers rightly argue that a contract an individual is forced into is not valid. Perhaps no better examination of this than Jean-Jacques Rousseau’s “The Social Contract”.

(Interesting tip: if you find classical texts too heavy to really get into and comprehend, try Early Modern Texts — they include the whole of the work, but translate to modern English style).

Questions of consent are nearly as old as thought itself. (Image Credit: James Lee/Unsplash)

At the heart of what it means to be have personal liberty, there’s some truth that any structure which is forced upon a subject, with no other option, is not a valid one.

A Solution

I’ve long wondered what libertarians really want. It would seem to me that their worldview is entirely unreasonable — it appears they wish to live in a civilized society which no one is obligated to pay for. If I dismiss that as impossible (thought I’m sure I’ll get comments telling me why a voluntary system is entirely possible, from the same group that call most models of socialism a utopian fantasy), I’m left to wonder what an American libertarian society would actually look like.

In the name of consent, I would be in favor of setting aside large plots of land, tax free territories, for any and all that wanted to remove their consent to be governed. While this may seem unrealistic on a surface level, I think with a few stipulations and observations, the idea holds a lot of merit.

America has no shortage of affordable land. (Image Credit: Tomas Eidsvold/Unsplash)

First, the land would have to paid for, at free market prices. We certainly can’t give “free land” to people that cry foul about “free health care” or “free college” — it would surely be unfair to consenting tax payers that we use their money so others can opt out. But rural land is relatively inexpensive, and there are many incredibly wealthy libertarians (Looking at you, Koch family!)

Next, the land would essentially be lawless. This goes for taxation, but also goes for all other laws. To be more precise, the land would still be subject to federal law, but we would agree not to have any enforcement on that land. If we could prove a crime, and you left the reservation, you’ve subjected yourself to the American judicial system in place.

Public officers, for better or for worse, would not be protecting those who opt out of “public” cooperation. (AJ Colores/Unsplash)

But that means we provide no enforcement — police, fire, and perhaps more interestingly, no health care. If we agree that the reach of the government won’t get to your wealth, you agree that not a single public dollar will be allocated or spent for anything regarding your land. Fair trade.

Doctors and hospitals are not cheap. (Image Credit: Arseny Togulev/Unsplash)

But what of incomes? While any incomes derived from business activities within entities in the reservation should be exempted from income taxes, it would not be fair to exempt incomes derived from outside the reservation. So if you sell products or services to citizens outside of the reservation, you’re willingly participating in the American economy, and thus willingly subjecting yourself to being taxed on that income.

This would also prevent large corporations from using the reservations as domestic tax havens — sure, they could set up shop there and avoid taxes for those also on the reservation, but the rest of their American business activity would not exempt from taxation. It would surely not be fair to let businesses benefit from all of American buying power without contributing.

You’d have to be careful not to let corporations have a free lunch. (Image Credit: Annie Spratt/Unsplash)

Public utilities — being public — would not be accessible to the land. The residents could organize to purchase services at a fair market value, or rely on private sector within or outside the borders to provide any power, water, internet, etc.

While this certainly doesn’t cover every detail, it provides a decent foundation for a “free society” for libertarians to escape the government they loathe.

A few afterthoughts: so long as the reservation doesn’t occupy part of an international border, we’ll cover national defense.

The most problematic issue would be that of education: it, of course, would not be provided. What of children born or moved to the territory? They surely have not consented to be woefully uneducated, and criminal neglect could arise if their needs are not met. But how to enforce that? I don’t have an answer for that, aside from “Your kids are your problem”, but that feels callous and cold to children that will undoubtedly be harmed by lack of exposure to the full spectrum of ideas.

Predicted Outcome

Could this all work? Libertarians would have you believe so, but I remain very doubtful. I think many libertarians vastly underestimate the costs of a civilized society, often complaining that they get too little for their few thousands of dollars in taxation contributed.

Even if you cut the U.S. government by 60%, arbitrarily and wholly theoretically, that means total expenditures, now about $4T, would be reduced to about $2.25T, and would come out to about $7000 per person. Comparing that to US tax rates, that would make a person “tax neutral” at an income of about $52,000 — still well above the American medium income of $33,000.

It’s hard to make government in a large country as small as they hope to. (Image Credit: Joshua Sukoff/Unsplash)

The “tax neutral” income at current spending levels? About $74,000. Which means about 75% of Americans pay less in taxes than their share of federal spending.

But let’s assume their voluntary contributions are enough to sustain a territory to their liking, despite what the numbers tell us.

Consider what they will have a created: a group of citizens, voluntarily cooperating, controlling and owning their own labor, to participate in capitalism, the purchase of goods and services for private benefit, cooperating in a territory for the community goal of maximized individual liberties.

Pooling money together to create a society they all enjoy while preserving the best of parts of capitalism? They would have, more or less, discovered libertarian socialism.

Follow Michael Francis on Medium and Twitter for more, as well as on Facebook and Instagram for short video summaries of articles.

Politics, philosophy, culture. Just trying to make the world a better, place. BS Finance. Follow me everywhere @MFrancisWrites. “I know that I know nothing.”

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