THE MORALITY OF COERCED TAX COLLECTION

Abstract

Coerced tax collection is common practice all around the world. Sales taxes, VATs and wage withholding tax are generally collected by businesses on behalf of the government. Commonly, no pay is offered for the collection services performed. That is a departure from the past when third party tax collection, called tax farming, was a profitable business. In many US states unpaid tax collection is justified as a service in kind in return for the privilege to do business in the state. This would require the state to have a monopoly to do business, a presupposition found to be false in fact and in morality. In most instances no justification is offered for tax collection without financial compensation. The question arises how to characterize coerced tax collection without pay or reimbursement of costs. In analysis, it appears that coerced tax collection does not constitute a form of extortion, but resembles a form of taxation in kind. In itself, mandatory tax collection need not be rejected on moral grounds. Optimum efficiency is a perfectly acceptable rationale, but to turn tax collection itself into a form of arbitrary taxation by not offering financial compensation has no basis in morality.