“The Man creates - the parasite says ‘Where’s my share?’ ” - Bioshock
In cities all over America, state and local governments are continually demanding that working, home-owning citizens shoulder an ever increasing tax burden. These taxes come in the form of state income taxes, gasoline taxes, sales taxes, and more. No single burden is as heavy as the property taxes levied on home owners. These taxes are ostensibly to provide services such as waste removal, public schools, and the like. Beneath the seemingly benign veneer of Public Service is a rotten core of income redistribution, rights violation, and political pull for sale. The offenses are particularly grievous in the theory and practice of Not for Profit Organizations (NPOs) in America.
NPOs are able to apply for tax exempt status, which tends to be universal in nature once granted. Revenues generated in excess of operating expenses are not taxed, sales tax is not paid, and property tax on land and buildings owned by the entity is not collected. Given the relatively large amounts of money, we will focus on property taxes here.
The first problem with this arrangement is that there is no solid rational or moral foundation for giving favorable tax status to one type of organization over another. The fact that many NPOs operate charitable ventures as their primary activity does not change this. The activities undertaken by an organization are the concern of the business, their clients, and owners as long as the business is not breaking any laws or violating anyone’s individual rights. It cannot be rationally supported that it is “in the public interest” to redistribute income from for-profit businesses to NPOs so that they can run public-funded charities. As Ayn Rand stated in The Virtue of Selfishness:
“…there is no such entity as “the public,” since the public is merely a number of individuals, any claimed or implied conflict of “the public interest” with private interests means that the interests of some men are to be sacrificed to the interests and wishes of others.”
The income redistribution happening in favor of NPOs is obvious. No taxes of any kind are paid, and yet taxpayer funded services are still consumed by these entities. Consider the example of a church in a small town. Does the garbage still get picked up? Will the fire department show up if the church is on fire? Do the police answer 911 calls from the church? Is there running water? Is waste water treated? All of these things are funded by property taxes and various extra fees on service bills presented to normal citizens who lack the political pull and legal knowhow to create a special status for themselves. If a small city of 10,000 people containing various private residences as well as churches spends $100,000 per year on waste pickup services, the citizens who pay taxes are directly paying for the NPOs. Citizens who belong to the churches likely don’t mind, but what about everyone else? In the same example town, should the hindu(1) family really be subsidizing the services consumed by the evangelical christian (1) church? Should the atheist family be subsidizing either? Of course not, except for the threat of force, no one would choose to pay.
In a true free market society, one would be able to opt out of any service provided by the government and also no pay for it, or ideally these services (fire, waste, etc.) would be provided by competing private enterprises who had to convince me to use their service with a solid value proposition. This is not the case in any municipality I know of, and it gets worse. As in every case where the government tampers with the market and takes away freedoms, there are unintended side effects that distort the original intention of the laws that had no moral foundation to begin with. Wealthy retirees in Milwaukee with legal and financial pull are forming communities within the city (2) in order to avoid property taxes. If a resident having a heart attack calls 911, the costs associated for this necessary and life saving service will be passed on in the form of ever-increasing property tax burdens. Because the tax exempt status is near universal and practically unconditional, it is not restricted to the core aims of the organization. In the same example town of 10,000 and countless other municipalities across America, religious organizations are using excess donations to purchase large tracts of land for speculation. A private citizen doing so would be saddled with a hefty property tax bill, thereby forcing them to carefully consider the risk and reward possibly by buying land. The market is therefore severely distorted because the rules are not the same for all participants. It is impossible for this situation to continue, as Ayn Rand put it:
“In any compromise between food and poison, it is only death that can win. In any compromise between good and evil, it is only evil that can profit.”
In the ever-escalating practice of making a smaller group of people support the lives of others, only evil can win and the process cannot go on forever. Eventually, those who produce and pay will either opt-out of participating in this civilization or die as they are unable to sustain their own lives. Where will the parasites get their free lunch then? In the mean time, the happiness, goals, and values of some people are sacrificed to further the happiness, goals, and values of others. This is a morally bankrupt practice and indefensible state of affairs.
The example town of 10,000 is in fact where I live and not a theoretical example at all. In 2008 the property taxes for a 2,500 square foot home in this country town 35 miles from Milwaukee will work out to be around $600 per month. There are no services to opt out of and no special status that most citizens could qualify for – the sacrificers must outnumber and out produce those collecting the sacrifices as a simple matter of mathematics. The picture for retirement is particularly bleak and puts modern American life into perspective: a retiree could responsibly save for retirement over the course of their career, pay off their home mortgage, and still be forced to pay $600/month in today’s dollars for the privilege of having property that is already rightfully theirs. Of course, the value of their home will adjust upwards for inflation every year, the actual tax rate can go up any time for any reason, and their hard earned savings can be eroded by the fiat currency policies of the Federal Reserve at any time by any amount.
One cannot help but feel that in America in the 21st century, one does not actually own property, but rather one can lease it from the government for a non-negotiable and never ending extortion amount.
The root cause of these issues is the government’s ability to tax any group for any reason and for any amount. Besides expanding government power far beyond protecting individual rights it creates an environment where some citizens gain a protected and elevated status and all other citizens are the losers who must pay the price for the lifestyles of others. Citizens are free to use their time and money to support any cause they favor, in other words to work to gain and keep that which they value. Waste removal services are free to give away services to a charitable institution favored by the ownership, and even though religious claims are not rationally supportable one must support the right of private citizens to donate to these institutions if they choose to do so.
Organizations with ideas that have merit will be able to succeed on their own, and those that do not will rightfully fail. Stop using government force to make citizens subsidize protected organizations.
(1) A note on grammar: I have decided to refuse to capitalize names of religious bodies, etc. Such habits only serve to reinforce the notion that religions are somehow special entities deserving elevated status and beyond rational criticism. I do not share this opinion.
(2) Please see this Milwaukee Magazine article for information on these communities: http://www.milwaukeemagazine.com/currentIssue/full_feature_story.asp?NewMessageID=11063