Funding Government Through Externality Payments
In most of the libertosphere, you’ll likely hear the statement “Taxation is theft.” The general implication of this, of course, is that for us to right this wrong, we must have no government, or government financed entirely by voluntary contributions. But what if there was a third way?
What if we could fund government entirely through the externality of pollution?
I think all libertarians, and even anarcho-capitalists, that pollution is typically one of those externalities that is very difficult to handle. For example, it is hard to me to bring a lawsuit for harm against someone driving around metro Atlanta, but their exhaust emissions are contributing to reduced air quality, which does a very minute bit of harm to me and the people around me. When the harm is an aggregate measure caused by millions of people, it is impossible to quantify that harm. Sure, if my neighbor up the hill is pouring toxic chemicals down the hill, that’s easy to solve with a lawsuit. But if the harm is an incremental addition to other air pollution, I cannot find or seek damages from the person who caused it.
So is it possible to our government to be funded entirely by the cost of pollution? Well, for some things, such as the individual purchase of cars/etc, it would be fairly easy to assign a pollution tax. It could be assessed by the mileage driven and type of car at registration time, done through gasoline taxes, or front-loaded into the cost of a vehicle (perhaps partially refunded based on the mileage at sale). Since I would think that the personal automobile is one of the primary pollution that individuals cause, that would be a good start. Then, of course, there would be pollution taxes on businesses. These, like all taxes on business, would eventually be paid by the individual, but the business would make a good collection point. Since, of course, the taxes would be based on each business’ individual pollution, businesses who pollute less would have a competitive advantage, in the final cost of goods, over businesses who pollute more.
If the rates are set fairly (certainly not an easy task, and one that I’m not sure government is capable of), it would give the government an income stream to pay for public goods like the military, police forces, etc. I’m certain that if the rates were set fairly, of course, it would drastically trim the government budget. But I’d offer a guess that it could probably cover the constitutionally-authorized functions of government.
So that brings us back to the primary question. Is it theft? Perhaps, but if so, it’s theft from those harmed by pollution, not those who cause pollution. Since it would typically be nearly impossible, and quite inefficient anyway, for the people damaged by pollution to collect damages from individual polluters, it is theft of money that those people would likely never collect anyway. It’s not theft from the polluters, of course, because this is the cost of harm they’re inflicting on others. This is not a theft, but a collection of real damages inflicted upon society.
Non-anarchist believers in liberty constantly need to find a way to finance the minarchist government they advocate, with the knowledge that taxation is theft. Could this be a way to reconcile that conflict?