Friday, 21 February 2014

One Dollar, One Vote?

     You may have read about the wealthy financier Tom Perkins' recent controversial remarks. I'll leave the hyperbolic nonsense about persecution of the rich for another post, but I wanted to address the suggestion he made that voting rights should be contingent on paying taxes. Originally he said that paying a million dollars in taxes should entitle one to a million votes, but when people objected to that he claimed he was joking, and really just meant that you should have to pay at least some taxes in order to vote.
     I suppose to some, particularly those in the business world, that sounds reasonable. After all, not just anybody can vote for the board of directors of a corporation; you have to be a shareholder. And among shareholders, you actually do get more votes for having invested more money in the company. There's nothing fundamentally wrong with this principle, so why not apply it to national as well as corporate governance?
     In fact, I agree. But the model needs to be applied correctly, and clearly identify who the shareholders are, and what it is they invest in the enterprise of the State. So here's the way I look at it.

    First let's talk about what a nation state is. It's a sovereign entity with the power to enact and enforce laws, to tell the people within its borders what they can and cannot do. It's not possible to have a state unless you have a sufficient number of people willing to recognize that state's authority over them, and who agree to be bound by its laws. So, in essence, the capital stock of the state is the liberty of its citizens; that's what we are investing.
    And we don't invest it out of patriotic fervor, any more than shareholders give money to a company because they are feeling generous. No, it's an investment; just as the shareholder expects to realize a return, to get more money out of the deal than she puts into it, so too does the citizen legitimately expect to get more a liberty dividend that makes the investment profitable.
     To that end, we elect a Board of Directors (the government) to manage that liberty investment on our behalf. The government expends some of that liberty by enacting laws that limit some of our freedoms (say, the freedom to commit murder) but pay off with enhanced freedom overall (being murdered curtails all freedoms). Since each of us invests essentially the same liberty capital, each of us has one share and is entitled to one vote.

     What, then, of taxpayers? Well, there are several ways to approach this question, but the important point to make here is simply that paying taxes is not and never has been anything like buying equity in a company. In my view, the taxpayer is best understood as a customer of the state, and taxes are its income. It is the government who decides, on behalf of the citizens, what to do with the money so raised, whether to reinvest it in providing government services to maintain the whole system, to hang onto it as retained earnings, or even to declare a dividend payable to the shareholder/citizens. The taxpayers qua taxpayers have no say in this, though they do have a say in their capacity as citizens.

     (I will leave the question of what the value the taxpayers/customers receive for their money to another post. Suffice for now to say that it depends on the nature of the tax, and there are many kinds of taxes: property tax, income tax, sales tax, etc.)

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