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In 1619, Father Pedro Fernandez Navarrete, “Canonist Chaplain and Secretary of his High Majesty,” published a book of advice to the Spanish monarch. Sternly advising a drastic cut in taxation and government spending, Father Navarrete recommended that, in the case of sudden emergencies, the king rely soley on soliciting voluntary donations. Alejandro Antonio Chafuen,Christians for Freedom: Late Scholastic Economics (San Francisco: Ignatius Press, 1986), p. 68.
It is particularly poignant, on or near any April 15, to contemplate the dictum of Father Navarrete, that “the only agreeable country is the one where no one is afraid of tax collectors,” Chafuen,Christians for Freedom, p. 73. Also see Murray N. Rothbard, “Review of A. Chafuen,Christians for Freedom: Late Scholastic Economics,” International Philosophical Quarterly 28 (March 1988): 112–14.
See, for example, Irving and Herbert N. Fisher,Constructive Income Taxation (New York: Harper, 1942).
For a fuller treatment, and a discussion of who is being robbed bywhom, see Murray N. Rothbard,Power and Market: Government and the Economy, 2nd ed. (Kansas City: Sheed Andrews & McMeel, 1977), pp. 120–21.
See Murray N. Rothbard,Man, Economy, and State: A Treatise on Economic Principles, 2nd ed. (Los Angeles: Nash, 1970), 2, pp. 791–92; idem,Power and Market, pp. 84–88, 14–16. Cf. John C. Calhoun,A Disquisition on Government (New York: Liberals Arts Press, 1953), pp. 16–18.
See the illiminating article by Roger W. Garrision, “West's ‘Cantillon and Adam Smith’: A Comment,”Journal of Libertarian Studies 7 (Fall 1985): 291–92.
See Rothbard,Power and Market, pp. 98–100.
We omit here the fascinating question of howgovernment's activities should be treated in national income statistics. See Rothbard,Man, Economy, and State, 2, pp. 815–20; idem,Power and Market, pp. 199–201; idem,America's Great Depression, 4th ed. (New York: Richardson & Snyder, 1983), pp. 296–304; Robert Batemarco, “GNP, PPR, and the Standard of Living,”Review of Austrian Economics 1 (1987): 181–86.
In fact, per note 9,supra, there will be a shiftin favor of consumption because a diminished amount of money will shift the taxpayer's time preference rate in the direction of consumption. Hence, paradoxically, a pure tax on consumption will and up taxing savingsmore than consumption! See Rothbard,Power and Market, pp. 108–11.
If net income is defined as gross income minus amount paid in taxes, and for Jones, consumption is 90 percent of net income, a 20 percent consumption tax on $100,000 income will be tantamount to a 15 percent tax on this income. Rothbard,Power and Market, pp. 108–11. The basic formula is thatnet income,\(N = \frac{G}{{1 + tc}}\) where G = gross income, t = the tax rate on consumption, and c, consumption as percent of net income, are givens of the problem, and N = G – T by definition, where T is the amount paid in consumption tax.
Rothbard,Power and Market, pp. 88–93. Also see the notable article by Harry Gunnison Brown, “The Incidence of a General Sales Tax,” inReadings in the Economics of Taxation, R. Musgrave and C. Shoup, eds. (Homewood, Ill: Irwin, 1959), pp. 330–39.
Jean-Baptiste Say,A Treatise on Political Economy, 6th ed. (Philadelphia: Claxton, Remsen & Heffelfinger, 1880), pp. 412–15. Also see Murray N. Rothbard, “The Myth of Neutral Taxation,”Cato Journal 1 (Fall 1981): 551–54.
Say,Treatise, p. 446.
Ibid., p. 449.
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Murray N. Rothbard is S. J. Hall distinguished professor of economics at the University of Nevada, Las Vegas and editor of theReview of Austrian Economics.
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Rothbard, M.N. The consumption tax: A critique. Rev Austrian Econ 7, 75–90 (1994). https://doi.org/10.1007/BF01101943
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DOI: https://doi.org/10.1007/BF01101943