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The Circle Bastiat

To tax is to destroy

Taxing citizens destroys freedom, prosperity, and market efficiency

By Fred BuzzeoGuest blogger / April 28, 2011

United States Postal Service worker Tom Michael loads final Oscar ballots for 82nd Academy Awards into his postal truck at the Academy of Motion Picture Arts and Sciences office in Beverly Hills, Calif., on Feb. 10, 2010. According to the US Census Bureau, there are 2.8 million civilian employees working for the federal government who are paid for with taxes.

Matt Sayles / AP / File

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The landmark Supreme Court decision McCullough v. Maryland (1819) has had wide impact on the powers of the federal government. In fact, this decision, more than any other, is responsible for the incredible growth of federal authority throughout the years. Today, Washington has a tight grip on every aspect of our lives, and much of this federal intrusion is due to the "implied powers" doctrine that emanated from this court decision.

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In the case, the clerk of the Bank of the United States, James McCullough, brought action against the state of Maryland. In opposition to the national bank, Maryland had imposed a tax on the Bank of the Unites States — hoping to tax it out of existence. McCullough took the position that such a tax was an unconstitutional interference with the activities of the federal government by a state — in this case Maryland. Therefore, McCullough brought action to stop Maryland from taxing the national bank out of existence.

Pleading the case on behalf of McCullough, the eminent jurist Daniel Webster argued that Maryland had no authority to tax the bank. The essence of his argument was quite simple: "An unlimited power to tax involves, necessarily, a power to destroy."

The court agreed. Speaking for a unanimous court, Chief Justice John Marshall echoed Webster's words. He wrote, "The power to tax implies the power to destroy. If the States may tax one instrument, may they not tax every other instrument…? This was not intended by the American people."

Consequently, with the help of these two highly esteemed jurists, we have conclusively settled a point of contention among many scholars — that the unlimited power to tax is the power to destroy, clear and simple. And without question, the government has an unlimited power in this respect.

Let us now examine some of the many ways in which the power to tax destroys.

The Power to Tax Destroys Freedom

In order to have an effect, laws must be enforced. The enforcement mechanism is the bureaucracy. Without a bureaucratic system of enforcers, laws would be just a collection of restrictive words on fancy parchment. This is why President Jackson said of another case during the Marshall court, "John Marshall has made his decision. Now let him enforce it." This was a reference to the obvious fact that the chief justice did not have an army of bureaucratic enforcers to put his words into action.

For the sake of clarity, I do not advocate the abolition of all laws. However, we must define legitimate laws as those that prohibit an act that is in itself bad. An example of this type of law is one that prohibits the infliction of bodily injury on another. Those laws that make an otherwise innocent activity unlawful are simply political in nature. They are what the philosopher Thrasymachus, best known as a character in Plato's Republic, labeled "the advantage of the stronger."