Ayn Rand on Tax Reform


Make the best of a non-ideal mixed economy

[In a proposed tax system], an individual would be given tax credits for the money he spends on education. I want to stress that I am not an advocate of the income tax. Tax incentives--none of the phenomena would exist in a free economy. But we are living in a disastrously mixed economy, which cannot be fixed overnight.
Source: The Voice of Reason, by Ayn Rand, ch.23, p.249 , Jun 30, 1990

Soaking the rich reduces investment & doesn't help others

If an average housewife sees a tycoon in a resplendent limousine, she might well think that just one of his diamond cuff links would solve all her problems. She has no way of knowing that if all the personal luxuries of all the tycoons were expropriated, it would not feed her family--and millions of other, similar families--for one week; and that the entire country would starve on the first morning of the week to follow . How would she know it, if all the voices she hears are telling her that we must soak the rich?

No one tells her that higher taxes imposed on the rich (and the semi-rich) will not come out of their consumption expenditures, but out of their investment capital (i.e., their savings); that such taxes will mean less investment, i.e., less production, fewer jobs, higher prices for scarcer goods--and no power in the world (no economic power) will be able to revive the dead industries (there will be no such power left).

Source: The Ayn Rand Letter, III/21/3, by Ayn Rand , Jan 1, 1979

In a free society, taxation would be voluntary

In a fully free society, taxation--or, to be exact, payment for governmental services--would be voluntary. Since the proper services of a government--the police, the armed forces, the law courts--are demonstrably needed by individual citizens and affect their interests directly, the citizens would (and should) be willing to pay for such services, as they pay for insurance.

The question of how to implement the principle of voluntary government financing--how to determine the best means of applying it in practice--is a very complex one and belongs to the field of the philosophy of law. The task of political philosophy is only to establish the nature of the principle and to demonstrate that it is practicable. The choice of a specific method of implementation is more than premature today--since the principle will be practicable only in a fully free society, a society whose government has been constitutionally reduced to its proper, basic functions.

Source: The Virtue of Selfishness, "Financing," p.116, by Ayn Rand , Nov 1, 1964

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