They don’t really do anything, these buttons we press to close elevator doors or cross the street, but we press them anyway. They’re called placebo buttons, and they exist only to give us the illusion of control. In cynical moods, I’d add that dial in the voting booth to the category. Pick red or pick blue—now we’ve got your consent to take your money, throw you in jail, or require your children to brush their teeth in day care. And it goes without saying, if you sell Whoppers to Sri Lankans, we get a third of that action, too.
Only I haven’t consented to any of these practices—not explicitly. I think the federal government ought to stick to raising armies, punishing piracy, and erecting Forts, dock-Yards, and other needful Buildings in the District of Columbia. I suppose I consent to the rest of Congress’ enumerated powers under the Constitution, but that’s it.
Aside from a stray monarchist or two in the wilds of New Hampshire, we all agree that government derives its legitimacy from the consent of the governed. Yet I don’t consent to much of the modern American state, and there are tens of millions of Americans who feel the same way. Does that make the income tax illegitimate? Is the federal government an actual tyranny? And what of those indisputable tyrannies, the dictatorships at the fringes of the modern world, or the kingdoms of the old one? Have they no claim to authority? If Saddam Hussein had come to power by a few hanging chads in Al-Basrah, would we have invaded Iraq?
Consent of the governed is compelling as an ideal, but there is something absurd about it in practice. It has something to do with the distance between the great questions—most of them decided long ago by other people—and the actual matters you get to vote on—municipal judgeships and such. Here in Texas, particularly, where the results are foreordained, it feels like so much placebo button pushing. I suspect that even those privileged white male property owners of past centuries felt the same: removed from the real questions forever being decided from the real seats of power.
Yet we do consent somehow, and it’s not by voting. Plato identified the principle in Crito, in which a friend of Socrates tries to convince him to escape from his imminent and unjust death sentence by fleeing abroad. Socrates imagines what “the laws” would say, which “give the right to every Athenian, that if he does not like us when he has come of age and has seen the ways of the city, and made our acquaintance, he may go where he pleases and take his goods with him; and none of us laws will forbid him or interfere with him.” Socrates goes willingly to his death because he can’t dispute that he has acknowledged the soundness of this principle: “he who has experience of the manner in which we order justice and administer the State, and still remains, has entered into an implied contract that he will do as we command him.”
There’s a truth here that’s not easily shrugged off. Whatever the form of government where you live, however abusive and tyrannical it may be, if it allows you to leave freely with all of your possessions, then you are in some way consenting to its authority if you remain, whatever your notions about the rights of man or the Constitution. But if the government plays Pharaoh to your Moses, trying to chisel your flocks and herds in exchange for an Egyptian exit visa, then it deserves the plagues that come upon it.
This is why politicians like Sherrod Brown, Bernie Sanders, and Sander Levin are deserving of even more contempt than usual. Their outrage that Burger King might establish a parent company in Canada, eliminating its American tax liability for foreign operations, is obscene. Theirs is the politics of the Berlin Wall, of coercing allegiance that only matters when it’s freely given.
Now, there is a world, at a least a theoretical one, in which totalitarian communist governments are legitimate, but that legitimacy depends on consent, on free exit passes. Our own government, which recognizes fewer limits than ever on its own power, is subject to the same principle. If it won’t let people leave freely, it loses its claim to authority, moral or otherwise. The law then loses any claim to our conscience, and represents nothing nobler than power and coercion.
For most of us, this question would be more practical if jurisdictions were still the size of a polis, but for multinational corporations, it’s practical now. Most of the recent commentary on Burger King’s move and tax inversions in general has focused on tax rates, and rightfully so. The United States has the highest corporate tax rates in the developed world, twice as high as rates in Europe and Asia. This is self-defeating; it leaves us with lower tax collections and chases off massive amounts of capital that would otherwise be invested in the United States.
Corporate taxes are also a form of pickpocketing, as their sole purpose is to get money from an unaware victim. “The elementary fact is that ‘business’ does not and cannot pay taxes,” Milton Friedman wrote four decades ago. “Only people can pay taxes. Corporate officials may sign the check, but the money that they forward to Internal Revenue comes from the corporation’s employees, customers or stockholders.” Yet these taxes persist and grow, he wrote, because the “politician can levy taxes, as it appears, on no one, yet obtain revenue. The result is political irresponsibility.”
In 2004, Congress imposed a tax on any stock or options awarded to executives that led inversions. This is naked coercion, and it’s not just toward corporations. Unlike the rest of the developed world, we tax income earned by our expatriates, despite the fact that they pay taxes where they reside. Historically, the injustice has been mitigated somewhat by partial tax credits, but that’s changing, too. Over the last five years, the government has gone after tens of thousands of middle-income expats whose only crime was ignorance of a dusty old law from 1970 requiring them to report any foreign accounts they had. That’s allowed the government to go after more than 43,000 people for more than $6 billion in taxes, interest, and penalties, not to mention flocks and herds.
That campaign is leading to record numbers of Americans renouncing their citizenship, to which the government responded last week with yet more coercion: it’s quintupling the fee for citizenship renunciation to $2,350.
Treasury Secretary Jacob Lew says the answer is to give bureaucrats the authority to unilaterally declare any company in the world a U.S. company if it fits certain criteria, and tax it accordingly. By “allowing these transactions to continue, we run the risk of eroding our corporate tax base,” he writes.
East Germany offered a similar argument in favor of the Berlin Wall: “We no longer wanted to stand by passively and see how doctors, engineers, and skilled workers were induced by refined methods unworthy of the dignity of man to give up their secure existence in the GDR and work in West Germany or West Berlin. These and other manipulations cost the GDR annual losses amounting to 3.5 thousand million marks.”
No doubt the American version of the wall would come with some sort of button you could press.
