At What Population Size Does Taxation Become Legitimate?

Consider the following scenarios and provide your answers below:

A group of 10 people were stranded on a very large island due to a shipwreck.  The ten people set about helping each other produce things that were necessary for each others survival.  Of the ten, John happened to be exceedingly industrious and managed to create more goods than the others on the island.  John loved to trade the goods he created with the other people on the island, but John almost never gave any of this goods away for free.  He always expected to be paid for his goods in either labor or in trade.

The others on the island began to resent the wealth that John had created for himself and decided that John should be forced to give them some of his wealth without them having to give John anything in return.  They did not like the fact that John had such a comfortable life while the rest of them were barely scrapping by.  In order to equalize the wealth in their community, the nine other people took a vote among themselves to institute a new government.  The new government (which consists of the nine other people) instituted a tax that only effected John, which allowed them to take and redistribute property from John which they felt was excessive and then redistribute that wealth among themselves.

After several decades the population of the island had grown to 10 families consisting of 100 people and a monetary system had been agreed upon by the islanders that was predicated on the trade of fish hooks for goods and services.  John’s family continued to be incredibly productive due to John’s skills as an engineer.

There were now two fairly rich families living on the island consisting of 20 family members.  The rest of the community was still having a difficult time producing an abundance of goods to trade.  The families that were having a difficult time got together and voted to levy a tax that would effect the richest two families.  The people who were having a difficult time felt that they should not have to trade goods and services voluntarily with the richest two families in order to acquire wealth from them.  They felt the two richest families were hoarding wealth and so they voted to implement a 30% tax on all income above what they considered to be the median income.  The wealth that was taken from the richest two families was equally divided up among the 80 other people.

A very large and strong man named Bill, from one of the poorer families, was elected sheriff of the town.  Bill’s job was to keep the peace, make sure that taxes were paid, and to act as a judge in cases of dispute.  In order to accomplish this task, Bill would periodically review the richest families finances (without their consent) to make sure they were paying their “fair share.”  If Bill discovered that one of the families was not paying the proper amount of taxes that had been levied by the community, Bill would simply take the property that was owed.  If anyone tried to stop Bill from collecting the taxes, Bill would threaten them with violence.  Bill also kept some of the money he took from the richest families for himself as payment for his services as a sheriff and judge.

After several more decades the population of the town grew to 200 families consisting of 1000 people.  The monetary system of fish hooks allowed the division of labor to take place and now there were several businesses of intermixed families all working to produce goods and services for each other.

By this time there were enough children that a formal school had become necessary to teach all of them; however, the families who had children did not want to have to support the cost of a school and school teacher on their own.  Since the number of families that had children outnumbered the families that did not have children, the families that had children all got together and voted to make the families without children help pay the cost of their child’s education.

The sheriff at this time did not have children and refused to give up his wealth or take the wealth of others to support a school, in defiance of the what the majority had voted to do.  In response to this, the majority voted Sheriff Bill out of office and installed a new sheriff.  The new sheriff mustered a posse of fellow child-having citizens and took Bill’s property by force.

After several more decades the population exploded and now there are 2000 families and nearly 10,000 people.  The city now had a formal government with a town council, police force, and court system.

One of the city’s most prominent businessmen had been elected the mayor of the town, largely because he had the resources to run a large campaign.  The mayor’s family owned a paper producing business that made various paper products.

After being elected to office, the mayor convinced the town council that the people would better be served if the town used paper money instead of fish hooks.  This would allow the town government to print the money necessary to operate government without having to use direct threats against people in order to take their money through taxation.  The town council agreed to this, along with the police and court officers who were all very eager to ensure the government would always have the money necessary to pay their salaries.

The mayor’s son got the contract to produce the paper notes.  The police and courts began refusing to uphold contracts paid in fish hooks.  And the government would only accept the payment of taxes in paper notes.

In order to pay their taxes, citizens had to exchange their fish hooks for paper notes at a fixed rate established by the town council.  The public was not allowed to directly vote on this change in the money system.  Their elected representatives on the town council made this decision for them.


I hope this article has provided you with some food for thought about the nature of government and taxation.  Please share this article with your friends and family.  Everyone needs to reflect on what government has done to our money and what taxation actually entails.

Of course, I am of the opinion that the use of coercion and violence to fund welfare, warfare, or public works is totally inappropriate.  If people want something, then they should have to work or trade for whatever it is they want.  This is the only way new wealth comes into existence.  Voluntarism and free markets are the only way a civilized society should conduct itself.

If you are curious about what a civilized society might look like, please watch this lecture by Austrian economist Hans Hoppe.


Factoid: NYC had a population of just over 5,000 in 1776.


  • beaulingpin

    voting on matters of fact will invite trolls, like myself, to troll your data.  Facts are facts, and voting is strictly irrelevant.

    • I’m not sure how one can “troll” a voluntary opinion poll.

      However people chose to vote is up to their own personal beliefs.

    • James Westlock

      Welcome to irony.

  • Exuberant1

    I love island based thought experiments, being one who often uses them.

    I shall drink my coffee and do this poll on a full stomach.  That is how good it is.

    Great work Mnemeth1.

  • Nice. It’s always with obfuscation that taxation is justified.

  • (got here from a USAIC hit on my own site).  I’ll share this with my kids, although the material has been discussed before.

    The “Education wars” are necessary because otherwise more children would figure out the fish hook situation faster; (a) they might be actually literate and (b) they might have time to do something besides values indoctrination.

    Seriously speaking, I have spent a few years getting some answers to my “why?” or “how did THAT! happen?” and  a lot of this figuring out included time on databases from the Dept. of HHS and/or (neither of which are reliable, but they are eye-openers).  I am aware that this HHS spends approximately $4 billion year on enforcement — not support, but enforcement– activities surrounding welfare, that there is a $2/$1 (for what a $ is worth anyhow) incentive to keep people ON welfare, including those who didn’t ask for it — through the invasive and abusive OCSE (Office of Child Support Enforcement).

    We (i.e., I have friends who also do look-ups) also are aware that this telecommunications / IRS-based agency of the federal government has an expansionist policy on centralized “SDU” (Statewide Distribution Units) of child support, and (nationwide, do the math) local county child support agencies are often losing track (average per state — around $2 million, although no one really knows the amount!) of money they’ve already collected; the term is ‘UDC” (Undistributed Collections).  One would think a black hole of this size would truly concern anyone concerned with budgets, period — however, the HHS/OIG/OAS (that’s the audit service) having barely audited a sample of counties in sample? of states — expresses in their reports very little concern that the children (for which reason their entire department allegedly exists) are not getting these funds, merely that the Feds are not getting their 66% take.

    Education — look at the teachers’ unions contributions to politicians (Obama, etc.).   I had a custody war based around this, a life-changing one, where I lost contact with my children for about the last 5 years of their high school; they have since both turned 18 and gotten back in contact (voting with their feet, in other words).  Come to find, grants to the states to equalize the therapeutic outfits under the guise of “courts” has been going on since at least the mid 1990s.   There is a clear intent by select people (and foundations) to put the entire US, if possible,  at their feet to be trained not to fight back, and cause ripples.   The term in use is “high-conflict.”  High-conflict is bad and must be bred out of the populace by removing children from whoever protests (one or another form of abuse or insanity).

    The outfits doing this do so because they obtain nonprofit status to do ( in many cases) their already-mandated by public employment jobs.  I have a certain satisfaction, of late, to find out some of these groups being shut down for delinquent, incomplete, or non-filing of their own mandated IRS 990s, or failing to even bother to register as a charity, as they are required by law.  Eventually I came to understand that the problem lies with the tax code, which sets up a patronage system, and a carrots & sticks routine, if you buy into it.   

    Anyhow, you might enjoy reading some of    I enjoy writing it, particularly as part of what I write seems to have (recently) forced a few groups emanating from SF to straighten up and fly right — or at least, on the radar, which they now are.  These groups have inappropriate financial relationships with judges and the courts.

    See also Joseph Zernik, DDS on the undermining of the court system through technology; dual-docket system (no one gets to see the real records) and automatic filing of pleadings, unmonitored by the hand of any clerk.  WE are in a hijacked and lawless judicial system at this point.  I am so glad my kids survived til they were 18, changing the extortion hold this system (and certain individuals) held on my life through causing and threatening to cause more harm to people I am related to by having given birth to them, or vice versa (elderly parent).

  • Larken Rose

    Keep in mind how convoluted and complicated the statist indoctrination has to be in order to make people imagine that theft is bad, but mass theft is good.  The fact that the vast majority of people recognize theft as bad AND at the same time advocate some form of “taxation” is a testament to the power of authoritarian propaganda. Great job making the truth hard to miss. One more thing I like to add, to make statists squirm, is this: “If it’s okay for someone to be robbed to give you free stuff, then at least have the honesty and courage to do the robbery yourself.” Not surprisingly, while most people will eagerly vote for “legal” looting that benefits them, they really don’t want to have to take on the responsibility and risk of committing the theft themselves. To be perfectly blunt, to be a statist is to be a hypocrite and a coward.

  • Even the Mayflower passengers sat down to write how they would share the ruling of the new community, so if 100% agree, I believe that is honest agreement. IF each citizen says I’ll contribute so many fish hooks, to finance a school, to pay someone to build the school, and then to pay someone to teach the children. BUT if even one citizen objects, then any taxing for anything is wrong. We have citizens now who have no children, but agree that it’s best for the community that all children be educated for the future of the community. Thats great as each person pays exactly the same amount, regardless of income. We want streets, we vote to have someone to pave the street. In early America we had toll roads that paid the person owning the road for his labor to maintain the road. As the community grew larger this became impractical. In California we vote on many laws and taxes, then the government does exactly what they want and tell us we don’t know what we want. Now we have Jerry Brown for governor again,  no justice for us. As President I will demand and get the right to pass or not pass any bill brought before me. Or else.

  • Skelly790

    It would have to be a very, very large island to fulfil the requirements of the Lockean Proviso…

  • Skelly790

    I suppose I’d better explain that statement:  There is a perfectly legitimate basis for taxation in that there aren’t an infinite supply of natural resources. If there were then any person could mix their labour with those resources and completely own the product.  But when ‘John’ creates goods for sale from those resources he deprives another island dweller of the opportunity to do the same, and thus he must compensate them through the medium of taxation.  This is not to say he does not legitimately own the greater part of the result of his labours, but owe a part he certainly does.