Taxes Discourage Production
And he will take the tenth of your seed, and of your vineyards, and give to his officers, and to his servants. And he will take your menservants, and your maidservants, and your goodliest young men, and your asses, and put them to his work. He will take the tenth of your sheep: and ye shall be his servants. And ye shall cry out in that day because of your king which ye shall have chosen you; and the Lord will not hear you in that day. (I Samuel 8:15-18).
Te people of Israel wanted a king. They heard of the nations around them, and they were told that these nations had strong central governments. Each was led by a king, who embodied the power, prestige, and glory of his nation-state. The system of civil rule in Israel at this time was based on decentralized tribes. Each tribe had a system of judges. There was no legislature. There was no central civil government.
Samuel was both a priest and a civil judge. Representatives of the people of Israel came to him and asked him to anoint someone to serve as a king. He warned them against this. His warning came in the form of a threat: increased taxation. Not only would they have to pay taxes to the local tribal civil governments, they would now have to pay taxes to the central government, as embodied by the king.
Nevertheless the people refused to obey the voice of Samuel; and they said, Nay; but we will have a king over us; That we also may be like all the nations; and that our king may judge us, and go out before us, and fight our battles (vv. 19-20).
We might think that the threat of increased taxation would have scared them off. Not so. They wanted to be represented by someone with power, and they were willing to pay the price. The price was an additional tax of 10% of their income.
This 10% figure was the same as the tithe that was owed to the Levites, the tribe of the priesthood. Samuel warned them that the king would extract as much wealth from them as the entire priestly tribe was entitled to. This centralization of wealth and power would be enormous. But they did not care. They wanted a powerful central state, so they got one. It lasted through four kings. During the early years of the fourth king, Rehoboam, a tax revolt took place. The nation of Israel separated into the northern and southern kingdoms (I Kings 12). It was never brought together again under the rule of a Hebrew king.
The threatened system of taxation was proportional. It followed the same rule as the principle of the tithe. Everybody paid the same percentage. No group within the society would be able to extract a greater percentage of wealth from a richer group. The economic burden that afflicted the rich would also afflict the poor. The king of Israel would be an equal opportunity exploiter. Nevertheless, the people demanded a king.
It was clear that the productivity of the people of Israel would decline under the rule of the centralized government as manifested by a single king. A tenth of their wealth would be extracted every year. In addition, he would take menservants and maidservants away from them. These servants would no longer be part of the household production system. The wealth that they would otherwise have produced would be transferred to the king and his household. The households would no longer be as productive, because the resource inputs available to them would be siphoned off by the king. Nevertheless, the people demanded a king.
We take away two lessons from this. First, people who are in ethical rebellion prefer tyranny to liberty. This came as no surprise to Samuel, for God had told him that this would be the case.
And the Lord said unto Samuel, Hearken unto the voice of the people in all that they say unto thee: for they have not rejected thee, but they have rejected me, that I should not reign over them (v. 7).
Second, they are not swayed by the argument that higher taxes will reduce their wealth. They prefer to live under the embodiment of power rather than enjoy greater personal productivity. They did not listen to the economic logic of Samuel. He was correct in his assessment, but they paid no attention.
This is always the problem with voters who criticize the existing tax code. They do not object to taxation as such. They are happy to extend power to the central government. They just want a different tax code, so that someone else will have to bear a greater burden of taxation. They reject the principle of the tithe: proportional taxation. They think they can use their influence so that the central government will extract greater wealth from those who have more income than they do. Their call for tax reform is this: “Don’t tax you. Don’t tax me. Tax the guy behind the tree.”
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