Taxation and the Free Society

Between 1774 and 1775, a constitutional disagreement over political representation and the authority to tax exacerbated the divide between the American Colonies and Great Britain. This conflict began over tensions provoked by the Stamp Act and the Townshend Acts. The Stamp Act placed a tax on all printed goods, even on playing cards, and the Townshend Act placed taxes on imported British goods such as glass, lead, paints, paper, and tea. Although both acts were repealed, the tax on tea remained, with tensions between the Colonies and Great Britain steeping into bitterness. In 1774 the delegates at Philadelphia drafted the Declaration and Resolves of the First Continental Congress. 

Dr. Samuel Johnson responded to the Continental Congress with Taxation no Tyranny, a polemic in support of empire, hierarchy, and power. An apologist for Great Britain’s tax policy in the American Colonies, Johnson refers to the rights of citizens as “emanations” that come from the state and can be removed by the state at its will. Johnson claims that Great Britain has a fundamental right to tax its Colonies and that the Americans choose to leave Great Britain knowing the opportunity cost of their actions. The three Whiggish pamphlets examined here, written by “Anonymous”, “Regulus”, and Edmund Burke, were all published before the signing of the Declaration of Independence in 1776 and all respond to Johnson.

The responding authors believe that the rights of Englishmen go with them wherever they go and that the charters created governing frameworks, not contracts of indentured servitude to the crown. Burke focuses on economic efficiency and stability in his respectful speech before Parliament. Anonymous demonstrates that Johnson’s arguments contradicted the English tradition of natural rights. Regulus applies practical law and logic to expose fallacies in Johnson’s argument that Great Britain should have the ultimate right to tax the Colonies. Regulus and Anonymous believe representation is a precondition for Parliamentary taxation of colonial goods.

In Resistance No Rebellion Anonymous argues that protection of property is the responsibility of the King. If the King neglects that responsibility it degrades him to a corrupt despot. Property includes money. The House of Commons in Parliament has the power of the purse. The King ought to be a check against extraordinary and illegitimate Parliamentary taxation. When the King imposes taxes he fails to protect his subjects and usurps the role of Parliament. Parliament may tax by consent and may establish other interventionist policies.

To Anonymous, taxation without consent is slavery. As Englishmen, the Colonists should have representation in the development of policies that affect them. The Colonists gave up none of their rights as Englishmen under royal charters; they never rejected their identity as British subjects, and they thus maintain the right to representation regarding any levies raised against them. The executive (the King) should not have a say in colonial taxation. It is not within the scope of his authority. The King attempted to implement policy through his governors, but this constituted taking property from individuals who were stripped of the exercise of their rights as British subjects.

The Whigs also argue that absolutism is economically inefficient. If the government can take property (taxes) whenever it deems fit, then people will stop working hard and won’t invest because they don’t know if they’ll be able to keep the money they are making. 

To address the dispute regarding taxes among the Colonies, Johnson claims that the American Colonies are “represented by the same virtual representation as the greater part of Englishmen” (Johnson 36). He explains that 50% of people who have representation in the mainland of England are governed by people they don’t vote for, and that a lot of people don’t have the vote at all. Therefore, the American Colonists are in the same boat as most Englishmen. Regulus exposes Johnson’s logical inconsistencies: 

whereas our American brethren, having no qualification in England nor any connection with, or political relation to those who have, can in no sense, consistently with this constitution, be subject to parliamentary jurisdiction, or taxation” (Regulus 30). 

Johnson also argues that the Colonies are merely a grant from the crown, and they are living on the King’s terms. Johnson views a colony as a captive market. Its only purpose is to provide raw material to Great Britain and to buy British finished goods. Since Great Britain owns the “grant” to the land, then Great Britain has the right to restrict trade however it deems beneficial to the mother country. The Whigs believe that using coercion instead of consent will kill colonial loyalty and spark a revolt that will cost Great Britain far more than the revenue the taxes will generate. 

Economic intervention per se was not the issue. The colonies complied with the Navigation Acts and the provisions of their respective charters with little resistance. The Navigation Acts restricted colonial trade limiting it to only other parts of the British Empire, a monopsonistic arrangement; and only permitted Colonies to import from other parts of the British Empire, a monopolistic arrangement. Together these restrictions constituted de facto transfer of surpluses to the Empire from its subjects, what today are described as economic rents; and destruction of gains from trade, what we today describe as dead weight losses. 

Colonies were treated like input suppliers integrated into a larger firm. Anonymous says that the colonists understand the trade relationship. But when it comes to taxes that generate revenue the colonists require a say in the matter: 

They [the Colonists] deny our [Great Britain’s] exclusive power of settling not only the mode, but the quantity of this payment. They are ready to co-operate with all other dominions of the King, but they wish to cooperate on such terms as are allowed to the rest of their fellow subjects, and at such change as it may be rightfully adjudged they should bear. (Anonymous 13) 

Taxes affect the industrial capacity and thus the flourishing of the Colonies. 

Through representation, the governed outwardly consent to taxation. Citizens reap the benefit of protection provided by the government and may willingly exchange some level of autonomy for security. Great Britain had protected its Colonies from France in the Seven Years’ War, and sought revenues to resolve debts incurred in that conflict. In its haste, the Crown and its Ministers neglected to seek the consent of the Colonists. Johnson claimed that Great Britain spent a significant amount of money and blood protecting the Colonies, stating that he would “gladly see America return half of what England has expended in her defense” (Johnson 46). Johnson frames taxation not as oppression, but as reimbursement for imperial protection. Consequently, the Colonies were obligated to pay taxes to the “mother country” to help fund the necessary government aid to keep the Colonies safe.

From the Whig perspective, Great Britain imposed taxes on the colonists. Even if the ends (revenue) were justified, the means (taxation) were not. The subjugation of Parliamentary rule and the inconsistency of edicts from the King provoked Colonial resistance. Burke explains that British paternalism offended the dignity of the Americans, “They are ‘our children,’ but when children ask for bread, we are not to give stone,” (Burke 91). There was something fishy about Great Britain’s serpentine policy. 

The stench is demonstrated by examining the folly of the arbitrary tax on tea. Tea has no direct influence on commerce—it is merely consumed. There is no industrial or manufacturing use for tea leaves, making the tax on tea economically impotent. Burke states, 

No man ever doubted that the commodity [tea] could bear an imposition of three pence. But no commodity will bear three pence, or will bear a penny, when the general feelings of men are irritated, and two millions of people are resolved not to pay (Burke 21). 

Taxing tea has no effect on balance of trade, on Colonial production, on Colonial exports, or on revenues directed toward defense. Taxing tea contributes nothing to Great Britain’s legitimate objectives. Rather, the tax on tea merely manifested the exertion of power.

Taxing and laws as symbols of authority are found in any and all governments. These laws are often intended to set moral standards and assert cultural values. In the case of the British tax on tea it is being used to assert governmental authority. Burke dedicates a solid portion of his speech to attack the tax. He argues:

It is indeed a tax of sophistry, a tax of pedantry, a tax of war and rebellion, a tax for any thing but benefit to the imposers, or satisfaction of the subject. Well! But whatever it is, gentlemen will force The Colonists to take the Teas. You will force them? (Burke 19-20). 

Burke knows the legislation’s intent. The unpopular symbolic law resulted in nothing but an absolute loss for the British empire. It turned The Colonies against them, brought in no revenue and was an economic loss as the resulting boycotts hurt British producers. 

Johnson argues that because the Americans chose to leave Great Britain, they therefore willingly gave up the rights they would have had if they had stayed in Great Britain. “[B]y his own choice he has left a country where he had a vote and little property, for another, where he has great property, but no vote” (Johnson 27).  For Johnson, Americans gained by giving up the right to vote because property has more personal value than voting. 

Anonymous responds to Johnson by arguing that Englishmen cannot lose their rights just by crossing a body of water. Colonists should have more rights than the Englishmen residing in the motherland because the Colonists must also govern themselves. Regulus strengthens Anonymous’ rebuttal noting that if Johnson believes that the Englishmen who chose to go to America lose their rights, then those Englishmen should also be exempt from taxation. If they lose their rights when they cross the ocean, then the British government also loses the right to tax them.  Johnson ignores many economic realities: the cost of enforcing laws, the fragility of mercantilism, and the opportunity cost of coercion vs. incentives.  

Johnson’s argument rests on the rigid legalities of royal authority, but Burke shifts the debate toward the more practical terrain of economic efficiency and imperial stability. Burke prioritizes the preservation of a profitable trading relationship over the abstract right to collect taxes. In his critique of British colonial policy (1774), Burke states, “It is the weight of that preamble, of which you are so fond, and not the weight of the duty, that the Americans are unable and unwilling to bear” (Burke 21, 22). Burke argues that the Ministry’s obsession with the symbolic authority of the “Preamble” replaced practical governance with a self-destructive pride. Burke highlights the inherent irrationality of the tea tax; a policy the King himself admitted was “contrary to the true principles of Commerce” noting that Great Britain prioritized the abstract right to tax over the actual collection of revenue (Burke 25). Insistence on legislative supremacy dismantled what Burke terms the “efficiency of consent,” an economic strategy where leniency and colonial self-governance foster long-term loyalty and reduce enforcement costs. Analyzing the failure of the Stamp Act and the subsequent tea tax, Burke demonstrates that Colonial resistance was a reaction to military coercion rather than an innate desire for independence. Burke’s argument reveals a profound economic irony: by spending more to enforce a “three-pence” tax than the revenue it could ever generate, Great Britain transformed a profitable mercantile relationship into a wasteful military conflict. 

Burke’s argument is centered on the efficiency of consent, that can be linked to Richard Whately’s idea of catallactics (1831). Whately argues that the focus of economic study should be reconciliation through exchange and not solely the wealth of a nation. Anonymous mirrors this perspective when he recites: Liberos, liberalitat retinere, satiǔs est quam metu (it is better to keep men through kindness than through fear). It is more efficient to cooperate “kindly” than to try to control a group using force. The Whigs view the empire as a consensual exchange of loyalty and benefits from trade for protection and rights. When Johnson argues that Great Britain has absolute power over the Colonies and can restrict trade it breaks the catallactic contract between the British government and the Colonies. Anonymous and Regulus argued that when Great Britain commands taxes from the Colonists, it breaks the contract and its Ministers become lawless pensioners.  

Anonymous focuses on natural rights to dismantle Johnson’s arguments. He argues that Englishmen cannot lose their rights simply by crossing the ocean. He states that according to the charters, the Colonies “are to be considered as mere extension or processes of the British empire” therefore, they should receive the same rights as Englishmen residing on the mainland of Great Britain (Anonymous 14). Anonymous even argues that the Colonies should be “entrusted with ampler liberty” than the Englishman residing in the mainland. Anonymous also addresses Johnson’s claim that American Colonies care more about wealth than freedom when he states that Americans will continue to fight for their rights “in spite of threatened Famine and Destruction” (Anonymous 9). Parliament broke a contract (that it never had) with the Colonies by trying to enforce taxes. Anonymous warns that “political diseases are contagious,” suggesting that once Parliament assumes an illegitimate power, it will not confine the use of that power to the Colonies but will exercise that power throughout the empire (Anonymous 27).

Burke focuses on the practical outcomes of taxation on trade, but Regulus focuses on the use of practical law to dismantle Johnson’s claims. Regulus argues that the American Colonies are not the “property” of the British Parliament, but separate legal entities tied directly to the Crown through official charters. By framing these charters as binding contracts, Regulus identifies a critical constitutional limit. While the King may have granted the land, he did not, and could not, grant Parliament the right to tax a people who were already governed by their own local legislatures. Regulus exposes the logical impossibility of the Colonies serving “two masters,” asserting that a charter enabling a people to make their own laws “could not at the same time disable them” (Regulus 22). Regulus also refutes Johnson’s theory of “virtual representation” by highlighting the geographic distance between Great Britain and America. For Regulus, the 3,000 miles of ocean made it impossible for the mainland to represent Colonial interests, transforming compulsive taxation into “lawless robbery” (Regulus 30, 54). Using the vivid metaphor of a cow being milked to death, Regulus warns that this economic exploitation will inevitably force the Colonies to use their “horns and heels” in resistance. His argument shifts the debate from a simple tax dispute to a battle for survival, framing armed resistance as the only rational legal response to a system that sought to drain the “blood and vitals” of Colonial liberty (Regulus 45). 

The historical struggle against needing to serve two masters is still a reality in the modern United States tax system. Just as the Colonists were pulled between the British Parliament and their local leaders, modern Americans must answer to both the Federal government and their own State government. This system is often economically inefficient. The cost of compliance, or the time and money spent on double the paperwork, is a waste of resources that could be used to grow the economy instead. It also creates an overlap with tax claims. Because both the Federal and State governments have the authority to tax the same income, they often drive up the total bill without coordinating with each other. This risks the exact economic disaster Regulus warned about. By “milking the cow dry,” the government slows down the very growth it depends on for revenue. 

The inability of the British Ministry to look beyond rigid legalism turned an intellectual dispute into a war for independence. Johnson’s Tory argument was stuck in a rigid, imperialist mindset. He viewed a colony as a grant or a corporation that owed the King money simply because it existed under his protection. But as the Whig responses showed, this virtual representation was nonsense. It is not possible to be properly represented by people 3,000 miles away who don’t share your interests. 

Anonymous fought for natural rights. Regulus proved that serving two masters was logically impossible. Burke showed why the whole situation was an economic disaster. By trying to “milk the cow” until she was dry, the British Ministry turned a profitable trading partner into an enemy. In the end, this debate proves that an empire can’t survive when its leaders care more about proving they have power than they do about the actual health of the economy. Great Britain didn’t lose the Colonies because of outside forces. It lost them because they chose a policy of pride and force over the efficiency of consent. As Burke famously said, “a great empire and little minds go ill together” (Burke).

When taxation is brought up in the modern day, many forget the reason that these pamphleteers wrote. The writers and enforcers of the law had forgotten their duty to the people whom they governed. This issue is still reflected in the opaque tax policies of elected officials who care little for the affairs and lives of their constituents. There is at least representation through those duly elected, but as our populace grows bigger and the world becomes more integrated, it becomes more difficult for taxation with representation to obtain. These authors wrote about the consent of the governed. A system that grows too large may not be able to properly care for its constituents’ desires.

Taxes imposed by the executive violate the requirement of consent and thus have no justification. Arbitrary power rejects any respect for free association and exchange. In the same way, modern tariffs are extensions of nationalistic and protectionist mercantilism that put individuals at the mercy of the executive for policy decisions that should be made by a larger body of electors, responsive to their constituencies.

The conflict between Johnson, and the pamphlet authors and Burke was more than a disagreement on the taxation rate. It was a constitutional crisis concerning where the government gets the rights to tax and how that is negotiated, what are the government’s legitimate obligations and what are the proper means of fulfilling those obligations.