Letters from Tomis

Introduction

“We don’t pay taxes; only the little people pay taxes,” declared the late billionaire hotelier Leona Helmsley. Such patrician venom, uttered with candor befitting a modern Marie Antoinette, is a fitting epigraph for any Marxist discussion of taxation under capitalism. For Karl Marx and his ideological descendants, taxation is no mere technical matter of public finance – it is a battleground of class struggle, a cipher of exploitation and power. In what follows, I undertake a defense of the Marxist perspective on taxation, marshaling the insights of Marx, Engels, Lenin, and Trotsky, and illustrating with contemporary cases from the United States and Western Europe. The aim is to scrutinize taxation’s philosophical, economic, and political implications under capitalism, to indict the bourgeois state’s use of tax revenue, and to contrast this state of affairs with Marxist alternatives. What emerges is an argument – delivered with rhetorical flair and polemical relish – that the tax system in capitalist society is a reflection of class dominance, and that meaningful emancipation requires us to see through the fiscal fog that veils exploitation.

Historical Materialism and the Origins of Taxation

Marx’s historical materialism teaches us that to understand any social institution, we must dig into the mode of production that underpins it. Taxation, no less than law or religion, is rooted in material relations and class dynamics. In feudal times, lords extracted grain and gold from peasants; in slave societies, the surplus was appropriated directly by slave-owners. Capitalism swept aside these older forms and centralized surplus extraction under the aegis of the bourgeois state. As Marx and Engels observed in The Communist Manifesto, the modern state exists to manage the affairs of the capitalist class as a whole. The fiscal system – taxes and expenditures – is one of its chief tools. To paraphrase Marx’s pithy formulation: the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie. Taxation, in this view, is not a neutral civic duty shared equally by all “citizens,” but a terrain upon which the contending classes fight over shares of the social product. Who is taxed, how heavily, and for what purposes the revenue is used – these are questions whose answers are determined by class power, not by some lofty ideal of the “common good.”

It is telling that one of Marx’s early revolutionary acts was a call for tax resistance. During the 1848 uprisings in Germany, when a reactionary government asserted authority, Marx’s newspaper proclaimed: “From today, therefore, taxes are abolished! It is high treason to pay taxes. Refusal to pay taxes is the primary duty of the citizen!” This was no anarchist swipe at all taxation per se, but a tactical broadside against a state apparatus that had betrayed the people. The young Marx knew what the bourgeoisie also knows: the purse is the sinew of power. Cut off the flow of funds to an illegitimate regime, and you strike a blow for the revolution. Thus even at its dawn, Marxism treated taxation as profoundly political. The Communist Manifesto of 1848, while envisioning the eventual “withering away” of the state (and with it, of taxes), nonetheless included “a heavy progressive or graduated income tax” as one of ten immediate measures to be taken by a workers’ government. Marx and Engels advocated steeply graduated taxes on income and wealth as a means to expropriate the expropriators – to begin siphoning away the riches of the bourgeoisie for the benefit of society. Not for them was the timid liberal notion that a little charity trickles down from rich to poor; rather, they proposed to wield taxation as a weapon in the class war, redistributing wealth and undermining the material basis of the capitalist class’s power. At the same time, Marx’s ultimate vision looked beyond taxation. In a socialist future, with the means of production common-owned and class distinctions erased, the very rationale for taxation would fade. Society would directly allocate resources to meet needs without the roundabout of taxing private profits – because private profit, that sacred idol of the bourgeois era, would itself be no more.

The Bourgeois State and the Uses of Tax Revenue

To defend the Marxist perspective on taxation, one must first grasp the nature of the bourgeois state that levies and spends taxes. Far from a neutral umpire hovering above classes, the capitalist state is, as Lenin crisply put it, “an organ for the oppression of one class by another.” Governments may speak in reverent tones about “taxpayers’ money” and the social contract, but Marxists insist we peek behind this ideological veil. In practice, the lion’s share of tax policy is engineered to serve capital’s interests – to reproduce the conditions for profit-making and social control. The record of history offers abundant proof. Under capitalist regimes, indirect taxes (sales taxes, VAT, excises) that fall disproportionately on the masses have long outweighed truly progressive levies on the rich. Writing in 1913, Lenin noted with scathing irony that in the United States – a democracy vaunted for its egalitarian ethos – workers were paying “twenty times more” in indirect taxes (as a percentage of their income) than the capitalists. “We see that the workers pay seven kopeks to the ruble in indirect taxes while the capitalists pay one-third of a kopek,” Lenin reported, after examining U.S. statistics. The “very disorderly order” of this tax system was no accident, he pointed out, but an inevitable outcome in all capitalist countries. In other words, tax structures under bourgeois rule tend to shift the burden downward – champagne and yachts are lightly taxed, bread and beer heavily so.

Why would the working class tolerate such an arrangement? Marxist analysis replies: through a mixture of coercion and consent manufactured by the state. The coercion is easy enough to spot – pay your taxes or face fines and jail. The consent is cultivated by ideology: the incessant refrain that “we are all taxpayers”, that paying tax is a patriotic act and that the government is “we, the people.” Marxists demur. They point to how “bourgeois democracy” routinely translates into the domination of society by wealthy interests behind a façade of universal suffrage. The political power of concentrated wealth ensures that tax codes are riddled with loopholes and indulgences for the bourgeoisie. Observe, for instance, how the executive suites deploy armies of accountants and lobbyists to whittle their tax bills to the bare minimum, while the ordinary wage-earner has taxes taken from each paycheck before it even reaches his hands. The bourgeois state, true to form, trumpets any modest tax relief for workers as evidence of its benevolence, even as it quietly allows capital to squirrel profits away in offshore havens or benefit from capital gains rates lower than a secretary’s payroll tax. In Marx’s unsparing prose, the state’s legalese and jurisprudence around taxation amount to “the will of your class made into a law for all,” masking bourgeois advantage as the common interest.

Even the expenditure side of taxation betrays class priorities. Citizens are told their taxes pay for “civilized society” – schools, roads, healthcare, safety nets. Indeed, under pressure from below, some of the revenue is begrudgingly devoted to public goods. But consider where much of the tax money really goes. A Marxist indictment of the bourgeois state’s spending would highlight swollen military budgets that underwrite imperial adventures and prop up a global order safe for multinational corporations. It would note the generous subsidies and bailouts lavished upon industries – from Big Oil to Wall Street banks – whenever their profit horizons dim. It would expose how ostensibly public funds are channeled into private coffers: lucrative contracts for construction and arms manufacture, or corporate tax abatements justified in the name of “job creation.” The scandal of contemporary capitalism is not that taxes exist, but that they are so often paid by the many and pocketed by the few. As one report documented, dozens of U.S. corporations have perfected schemes whereby they keep income taxes withheld from their workers’ paychecks instead of remitting them to state treasuries, effectively turning employee tax contributions into corporate subsidies. Thus the working class not only produces the surplus that capital appropriates; it even pays taxes that are then handed back to capital under euphemisms like “incentives” or “public-private partnerships.” Little wonder, then, that Marxist theorists from Lenin to Trotsky viewed the bourgeois state’s fiscal regime as an engine to enrich capital and to buttress its dominance. Trotsky, in surveying the lot of peasant farmers in tsarist Russia, observed that “the modern bourgeois state, by means of taxation and militarism, throws the peasant into the clutches of usurers’ capital,” reinforcing the exploitation of small producers by big capital (a pattern one finds in various guises across the capitalist world). In sum, the Marxist perspective unmasks taxation as an instrument wielded by the ruling class: a means to extract resources from laboring people, to sustain the apparatus of class rule (armies, police, bureaucrats), and to socialize the costs of private profit-making (while privatizing the profits themselves).

Taxation as Class Struggle: Who Really Pays, Who Really Benefits?

If class struggle is the motor of history, then tax policy is one of its arenas. Rather than a soporific topic for actuaries, taxation in the Marxist view bristles with conflict between bourgeoisie and proletariat. Each tax bill passed, each budget cut or spending hike, reflects a tilt in the balance of class forces. The wealthy, contrary to their image as harried Atlas figures stooped under an unbearable tax burden, have proven remarkably adept at shirking their “fair share.” Helmsley’s brazen quote about “only the little people pay taxes” endures precisely because it rings true in practice – as countless examples attest. In recent years, U.S. corporate titans like Amazon and Netflix raked in billions in profits and paid literally $0 in federal income taxes. In 2018, Amazon.com – headed by the planet’s richest man – nearly doubled its profits to $11.2 billion and still received a tax rebate from the federal government, effectively posting a tax rate of –1%. Such outcomes are not anomalies or mistakes; they are the predictable result of laws written by and for the rich. A sprawling industry of tax avoidance thrives on capitalist globalization: multinational companies shift profits to low-tax jurisdictions (Ireland, Luxembourg, the Cayman Islands) at the stroke of an accountant’s pen. The “little people,” lacking Caymanian shell companies or high-priced lawyers, simply see the deduction for taxes on each payslip and sigh. To add insult to injury, the bourgeois ideological apparatus then scolds these same working people for any resentment, painting those who demand the rich pay more as envious or economically ignorant. The bourgeoisie’s staunchest defenders even invert reality by portraying high taxes on corporations as ultimately hurting workers – a claim Marxists reject as a cynical bourgeois sophistry. After all, when corporate tax rates were far higher in the mid-20th century (the U.S. had a top corporate rate of 52% in the 1950s, and even as late as 1980 it stood at 46%), businesses still invested and economies still grew. It was class power, not economic necessity, that drove the great tax counter-revolution of the last 40 years – from Reagan’s and Thatcher’s cuts to today’s ubiquitous tax havens.

Contemporary class struggle over taxation is perhaps most vividly illustrated by contrasting who actually shoulders the tax burden in capitalist societies. In the United States, payroll taxes and sales taxes eat up a hefty portion of a working-class family’s income, while billionaires famously pay a lower effective tax rate than their secretaries. This grotesque regressivity would not surprise Lenin, who highlighted how indirect taxes – those rolled into the price of goods – weigh heavily on workers. Even ostensibly progressive taxes like the income tax are undercut by myriad deductions and capital income exclusions that favor the wealthy. Small wonder that the richest 400 Americans saw their tax rates fall dramatically in recent decades, even as their share of national income skyrocketed. Marxist analysis interprets this trend plainly: the ruling class has used its political ascendancy (deregulation of campaign finance, revolving doors between government and business, think-tank propaganda) to rewrite the fiscal rules in its favor. The Tax Cuts and Jobs Act of 2017 in the U.S. was a case in point – a law piously sold as a boon to workers, but which in fact slashed the corporate tax rate from 35% to 21% and showered benefits on capital owners. The predictable results: a gaping budget deficit (later cited as pretext to cut social programs), a surge in stock buybacks (enriching shareholders), and no visible investment renaissance. In Marxist terms, the bourgeoisie had won yet another skirmish in the class war, enlarging its claims on the surplus at the expense of public coffers.

Across the Atlantic, in Western Europe, similar dynamics prevail – albeit with local flavor. In the United Kingdom, successive Conservative governments since 2010 executed an “austerity” agenda that combined tax hikes on the many with tax cuts for the few. The standard VAT (a regressive sales tax) was raised from 17.5% to 20%, hitting every Briton each time they purchased essentials. Meanwhile, the same government phased down corporate tax rates year after year, from 28% toward one of the lowest in the OECD. The ideological rationalization was that cutting business taxes would “turbocharge” private investment – the old trickle-down wine in a new bottle – but workers experienced little beyond squeezed wages and fraying public services. In France, President Emmanuel Macron in 2018 abolished the wealth tax on multimillionaires, then moved to hike fuel taxes in the name of environmental policy. The result was the eruption of the Gilets Jaunes (Yellow Vests) protest movement. To the working-class citizens of rural and peri-urban France, many of whom rely on cars and saw none of the benefits of Macron’s favors to the rich, the fuel tax felt like “class warfare from above.” As one analysis noted, “as tax cuts went to the wealthy, it is no wonder working people in France objected to fuel tax increases”. The Yellow Vests demanded not the end of taxation per se, but its fair apportionment – “progressive taxation; stronger regulation of big business; and new protections for workers.” In their slogans, Marx’s legacy was alive: they recognized that “tax has become a central issue in the anti-austerity struggle,” a proxy for broader demands of social justice against the dominance of capital. Even in the high-tax welfare states of Scandinavia – often held up as models of civilized capitalism – Marxists would point out that the underlying class structure remains. Generous social benefits and relatively high taxes on the rich have ameliorated inequality, yes, but they came about through fierce class struggles (strong trade unions, socialist parties) that forced concessions from capital. And tellingly, even those societies rely heavily on consumption taxes (like Denmark’s 25% VAT) which ensure that workers still finance a substantial share of public outlays from their own pockets, while capital calmly continues accumulating profit. The moment labor’s power falters, the bourgeoisie presses to roll back taxes on wealth and business – as happened when Sweden abolished its inheritance tax and scaled down taxes on corporate profits in recent decades. The lesson is clear: taxation under capitalism is an expression of class power relations. Gains in tax fairness are won by the organized might of the working class; reversals occur when the ruling class reasserts its hegemony.

Philosophical, Economic, and Political Implications

What are the deeper implications of this Marxist reckoning with taxation? Philosophically, it challenges the liberal notion of the state as an impartial arbiter and taxes as a patriotic duty evenly shared. Marxism forces us to ask: duty to whom, and for what? If the state is, in essence, the “bourgeois state” (as Marxists contend), then paying taxes often means funding one’s own oppression. This is a harsh charge, to be sure. Few would dispute that some of our taxes provide genuine public goods – libraries, levees, vaccines, and the like – which even Marxists acknowledge as necessary for social life. But the moral envelope in which bourgeois ideology wraps taxation (“we all give according to ability to a common purse for the common good”) is ripped open by Marxist critique. Instead, the act of taxation is situated within the grand ethical problem of exploitation. Marx famously located exploitation at the point of production – in the capitalist paying a worker less in wages than the value the worker’s labor adds to the product, the difference being surplus value appropriated as profit. Taxation does not negate this exploitation; it merely redistributes some of the surplus after the fact. If anything, the standard structure of taxation often compounds injustice: workers are taxed on their wages (which were already a truncated share of what they produced), and then those tax proceeds might be used to underwrite, say, a police force that can be (and often is) deployed against them should they strike or protest. The “bourgeois social contract”, as idealized in civics textbooks, starts to look rather one-sided – more a feudal tithe by another name. The Marxist view holds that true freedom and equality cannot be achieved merely by tweaking tax rates within a capitalist framework; rather, it demands a transcendence of that framework, a transition to a society where the wealth produced by labor is not siphoned off by either private profiteers or bloated state bureaucracies acting on their behalf.

Economically, the Marxist perspective underscores that taxation is fundamentally about distribution of the social product. In capitalist economies, production is privately controlled but its fruits must be shared (to some extent) via both market exchanges and state intervention. Taxes and transfers are a secondary distribution, superimposed on the primary distribution determined by property and labor relations. Reformist thinkers often put forward taxation – especially progressive income taxes or wealth taxes – as a remedy to excessive inequality. Marxists support such measures to relieve workers’ burdens, but also warn of their limits. Taxation cannot eliminate the exploitative relations at the root of capitalism; at best, it can temper some outcomes. There is also a built-in structural tension: push taxation of capital too far, and capital will resist with every weapon at its disposal (capital flight, disinvestment, propaganda about “job killing” taxes, even sponsoring coups in extreme cases). This is not an argument to coddle the rich – it is an argument that the rich, as a class, will never willingly allow their wealth to be taxed into oblivion. Only by changing who owns the wealth – through socialization of the means of production – can we decisively alter how resources are allocated. Until then, every tax policy that significantly bites into profits will be undermined or overturned when the correlation of forces permits. We have seen this pattern: after World War II, high taxation of the wealthy coexisted with strong growth for a few decades (under unique historical conditions of booming economies and strong labor movements). But from the 1970s onward, a capitalist offensive (neoliberalism) rolled back those taxes globally, resulting in the rampant inequality of today. In short, Marxist theory views heavy taxation of the rich as a transitional demand – useful in curbing capitalism’s worst inequities, but unsustainable as a permanent solution without a deeper social transformation.

Politically, the fight over taxes often lays bare the class character of the state. Electoral campaigns frequently pivot on tax issues (tax cuts, tax credits, funding public services), and here the Marxist is quick to note the dichotomy: bourgeois parties inevitably promise to lighten the tax “burden” – by which they mean the burden on capital and its upper-middle allies – whereas genuinely socialist movements seek to shift the burden upwards and use revenues for broad social benefit. When socialist-leaning parties come to power within capitalism and attempt to implement redistributive taxation and expansive social spending, they tend to meet fierce resistance not just from domestic elites but from international markets (witness how proposals to tax the rich or boost spending can trigger capital flight or currency attacks). The Marxist interpretation is that the capitalist state, even under left-leaning governments, is constrained by the structural power of capital. One might win a vote, but as long as big business can threaten an “investment strike,” policymakers flinch. We saw a vivid instance in Britain, 2022: a right-wing government under Liz Truss announced sweeping tax cuts for the wealthy and corporations – a move rewarding the bourgeoisie – yet ironically spooked the financial markets and had to reverse course, toppling the Prime Minister. This curious episode, where even the guardians of capitalism momentarily overstepped, underscored how delicate the balance is. The state must manage taxation such that it extracts enough from the system to fund itself and maintain social peace, but not so much as to imperil capital accumulation. Marxist political economy thus frames taxation as a balancing act in service of capital: tax the working masses too heavily, you court unrest; tax capital too heavily, you choke investment (or rather, the perception of profit prospects). The outcome in capitalist democracies tends to be a middle-of-the-road tax structure that mildly redistributes without ever threatening the fundamental class structure. Social democratic welfare states, for example, achieved a temporary truce in the class war: the workers paid taxes and received services; the capitalists paid taxes but retained ownership and control. That truce, however, has been eroding in our era of globalization, where capital plays jurisdictions against each other in a race to the bottom on tax rates. Marxists would contend that this erosion is not mere policy folly but intrinsic to capitalism’s logic of competition and accumulation. In the long run, “one must either undo the gains of the welfare state or undo capitalism itself,” the stark choices converge.

Marxist Alternatives: From Taxation to Expropriation

Having surveyed the dismal science of taxation under capitalism, what do Marxists propose as an alternative? It is a common misconception that Marxism simply means “higher taxes and bigger government.” In fact, Marx himself envisioned the abolition of the standing state and with it the complex tax-and-spend machinery that characterizes class society. But that stateless communist horizon is reached only after a period of transition – the dictatorship of the proletariat – during which the working class uses state power to transform the economy and social relations. In that transitional period, Marxists do advocate vigorous use of taxation as one tool among many to dispossess the bourgeoisie. For instance, Lenin in 1917, on the eve of the Russian Revolution, called for “a heavy tax on capitalists” and the “confiscation of war profits” as emergency measures. Similarly, revolutionary programs, such as those influenced by Trotsky’s Transitional Program, often include demands for sharp progressive taxes and levies on wealth to fund relief for workers and the poor. The point of these policies, however, is not to establish a permanent tax bureaucracy skimming off capitalist wealth year after year while leaving the capitalists in place. Rather, it is to weaken and ultimately dissolve the economic power of the bourgeoisie itself. In the Marxist ideal, once the working class has taken power and expropriated the major industries, finance, and land, the social surplus can be allocated through democratic planning rather than haggled over through the tax code. Engels noted in Anti-Dühring that in a future socialist society, “the government of persons is replaced by the administration of things” – meaning that governance becomes a matter of managing production and distribution directly for social needs, not wringing revenue from unwilling private owners.

Even during the transition, Marxists emphasize that many needs can be met by direct public takeover of resources rather than by taxing private entities and then contracting back services. For example, rather than taxing private utility companies heavily to fund subsidies for poor households’ bills, a socialist approach would be to nationalize the utilities and provide power at cost as a public service. Rather than complex housing benefit schemes that tax the rich to pay the poor’s rent (thus indirectly funneling money to landlords), better to socialize housing and charge affordable rents or none at all. In essence, the Marxist alternative to bourgeois taxation is expropriation and planning – taking the means of creating wealth away from a small class and placing them under social control. This does not mean that accounting and redistribution vanish overnight. Marx, in his Critique of the Gotha Programme, famously outlined how a socialist society would still need to make deductions from the social product for common funds: to invest in new production, to support those unable to work, and to cover communal services. In that sense, there would still be a kind of “taxation” – but crucially, it would not be an antagonistic process between separate classes. It would be the democratic community allocating its labor and goods according to collective decisions, not an exploiting class skimming value under the guise of taxation. Marxist thinkers often liken this to members of an association deciding how to apportion dues for their common purposes; it is done by and for the associated producers themselves, not by an alien state power confronting them.

To bring this down from the lofty heights: imagine a society where the top 1% do not exist as profiteers because productive wealth is owned by workers or the public. The question “how do we tax billionaires to fund healthcare?” becomes moot when there are no billionaires – instead, the large enterprises (now publicly owned) simply channel a portion of their output to maintain hospitals, pay doctors, build schools, etc., as part of the plan. The Marxist alternative envisions funding public needs through direct provision – the social surplus is allocated at the outset to public goods, not first claimed as private profit and then partially clawed back in taxes. During the revolutionary transition, yes, soak the rich through taxes, by all means – Marxists are not shy about endorsing that. But they see it as a bridge to a more radical resolution: the socialization of wealth itself. As the saying (often attributed to Marxists) goes, “instead of a maximum wage and higher taxes on the rich, why not simply no rich?” This is perhaps the sharpest contrast with liberal reformers, who tinker with tax rates to balance inequities while leaving the basic class structure intact. The Marxist finds that approach akin to treating symptoms while the disease rages on. Tax-and-transfer policies in capitalist societies can dull the pain of exploitation, but they cannot cure it.

One might ask, is this not utopian or extreme? But consider how even moderate center-left proposals – a modest wealth tax, free college funded by taxing Wall Street trades, universal healthcare funded by taxes – meet ferocious opposition from the propertied class. The mere hint of encroaching on the privileges of capital sends billionaires to media pulpits decrying “socialism.” This reaction, in a perverse way, validates the Marxist analysis: the bourgeoisie intuitively sense that any significant taxation for egalitarian ends is a slippery slope toward undermining their dominance. They fight tooth and nail against it, often more fiercely than against far-right movements that leave economic hierarchies untouched. Thus, Marxist policy does not fetishize taxation; it uses it contingently, as part of a broader strategy to empower the working class and disempower the capitalist class.

Conclusion

In defending the Marxist perspective on taxation, we find ourselves peering through the looking-glass of bourgeois society, where so much is the opposite of what it claims to be. Taxation in a capitalist democracy is sold as each citizen’s equitable contribution to the republic’s welfare; in reality, it more closely resembles a form of class tribute – with the working masses playing the role of tribute-payers and the bourgeois state the collector and custodian of wealth for the elite’s benefit.

Marxism teaches us not to take these injustices as eternal. It provides not only a critique but a vision of transcendence: a society in which the surplus wealth created by all is turned to the benefit of all. In that society, the question of who pays taxes and how much would lose its agonizing significance, because the class division that makes taxation a contentious transfer would have been overcome. Until then, however, we live in the world of class struggle. Every tax loophole and every social program teeters on the scales of that struggle. A Marxist defense of progressive taxation is thus part of a larger offense against the rule of capital. It insists that the working class has not just a right but a duty to demand that those who monopolize wealth disgorge a good portion of it for social needs – and ultimately, to demand the end of that monopoly itself. It is a fitting irony that the wealthy often accuse Marxists of wanting to “rob Peter to pay Paul.” In truth, as Marxist analysis reveals, it is the capitalist who has been robbing Peter (the worker) to pay Paul (the profit-taking shareholder) all along. Taxation can be a tool to take some of that plunder back and use it for the common good, but only a tool – the real task is to end the plunder at its source.

In closing, let us return to where we began: Helmsley’s arrogant dictum about the little people. A Marxist perspective turns this on its head. In a just society, “little people” would not exist – only people, without a rapacious elite lording over them. And in such a society, paying one’s share for public purposes would cease to feel like treason to oneself and instead become simply part of the collective thriving. Until that day, we must remain vigilant and unsparing in our critique: taxation under capitalism is an index of the class struggle that permeates every facet of our social existence. We who seek a world beyond exploitation are compelled to fight for every inch of justice, including just taxation, even as we keep our eyes on the prize of a classless society where the prefix “tax” can finally be removed from the word “justice,” and the two will be one and the same.