Every legal obligation to pay taxes is, in itself, an attempt to commit robbery; however, it can only be considered robbery if executed effectively, meaning if taxes are paid. In such a case, the use of this resource by the state will not determine whether the transfer of property was, or was not, an act of robbery (e.g., unlawful spending). Conversely, even if no law were to classify tax payments as robbery—given the definition used here—this would not imply that these payments are not a form of robbery.

While taxes—as an economic policy—are incompatible with libertarianism, they are not incompatible with capitalism. This is because capitalism solely refers to a form of social organization in which there is wage labor and at least some means of production are privately owned. Therefore, as long as both conditions are met, capitalism is compatible with tax payments.

Furthermore, in a free market, the absence of legal restrictions on the exchange of the property rights of assets, or on other types of economic agreements, means that tax payments are semantically compatible with certain types of taxes—for example, taxes not conditioned on the execution of any economic activity, such as wealth taxes.

Let’s consider a population with the following characteristics:

All taxpayers have a monthly income of $2,000 dollars
Everyone pays their taxes as mandated by law

Assuming these premises hold, we can infer that the tax revenue in this population would be $1 million dollars monthly. What happens if one of the quantitative variables increases while the rest of the variables remain constant? If so, the only semantically possible result is that the tax revenue would also increase. This shows us that tax revenue is not only determined by the rates of certain taxes but also by other variables such as the quantity of taxes, the number of taxpayers and the value of each individual tax base, the frequency of tax collection, and the effectiveness in law enforcement (rule of law).

Regarding the value of each tax base, this variable can increase due to various factors: a decrease in the quantity or value of exempt incomes, an increase in the quantity or value of tax-deductible expenses, or an increase in the value of the economic variable on which the tax is applied (e.g., income, profit, wealth).

Furthermore, if we not only analyze the behavior of tax revenue as a variable but also its ratio to the gross domestic product (GDP) of that population, we find that this ratio would be affected not only by the aforementioned variables, but also by the rates of economic growth or economic decline. Therefore, if tax revenue decreases in a country but the GDP value decreases at an even-greater rate, the value of the tax-to-GDP ratio will be higher.

The fiscal balance is the difference between a state’s revenues and expenditures. Meanwhile, the primary balance refers to the difference between a state’s revenues and expenditures, excluding interest payments on debt. While a state can have both a fiscal deficit and a primary deficit, it is also possible for it to have a fiscal deficit and a primary surplus.

However, both variables are subject not only to the value of the income variable but also to the expenditure variable. Therefore, an increase in tax revenue alone cannot mean a decrease in the primary deficit or the fiscal deficit. In both cases, it is necessary to know the value of the expenditure variable to determine whether such an increase in tax revenue leads to a reduction in a certain deficit.

Similarly, if by poverty we are referring, in part, to a group of individuals with a certain range of consumption, wealth, or income that starts at zero, it is fallacious to infer that a tax increase means a decrease in poverty. As explained earlier—because both surpluses and deficits can exist—state spending and tax revenues, as variables, are semantically independent.