Not too long ago we got into a discussion about one of everybody’s least favorite subjects: taxation. Nobody likes it, even the people who levy taxes or benefit from it. That being the case, why do we need taxes in the first place?
|No, it doesn't quite work that way for anybody.
The short (and best) answer is that there is no such thing as a free lunch. If you want what government provides, you had better be prepared to pay for it . . . . shot figure out a way to shift the burden to someone else. All the someone elses who get stuck with the bill tend to get resentful, especially when the ones who received the benefit are out of reach and thus unaccountable.
That includes allowing the government to create money backed by its own debt, as is the case in virtually every country on Earth today. It’s not free money, because someone in the future either has to pay the piper, or someone else is left holding the bag filled with worthless government promises. One way or another, somebody who did not benefit from government spending is going to pick up the tab for it — and that’s a short road to revolution or conquest.
So allowing government to create money is always a bad thing. Almost as bad is allowing government to borrow from existing savings, but sometimes you can’t get away from that, especially in an emergency when the government needs cash fast and there isn’t enough time for the legislature to levy additional taxes. There will be later, of course, which tends to keep the brakes on, but at least people know where the money came from; it wasn’t created out of thin air.
|Henry C. Adams
Which leads to the second reason for having taxes (the first being that it’s the soundest way to meet government expenditures): control over the purse strings. If the only way government can get money is to go hat in hand to the taxpayer, then the taxpayers are going to be in charge, not the government. If, on the other hand, government can figure out a way to finance operations or anything else without recourse to taxation, guess what? The government is going to be in charge . . . until the bill comes due to whoever or whatever supplied the financing. As Henry C. Adams noted well over a century ago,
As self-government was secured through a struggle for mastery over the public purse, so must it be maintained through the exercise by the people of complete control over public expenditure. Money is the vital principle of the body politic; the public treasury is the heart of the state; control over public supplies means control over public affairs. Any method of procedure, therefore, by which a public servant can veil the true meaning of his acts, or which allows the government to enter upon any great enterprise without bringing the fact fairly to the knowledge of the public, must work against the realization of the constitutional idea. This is exactly the state of affairs introduced by a free use of public credit. Under ordinary circumstances, popular attention can not be drawn to public acts, except they touch the pocket of the voters through an increase in taxes; and it follows that a government whose expenditures are met by resort to loans may, for a time, administer affairs independently of those who must finally settle the account. (Henry C. Adams, Public Debts, An Essay in the Science of Finance. New York: D. Appleton and Company, 1898, pp. 22-23.)
The easiest way of saying this is “Own or be owned.” If the citizens provide the means by which government operates, the citizens will own the government. If the government can function without taxation, then the government will own the citizens.
It’s as simple as that.