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?
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| 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.
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| 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.
#30#
