In Defence of Taxation

Posted on 12/08/2011 by

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Right now, it seems to be that there are two ‘philosophical’ camps regarding taxation in the US Federal Government. One camp says taxation is evil, is a hindrance to the enrichment of the chosen capitalists, and must be eliminated for the hardworking rich puttering on the golf course. The other camp contents itself with insisting meekly that taxation is a necessary evil, and supports increased taxation on those lazy poor people working at Seven-Eleven who can’t afford lobbyists to keep their taxes low. Unlike the hardworking rich.

As can be expected, taxation is neither of these things. It is a system by which everyone, or most everyone, provides monies for their defence, and the defence of all fellow subjects/citizens, by the State. This is one of the things which Hobbes meant by the Common Wealth: an institution built to gather together the disparate abilities of all to provide for the common defence of all. Because of the monetised nature of the modern economy, the primary tool for providing this common defence is via taxing monetised economic activity.

I’ve previously dismissed Anarchy, albeit cyber-Anarchy, so I don’t think I need to rehash much about my opinions of a State-less society. Just like human beings need language, so we also need States. It’s just the way we are.

The State should not be constructed as a for-profit enterprise, despite some concepts to the contrary, such as extremely silly flavours of Libertarianism and Socialism. Therefore, the State will always be ‘bleeding’ off a certain percentage of taxable economic activity within its purview. To this end, the State can be rightly called a symbiont: it survives off of the efforts of others, and provides benefits to the ‘hosts’. Neither can survive without the other.

When there is no benefit derived from the State by the populace, it becomes a parasite: a creature which takes but never gives back. This parasitism is destructive to the populace, as well as the State, because such unfair circumstances give rise to much-lowered rates of economic activity. Without tax receipts, a State can not long borrow monies to keep afloat before creditors start asking probing, inconvenient questions about income viability and credit risk. Consider the recent downgrade of the USA by Standard & Poors, especially in context with crashing tax receipts. Yes, that information is for 2009. No, 2010 will not be better looking, it will be worse.

The happier condition of symbiosis also means the State should, by and large and in a more perfect world, seek to foster a flourishing of the widest variety of economic activity feasible by generally staying out of the way of it all. Despite a pervasive misunderstanding, Adam Smith touted a mixed-economy system: he thought a ‘free market’ was a market where there are tens of thousands of different entrepreneurial interests. Anything less is not ‘free’, and had no business calling itself as such. Where there was no possibility of having tens of thousands of different interests, he did not think a market-based system was appropriate, nor even advisable. It are those categories where the State, in his mind, was to intrude in an active manner, but nowhere else.

It is generally accepted that flourishing economic activity results in higher taxation income with a per capita lower taxation rate. It is a reasonable assumption. A healthy and vibrant economy with an overall taxation rate of 10% will garner, in the long run, a far larger and more stable income than a sickly and contracting economy with an overall taxation rate of 40%.

However, a sickly and contracting economy with a 10% taxation rate is much the same as a similarly sickly and contracting economy with a 40% taxation rate. One is simply sicker and contracting faster. No other difference is perceptible or really needing consideration. Both economies, in the long run, are equally in serious trouble. The problem is not the taxation rate; part of the problem is taxation policy. Who, exactly, is being taxed? Who, more importantly, isn’t being taxed?

The conflation between the act of paying taxes, and the Acts which spend them, is an unfortunate one. One should not chafe at the notion of paying taxes in general. One should demand to see distinct benefits from paying them, such as resilient and convenient public transportation, clean sidewalks, swift impartial justice, and a host of other valuable concerns. If one desires these things – which I do very much – one is bound, in my opinion, to not complain about taxes in general. One is bound to complain about taxation policy in specific.

It is a very legitimate hope that the State both takes a modest percentage, and spends it wisely. Allow me to confide that I enjoy paying my taxes. The enjoyment, however, is in an abstract and philosophical fashion. It is my participation in society; it is my contribution to the common wealth. I like the idea of a State, and I am in agreement with Hobbes: better a tyrannical system than anarchy.

What I rant and rave about is how my taxes are spent, never mind the amount I contribute. My personal pecuniary pain is a trifle compared to the suffering which the United States unleashes every day throughout the world. What I also rant and rave about is the policy by which the taxation is levied, and for whose benefit. That, of course, is for those who stand upon the shoulders of the working people, and thereby proclaim themselves all the more superior for it.

Yes, I’m talking about the super-rich, as well as corporations. And they are the reason why the United States, and indeed much of the corporatised West are the way they are.

Read part 2 here.

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Posted in: Analysis, Reform