What are taxes good for?

| February 19, 2008 | Reply

I received this email from a regular reader in response to one of my responses to my Creationism in Florida Schools post:

“The real question that comes to my mind after reading this St. Petersburg Times poll is, should we allow popular demand to decide what is taught in science classes?”

How about for deciding what is taught in science, deciding tax policy, setting social programs, setting foreign policy, etc., etc., etc.? Should we allow popular demand to decide for these as well? I think we currently do, and I think it is with the same disastrous results. The next logical question is how should we pick the deciders? The problem is, we will never move to the next logical question.

What was considered ancient political wisdom at the time of the Caesars was: If the people can vote themselves bread and circuses, they will. Concentration of capital is the primary benefit of a taxation system. It allows big things to be done by a people of whom no individual member can afford. Government social programs (a form of insurance that used to be the province of churches, thus the tradition of tithing) are an example of dilution of capital. As is the Economic Stimulus Package that raced through our government checks and balances without much of either.

The examples of Ancient Greece, the Medici families (practically an empire unto themselves), the California legislature, and the Summerhill project (as described in the book by A.S. Neill) show that, once people get used to controlling their own disbursments as a group, they eventually regularly (but not always) behave in a responsible manner toward the group, and therefore unselfishly benefit themselves. Good things can, and usually do, come of it.

But a key word is “eventually”. They must vote themselves “pork” for long enough to see the damage done by not providing for the greater good. Our system would prevent sufficient damage to let people see how bad these decisions can be. So we are perpetually in the broad borderlands between doing something good, and fiscal collapse.

The Federal Government was set up as a coordinator between the States of the union, and to limit the power of States where it may interfere with rights of the people. Phrases like “Provide for the Common Defense” and “Insure domestic tranquility” come to mind. Early in the 20th century, legislators went hog wild amending the constitution.

Then we had a rash of arguably unconstitutional federal programs established, such as Income Tax and Social Security (technically, these are voluntary). But the federal income tax was set up to pay for the common defense (war debts). And with over 20 workers per retiree, who would mind 5% for retirement insurance, half paid by the employer? Rather than deal with charging the states that then pass the charges on to the residents as state taxes, it was more expedient to charge people directly, originally based on the ability to pay. The personal deduction was originally above the median family income. Now the deductible is well below the poverty level. Also there are now only 7 workers per retiree, and falling (14% to FICA).

Anyway, we now placidly accept that some things are better when controlled from the top. Highways and interstates, rail and airline routes, dams and power plants are all interstate endeavors, and therefore arguably under federal jurisdiction. And too expensive for states to afford on their own. The space program? Started as a branch of the U.S. Navy, and has too many actual and potential military uses.

What about science in general? Before the second world war, science was privately sponsored. But the big programs of studying and controlling small things on an industrial scale could not have been done with private funds. Gradually, tax money almost completely replaced private research foundations. Then we recently got a president who mandated that federal money may not be used by any facility that, as part of its investigations, uses certain raw materials.

Oops. Maybe it is time for not-for-profit (tax deductible) science foundations to flourish, again. But most science is paid for by the feds, and there is an entrenched bureaucracy to guarantee that this remains the standard.

What has become of defense? This is still the biggest wedge of the tax pie. At the start of the 20th century, America actively avoided foreign entanglements. We reluctantly fully joined both of the world wars, only after we were directly attacked by distinct enemy states (Lusitania, Peal Harbor).

By the middle of the century, Republican president Eisenhower issued a dire warning to watch out for the disproportionate influence of what he termed the Military Industrial Complex. By the first decade of the 21st century, war seems to have become a matter of justifying defense contracts. It is only loosely justified by socio-political arguments (WMD’s, “Terror”).

Also, the current war is financed by raising our debt. This is a quiet and dangerous form of taxation. Spending un-raised money is how Germany in the 1920’s paid off their war debts, directly leading to a political takeover by a reactionary splinter group with feel-good promises.

Enough blather for now. Comments?

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Category: Economy, History, Law, Science, War

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A convoluted mind behind a curly face. A regular traveler, a science buff, and first generation American. Graying of hair, yet still verdant of mind. Lives in South St. Louis City. See his personal website for (too much) more.

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