Taxes, a system of legalized banditry

It is a fact that when the government, through taxes, takes money from an individual, it takes from him the power to purchase, or, purchasing power. There may be abundance of goods to buy, but this individual will not be able to avail himself of it because this purchasing power has been reduced.

With money in his pockets, the individual can buy whatsoever he chooses in the way of goods and services to meet his private and special needs and desires.

So also with the government - when it has money in its coffers, it can command the goods and services which may be required by public wants.

It stands to reason that when the resources of the country have not been radically decreased or brought to the point of exhaustion; when the productive system is capable of supplying the normal needs both of the individual and the government, then there hardly seems to be any reason to take from the individual in order to give to the government.

There are two outstanding facts in our modern economic life; one is the fact of widespread and chronic unemployment; the other is that of increasingly heavy taxation. These two facts, existing together, express an obvious contradiction.

On the one hand, unemployment represents the non-utilization of the capacity to produce; that is to say, an unexploited resource.

On the other hand, taxation represents the shifting of actual production, under way, from one destination to another. That is, production is taken from one and given to another.

So the obvious question arises: why should production be shifted from the individual to the government; why should we take from the citizen, deprive him of needed goods and services in order to give these to the government when in fact we are not making full use of our capacity to produce? Which latter fact is amply demonstrated by the large number of unemployed.

Public works represent the production of new wealth. When we tax the citizen we are paying for this new production with money which has resulted from previous production. Why? If the country is capable of producing both for private needs and public needs — which is evidenced by the fact that we tax the first to supply the second — then why should the country not be able to pay for both?

The people of a country are responsible for the both kinds of production: the production of goods and services for the individual, and the production of goods and services to meet public needs. Now when you have public needs being met by production which results in an ever-growing debt being placed upon the shoulders of the people; and on the other hand, when private production results in goods piling up in stores and warehouses while the needs of the people go unsatisfied, then we can only conclude, with reason, that there is something radically wrong with the system of finance. It simply is out of harmony with reality.

We have an illustration of this in the manner in which the cost of living mounts continually. Here we are today, in this era of modern production techniques when we are producing more and more, in less time, with less need of human hands, and still the costs of such goods go up when they should go down. More goods, less energy expended, less human labour - surely this should equal lower prices!

And our deficit budgets! They indicate nothing other than an incapacity to pay in the face of a capacity to produce. The country can certainly produce, since it will produce those things which are shown as a deficit in the budget. But the country cannot pay for these goods. That's the deficit part. The country will have to go into debt to pay for these things which the people of the country are producing. Money will have to be borrowed from the banks. And this will add to the ultimate cost of the thing produced very considerably. For this money is lent by the banks only on its terms — terms of the time of repayment, and terms governing the rate of interest. So a government can, without any difficulty, pay three times the original cost of the goods or services produced because of having to borrow from the banks. And the means of repaying these loans are taxes. So the financial system, though the government, robs the citizen, since it is the citizen and not the financial system which has produced these goods.

If the financial system under which we live were truly in accord with the facts as they exist in our economic life, specifically with regard to the country's capacity to produce, we should be able to reduce very radically our taxes. Ultimately they would be reduced to a form of mere payments for special services.

This situation could be brought about through a scientific adjustment of prices in conjunction with a system of universal dividends. Thus we should be carrying out the proposals first enunciated by the engineer economist, Major C. H. Douglas; proposals which have been developed and enunciated numerous times in Vers Demain and The Union of Electors.