This is the second article of a series which will be published in The Union of Electors. They are translated from the work of Louis Even, "Pourquoi Taxer ?"
Three principal arguments are proffered in support of the existing system of taxation:
1. The government needs the money for the administration of the country; for the financing of public works and public services. It has to take the money where it can find it.
2. Taxation helps to correct the unjust distribution of wealth by taking the money: from those who have it and giving it to those who have not, in the form of pensions, allowances and other types of social security.
3. Taxes help to prevent inflation by skimming off the surplus of money when there is too much of it in the country.
If taxes are so universally detested, if each one strives too shove them over on to the shoulders of the other, if they reduce our already insufficient purchasing power, if they add to already too heavy prices, then why does everyone put up with them?
They are endured simply because, while undeniably painful, they are considered absolutely necessary.
The reasons given above for justifying taxation seems, at first glance anyhow, to be quite logical and beyond any argument.
The government needs money for administration purposes; to pay those employed by the government, to finance public works and public services, for national defence, etc., etc.. But the government has no money of its own. So it is obliged to tax those who have money — or at least to borrow today and tax tomorrow.
This, then, is the first reason given in justification of taxes. All the governments keep insisting, with an insistence which has become almost a rivalry, that they are penniless unless they get their money by one of the following means:
The latter brings in very little in the way of monetary profit. Probably the only exception is the liquor commissions which profit from a human passion which these days is little subjected to restraint. Other government businesses for the most part are more likely to show losses rather than gains. Moreover, a government which sets itself up as a boss in business, or as a merchant, is a government letting itself in for something for which it was not designed.
Selling natural resources brings in only a temporary profit, while it results in the loss of national capital. It is probably one of the worst ways in which a government can raise cash.
Royalties are simply another form of taxation, paid by companies or individuals for the privilege of exploiting a country's natural resources.
Borrowing is simply delayed taxation. In order to repay such loans it is necessary to tax later. And with the interest charges included, taxes are higher than the value of the services or goods obtained through the original loan.
So it is beyond any dispute that the chief means the government uses for raising money to meet the demands of public works and public services, and to administer the country, is taxation.
But then a certain question begins to present itself to anyone who reflects even a little on this situation: if the government has no money other than that which it gets from others through taxation; if we, the citizens, have no money other than that which we receive from someone else, then, where does the money originally come from? Who makes the money or sets it into circulation in the first place? If the government does not make it, if we the private citizens of the land, do not make it (and heaven help us if we even try!) then who does make it?
The second reason put forth in the attempt to justify taxes, is that such taxation helps, in a way, to adjust the imperfect distribution of wealth. The government takes purchasing power away from where it exists and places it there where there is none. Taxes make possible family allowances, pensions, grants and other forms of government largess.
This is an admission that wealth is improperly distributed in the first place. An attempt is made to smooth things over with the plaster of taxation. But since there seems to be no end in view to taxation, it is quite definite that this maldistribution of wealth has become a permanent fixture in the economy.
Would it not be more logical to cure the evil at its roots through a more just distribution of wealth at the beginning, rather than to attempt through the palliative of taxes to make the evil a little more bearable. A tablet will relieve a headache temporarily, but it will not cure the weak eyes which cause the headaches.
And thirdly, the governments, following the same reasoning as the banks, estimate that it is necessary to remove a certain amount of money from the hands of the people; otherwise there will be too much in circulation. We find this excuse being offered most often in times of inflation. We have noted above that taxes elevates prices – which is not difficult to understand.
And yet, the government is advised by so-called financial experts who maintain that heavier taxation is going to bring prices down!
Their reasoning goes something like this: if the people are taxed to the limit, if they have no money with which to buy, they will not purchase the merchant's stocks. The merchants will thus find themselves running after the purchaser; fighting for the small amount of purchasing power which is left. Thus they are eventually forced to lower their prices more and more if they want to move their stocks. They may descend to the very brink of bankruptcy - and, indeed, some are liable to fall into it.
That, in fact, is what happened in 1930. And prices rested on bedrock for years after. But who benefited? The bankrupted merchants? The consumer with no purchasing power?
What possible benefit can there be for anyone when, in order to bring prices down it is necessary to deprive the community of purchasing power?
But the proponents of taxation stick to their guns. The manufacture of armaments and munitions distributes money; the public does not buy munitions; if you do not tax them there will be too much relative to the amount of goods available for purchase.
Here, then, are the principal reasons given in support of the system of taxation:
At first glance, we repeat, these reasons may seem very plausible, logical and incontestable. And yet we must still put forth the question: Are taxes truly necessary?
(To be continued next week)