Taxes Can Sustain Us, but Never Will the Machines of Profit

Maybe the toughest and best solution for a public bailout is possibly removing any and all public services. Not permanently, but take away public services long enough for taxpayers to learn how to appreciate and understand where and how their tax dollars are spent to keep the society in which they live stable, secure, and apart from living in squalor and third world status. In the United States, many voters/taxpayers are mislead into thinking that taxes are too much, harm the individual's ability to do business and profit from it, provides extreme power to government, and only provides services to those who, unlike them, are not a contributing part of society. These premises are completely unfounded, and lack the reasoning that would wholly explain why taxes even exist at all.

 I have always held to the saying, "one has to spend money, to make money", sometime more than you earn, and this statement has so many truths that can stand up to our current financial dilemma, in that the money needs to come from somewhere, and if those that possess it fail to reintroduce it into society, then that is the point at which the economic machine grinds to a halt. It's a cycle, and as the saying imparts, the economy needs a consistent cycling of money in order to sustain itself. Businesses do it everyday, yet those who favor business spending associate that type of revenue as a benefit to profit only. Those same members of society, though view public spending in a negative manner, maybe because it is not providing instant gratification to their profit margins, and associate it right away with wasteful spending.

So, let's take it to the extreme. Let's provide a scenario that meets the far-right's wet dream of tax policies, which would be minimal to if any taxes at all. What kind of society would that be? Let us compare the benefits of a nation with a structured tax system to that of an under-developed nation, that may have a minimal tax policy system in place. Consider, the United States, or any other fully developed nation in Western Europe, and you would find that these are nations that carry a fairly well structured taxation system. Along with this well structured taxation system, comes a strong military presence, one that can move about the globe with ease and provide ample security for its citizens, due to a consistent revenue stream. These well funded governments can go into other countries and invest in their natural resources and provide a pathway for the private industries to business and make profits.

Then there are the amenities of well paved roads, running water, a consistent flow of electricity to each and every home. Look to nations that uphold the status of global tax havens, like Barbados (a 74,000 land force with a coast guard), Aruba (no military force at all), Belize (a force of 79,000 soldiers)! Most of these nations, lack a significant military force, and if they were to be invaded by a foreign force, they could not independently defend themselves. Set the military aside, and weigh in on transportation infrastructure! The U.S. (with a maximum tax rate on individuals of 35%) has well over 15,000 airports, and it is ranked number one in total roadways and railways. Compare that to Russia (with a 13% individual tax rate), with just over 1200 airports, ranked number two in railways, and number eight in roadway infrastructure. It is apparent that societies with higher taxes reap the benefits of return, that comes in the form of a stable and well structured state.

Granted some of these services are supplied by some private companies, but without subsidies and regulation by government, all of which costs money to build and regulate, not only would these utilities be scantily available, they would not be sustainable (Without Taxes, America Would be a Third World Country). I would challenge any individual, who believes in a limited tax system, to provide an example of a state that legally unbinds its citizens from taxation in any form, and show that state could provide the stability and security that matches that of nations that participate in a sensible tax system. An under-developed country without a feasible tax structure will never climb out of non-developed status. According to experts at the International Monetary Fund, development "will often generate additional needs for tax revenue to finance a rise in public spending". This public spending is necessary because it provides all the necessary mechanisms to create effective infrastructure, and without out it, the country stalls in the process of developing (Tax Policy for Developing Countries).

Speaking of developed nations, let's shift the focus to the comparison of tax structures in European states to that of the U.S. Most would argue that European taxes are way to high, and that argument lends itself to the entitlement of U.S. taxpayers, who pay little taxes in comparison to European social democracies, but on the same token receive less services from public sector, and that service is lacking in quality as well. Americans are paying more, simply because they aren't getting a significant return, and psychologically that angers taxpayers, and lends them to believe that government is taking advantage of them (a.k.a. big, bad, and overburdening goverment). If U.S. taxation is placed within the model of private investment, one would see that it is a bad investment, because even though taxes are lower in comparison to other developed nations in Europe, the return of services is lacking quality, efficiency, effectiveness, security, and stability. Why would anyone want to continue the punishment of investing badly? On the other hand, investors would pay more for a share if they felt that its value would have a good chance of increasing over time, and if value is to increase, then that would lead us to believe that more money is being placed into that same investment. Contrary to current investment practices, the taxpayer effectively needs to understand that you cannot get something for nothing, and that a higher rate of taxation doesn't necessarily mean a deflation in the quality of life. The U.S. has "the lowest tax rates among rich countries, the least generous public services" (1). This makes so much sense, because if the taxpayer consensus is to pay less, then obviously the return on services would match the level of financial provision.

An interesting view is if you compare not the rate of taxes, but the effects of government spending and the movement toward privatization and deregulation. The decrease in taxes and the increase in private infrastructure, seem to have an evident detrimental effect on lack of progress in worldwide economies. Take for instance the huge amount of government spending in the U.S. in the 1960's, a time when big programs like Medicare, the space program, military research, and increased regulation were strongly sustaining the economy, and were enhancing the economy on the taxpayer's dime. It was a time of good investment from and for the public. The U.S. was taking on the spending characteristics of the European model (1). It was during the 1980's, with the introduction of Reaganomics (i.e. trickle-down economic theory), and the drive for more market deregulation and the privatization of nationalized companies, where it seems that the descent into economic instability began, where economic bubbles formed and burst in an almost schizophrenic manner. Privatization of once public infrastructure gave conservative leaders a good excuse to justify lowering taxes. It makes a lot of sense, if a company is no longer public, why should the taxpayers have to pay for it? Though this restructuring of the economy sounds good, it fails to work, and fails to guarantee that a stable and effective infrastructure would be provided to the society that, even if it pays a lower rate, has to pay taxes. Look at private energy firms like Enron, or many other privately run utility firms, who place profit over social stability, that took over national energy responsibilities, and yet failed to provide a stable source of electricity for California (Enron linked to California Blackouts); (U.S. electricity blackouts skyrocketing), or created the scenario for regional blackouts in the Northeast. If these utilities were provided by government, the only entity to protect the interests of society and not profit, could such a threat to the stability of society have been prevented?

Where's the evidence, well look back to the 1960's or further back to post-war America, when the economy was growing intrinsically, based on production and value. The nation at that time was providing economic security. Sure, the business economy kept growing through the new millennium, but it was false value, and was only producing profitable returns for those investing in compartmentalized returns, failing to reach the greater element of society. There is no guarantee that private investment will benefit the growth of society. It is ridiculous to think that a privatized nation could promise the same level of efficiency, effectiveness, stability, and security that a nationalized infrastructure could carry. Self interest and the decrease or elimination of taxes fails to benefit either society, the taxpayer or the business realm.

So, for those who doubt government spending, and label it as wasteful, and that it fails to benefit the country as a whole, well I would ask those people to provide me with some evidence in current economic affairs, where private industry has made up for the loss of publicly funded infrastructure. Currently, while most states are preparing to make way for even more cuts to public spending, not a single element of the private industry has come forth to fill that gap. On the same token, they wouldn't be able to because they lack the investors from both sides: the taxpayer funded states who are slashing budgets for spending, and the lack of public investors. Newly re-elected California governor, Gerald Brown, has taken on the same economic character as his predecessor Schwarzenegger, who made extreme cuts to government funded services, and Brown plans to continue this practice by pursuing state worker's pensions. So that's one effort to cut spending. Wisconsin governor, Scott Walker, would provide "only the essential services our citizens need and taxpayers can afford" (2). Illinois, having recently struggled to pay its bills, due to the recent economic fallout, has $8 billion in unpaid social services bills, on top of it under-financed pension plan system. This is number two on our list, and proves that there is still no proof of excessive spending, and in fact its a lack of capacity to spend (2). Due to a significant lack of effective tax rates, it is outrageous to think that any government agencies have the ability to over-spend. It is simply a matter of reality, that there is not enough money coming in to spend anything at all, and that "money coming in" is better known as taxes. It's all well and good to want to cut spending, but it is a futile measure to rant about cutting spending at a time when governments lack the capacity to do so.

With our current rate of taxation, from where is most of this wasteful spending derived? There was plenty of money in the government to be had by the private banks and investment firms, when they failed to provide adequate returns on the false-value commodities they packaged. That wasn't spending, that was considered a stabilization of secure economy, because the private sector was incapable of providing sustainability for society, but at the same time not holding itself liable for doing so. Is it a fair premise that the only heroes of society are the same which failed to rescue anyone but themselves, while the taxpayers lose their right to public services? It was not government that wasted money on the wealthy private industry, but instead the private industry that threatened society's stability, due to its irresponsible free market behaviors. If we are to remove taxes and government, the people that make up the nation will lack economic security, and will only a threat to their livelihood.

1. "From sea to shining sea." Economist 369.8349 (2003): 6-8. Academic Search Complete. EBSCO. Web. 17 Jan. 2011.
2. "Budget Worries Push Governors to Same Mind-Set". Davey, Monica. The New York Times. January 17, 2011. <http://www.nytimes.com/2011/01/17/us/17governors.html>