On March 18, Joe Wiesenthal of Bloomberg Markets had MMT economist Stephanie Kelton on the show. If you’re not familiar with MMT, they think governments should print more money because deficits aren’t a big deal. At one point in the show, Wiesenthal asked, “If we don’t need to worry about deficits, why do we have taxes?” Kelton’s response was illuminating.
Now, the traditional excuse for taxes is, paraphrasing Oliver Wendell Holmes, that they are the “price of civilization.” Skeptics point out that, historically, societies with very low taxes are often far more civilized — think the Dutch Golden Age, Islamic Golden Age, Victorian England, the pejoratively-named “Gilded Age” in American history — that 30-year Golden Age when almost everything useful was invented. And, yet, throughout that period, federal receipts were one fifth what they are today.
Why so much civilization? Because much of what governments do today was done by charities or businesses competing for customer dollars instead of seizing their budget in taxes. When doctors, firefighters, and schools have to satisfy customers, things get quite civilized.
Still, even if we accept a “night-watchman state” argument for, say, national defense or salaries for Supreme Court justices, it gets tricky if government can simply print up the fresh money to pay for all that civilization.
Kelton’s answer? Taxes would still be needed because they make us poor. And because they can punish people she doesn’t like.
Specifically, Kelton likes that taxes “remove dollars from our hands, so we can’t spend them,” leaving more purchasing power for the government. So taxes make the people poor, and that’s a selling point to her, presumably because she thinks governments are really good at lifting people out of poverty. Anybody who’s spent time in America’s inner cities, where government money is pretty much the only money, might disagree.
Ah, but it’s not just about spending our money more wisely than we ever could, Kelton adds two secondary reasons she loves taxes: to punish particular people by redistributing their money, and to punish people for doing things she doesn’t like. Such as failing to buy energy efficient appliances (no, really). In other words, social engineering with carrots for your friends, sticks for your not-so-friends.
I should add that libertarians completely agree with Kelton here — taxes are indeed for spreading poverty and for punishing people you don’t like. That’s why libertarians, being kind and generous, oppose taxes.
Meanwhile, it’s nice to know we all agree that taxes have nothing to do with civilization, they are for destroying with a side of discriminatory punishment.
Great short write up. I’m baffled at people’s inability to understand just how corrosive and destructive personal taxation is, which is clearly and now unapologetically being admitted. I was reading an old law book on court cases dealing with taxation in which they point blank state “the power to tax is the power to destroy”. Mind you, that was written back when we actually had some semblance of sound money and an amount of control over our own currency/banking before is was stolen from under as and given to the private international money vulture monopoly. I have been researching this topic and law for years now and believe to have uncovered the root cause of this insanity back in the 1930’s. As Kennedy stated, “through infiltration” they corrupted our legal system and then corrupted the legal procedure of citizenship. These are foundational pillars of any system of law and civil society. It used to be well recognized the difference between a U.S. citizen and a State of the Union citizen which hinged upon the law of domicile. This legal doctrine of Lex Domicilii was erroneous displaced by Lex Patriae (law of nationality) by the Sec. of Treasury in the first edition of the Code of Federal Regulations in 1938. This fraudulently pulled ALL Americans into the relatively small *personal taxation powers of the limited United States government. It removed the proper role of the legal status known as the ‘Civil status’ of an individual. A completely separate and distinct legal status from their ‘Political status’ (nationality). But what else would one expect a government to do when it’s somehow granted the unimaginable power to pledge/mortgage/lien all the property and labor of their private citizens to underwrite their debts, which is what happened in the treasons of 1933. Read the speeches of Congressman Patman and McFadden from that time. It is a literal truth that we are paying for our own oppression and slavery, absolute insanity.