Jim Hlavac
Economic Theory
Economic Theory
There are dozens of types of taxes, levied at every level of
government.  But one thing for sure is that every one complains about
taxes.  Yet, when they start to consider the taxes as specific things
you find that taxes are far less disliked than at first assumed.

     So one task in thinking about taxes is to divide the subject into
manageable bites.  However there are some underlying premises
about taxes that should be considered first.  

     Taxes are the organized pooling of funds to accomplish projects
that are too big or two specialized for other organizations to do.  For
instance, to build roads, which are of such a nature that individuals or
corporations could not do the task.  

     Given that society is complex it stands to reason that taxes should
be complex.  However they need not be as complex as they are, and
the argument could be made that complex taxes result in a complex
society as much as the opposite. Indeed, they feed off of each other.  
The taxes collected reflects the economic and political world that
taxes themselves helped to create.  It is a symbiotic relationship.  

     Most governments like to split the discussion of taxes from a
discussion of expenses these taxes are collected for.   It would be
towards a more libertarian future to begin to tie the two together.  
Our whole way of looking at government is as if there are two
completely different subjects:  taxes and programs.  

     By looking at the expenditures we are better able to get a handle
on taxes.   When many times someone talks about cutting taxes right
away many other people talk about, "well, who's going to pave the
road."  Well, if you cut income taxes it makes not a whit of differece
for roads.  Roads are paid for by a tax on gasoline.  But the taxes on
gasoline and the building and maintenance of roads are commingled
with the general funds and operations of governments at all levels.  
The delineation should be clearer.  

     The amount of taxes collected and their purpose should be more
clearly set forth at the point of payment.  On a gas pump there should
be a rather simple and direct explanation of the amount of taxes and
the cost of gas in the price of a gallon of gas.  Too often when the
price of gas rises there is this visceral reaction against the oil
companies, many people not realizing that the taxes are a major
portion of the price.  

     Certain taxes are called regressive when they impact on the poor
more than the rich.  Sales taxes are just the most egregious.  When a
person who makes a small amount of money pays the same on items
that a rich person buys there is defintely a greater impact on the
poor, which, of course, only serves to keep them poor. From which
follows the argument that we should tax the rich more to give money
to the poor.  Why don't we let the poor keep their money by
exempting them from sales taxes?  Or getting rid of sales taxes all
together.

     But surely there is no point in extracting a sales tax from the
person on food stamps, or other government financial assistance, or
even unemployment.  Part of that assistance can be an exemption
from sales taxes.  This would just put more money directly into the
hands of the poor without causing grousing by those who pay more in
taxes about supporting the poor.  And of course there would be no
need for some portion of the bureaucracy which collects the money
from the poor only to turn around and ostensibly give it back to them.

     In deed there are many instances where taxes are collected from
people to whom the money will be returned to.  So why tax it in the
first place?  It is mere governmentalism.  The idea that the state
knows best.  But this taking to give is a net drain on the economy, and
individuals, and causes social unrest of some minimum because the
poor want more benefits and the rest don't want to pay taxes.  So if
some proportion of the taxes are not collected, say sales taxes, then
the poor would have more money directly, thus lessening their need
for government assistance.  They wouldn't have to ask the government
to give back to them the money they already had.

     On the other hand, those who call for eliminating all taxes are
fooling themselves if they think the society can be run without taxes
of some kind.  I guess the argument could be made that our
government has so spread out the tax structure to make it seem less
onerous than it is.  But there is still no doubt that vast amounts of
taxes are collected by government, particularly the federal
government, merely to be given back to the people as a measure of
control.  It is the desire of govermentalists, those individuals who
seek power, to constantly come up with new tax schemes.  

     So it can be said that some taxes are bad, some good.  Some are
for legitimate societal purposes, other are of dubious morality for
programs of no greater good.  

     The surest thing though is that the federal government has been
slowly trying to usurp the powers of the states and thus taking a bigger
portion of taxes.  This is done under the guise of supporting the
general welfare as the Constitution requires the government to do.  
But what was originally envisioned as federal responsibilities and state
responsibilities has been blurring for a long time.  And it's time to
have a look at that.  There has been a general assumption that the
way things are done is the way things are done, and that's it.  
However there are many areas that the federal government has
overreached.  It doesn't make a difference about the so-called
legality, morality or other murky opinionated reasons for why the
federal government should do this or that.

     Instead we should look at the practicality of having one level of
government do something over another level. The beauty of the
American system is that there is enormous flexibility in getting things
done that are societal in nature.  This practicality is far more
understandable and visible than might first be supposed because of the
enormous murkiness that clouds the discussion.