A few thoughts on taxes...

...only a few, I promise. Nobody likes to pay taxes, but as Oliver Wendell Holmes, Jr. famously said, "they are the price we pay for civilization." Okay, now that I have that obligatory sentence out of the way, we can continue.

In my personal evolution from libertarian to something else (post-libertarian, I guess), I've given some thought to taxes. Taxes, as we all know, are what keep libertarians up all night grinding their teeth. But taxes are at the heart of government. Because as soon as two or more people decide to form a government, the issue of revenue must be addressed. Even a libertarian would be for government, if only to protect life and property. Anything less than that would be anarchy. So once it's been determined to form a government, the next step is to establish a court system to punish crimes and resolve disputes, a police department to maintain order, and a military to ensure national defense. So where does the money come from to pay for these basic necessities?

An extreme libertarian would argue that the money would be donated, since this would ensure maximum freedom. The argument would be that if people really believed in the government, then they would be happy to pay for it. This argument does have some merit. After all, churches in America don't have any trouble thriving on the voluntary donations of their members. But it's not hard to see how this could cause problems. If I'm the richest guy in town, and in effect paying the judge's salary, it's not hard to see how this might tip the scales of justice in my favor. So a less-extreme libertarian would opt for other voluntary means, such as lotteries. But we all know that lotteries in reality fall mainly on the poorer and less-educated; anyone who's taken a class in statistics knows that lotteries are a bad bet. And we've all heard horror stories of how winning the lottery has actually made the winner's life worse.

So that leaves us with taxes, compulsory means of raising revenue enforced by the state. But these pick winners and losers, and that can seem arbitrary and lead to abuse. If you tax property owners, then it could be argued that only property owners should have the right to vote, since they are the ones paying for everything. We all know where that led in American history. The voters (white men) could define another group (blacks) as something less than human.

If you levy tariffs, as the Republicans liked to do in the nineteenth century, it could benefit northern manufacturers at the expense of southern farmers. This tension, I believe, was one of the major causes of the Civil War, slavery being an afterthought.

Lincoln established the first income tax, which taxes work and productivity. That doesn't sound like a good idea. And how do you tax income? A progressive tax isn't really fair; why should the rich pay more? Because society paid for the infrastructure that led indirectly to their success? I think that has some merit; I think that's what Holmes meant. Could Bill Gates have started Microsoft just anywhere? I doubt it. It took an educated populace and a good, reliable legal system. Hard to imagine Microsoft thriving in Russia. But taxing rich people can get out of hand; that's what scares Republicans about Obama. A flat tax can be problematic. If an individual makes $20,000 a year and pays 10% of that, it would be a much greater burden than the individual making $200,000 a year. Ah, but we'd draw a line you say, and those making less than a certain amount wouldn't pay any taxes at all. Okay, who draws the line and where? And what about the people who make just a little bit more than that? Do they get taxed on the incremental amount?

So what have I left out, sales taxes? Discourages consumption and favors savers (like me) over spenders (like my wife). Maybe that's a good thing, but again the government is picking winners and losers.

Maybe the best way to raise revenue is to combine all of the above, along with various incentives, into one huge Byzantine system that the average person doesn't really understand, like the one we have now in the U. S.

But I remember from my grade school days that one of the earliest and most important advances in civilization was the Code of Hammurabi. The populace was tired of the government making and enforcing arbitrary laws and demanded that they be written down for all to see. Isn't this what we need in this country, vis-a-vis the tax laws? If the Federal tax laws (not to mention state and local) fill several volumes that are in effect inaccessible to the average person, isn't that somewhat analogous to what the Babylonians faced?

My answer was always to levy a flat tax on incomes with NO deductions that could be filled out by anyone on a form the size of a postcard. This would require many a lawyer and accountant to seek other gainful employment (sorry, Jimmy and Mary) but address the "Hammurabi problem." But there are problems with a flat tax that I've already talked about.

So the bottom line is that if we are going to have a government, we are going to have to pay for it. Especially now, with all of our obligations. The question is how? What would be the best and fairest way to raise revenue? In my continuing journey from libertarian to post-libertarian, I am left with more questions than answers. Do any of you, dear readers, have any thoughts on the subject? See the comments section below if you do.