Tax Apology

An Appeal for Taxes

By John Taylor; 2009 Sep 17, Izzat 10, 166 BE

Nobody likes to pay more for the goods we buy than we have to. However, when the tables are turned and we become sellers, none of us wants to sell our own goods for less than we think they are worth. The same is true for taxes. We all pay taxes, and we all benefit from taxes. Nobody likes to pay more taxes than they have to but neither do they want to get fewer benefits than is right. We want our votes and our tax money to make a difference. An impotent, bankrupt government would be a waste of votes and tax money. Without tax revenue or support from the people, central governments would collapse and the resultant chaotic Mad Max scenario would end in total loss for everybody.

A disproportionate reluctance to pay taxes is a corrupting influence in a democracy. For example, in California in the 1980's an irrational aversion to taxation on the part of voters led to a law forbidding new or higher taxes; this tied the hands of legislators and by all reports has worsened the impact of the present recession. Similarly, economists tell us that the huge deficit of the United States could easily be removed simply by raising taxes, if only politicians dared flout the wishes of voters and lobbyists.

In the case of the superrich and most large corporations, which have not paid any taxes for decades, much could be done simply by eliminating tax loopholes that allow them to pay no taxes at all. National governments have not succeeded in closing the gaping tax loophole at their own borders, the formation of a world government would result in much greater value for money in taxation by closing the world's greatest tax loophole, the so-called "offshore" banking industry.

Jane Jacobs in her last book, Dark Age Ahead, discusses a less obvious problem with taxation, a sort of structural stupidity in the way tax dollars are gained and spent. One chapter of her book is called, "Dumbed Down Taxes." It discusses the tendency of central governments to cling jealously to their right of taxation, even when local and urban governments are in a better position to judge when to tax and how to spend a tax effectively. Local leaders know the situation first-hand and can often be creative in how they levy taxation. She attributes the rise of Europe from the Dark Ages to the spread of two principles in local governance, subsidiarity and fiscal accountability.

"Disadvantaged in almost every way though they were, the early medieval cities typically benefited from subsidiarity and fiscal accountability. Subsidiarity is the principle that government works best -- most responsibly and responsively -- when it is closest to the people it serves and the needs it addresses. Fiscal accountability is the principle that institutions collecting and disbursing taxes work most responsibly when they are transparent to those providing the money." (Jane Jacobs, Dark Age Ahead, Random House, New York, 2004, pp. 103-105)

She cites the case of a proposed tax on hotel rooms by the city of Toronto, the revenue from which was to be spent on promoting the city as a tourist destination. The Ontario government nixed the tax, saying that such taxes must be province-wide or not be allowed at all. Other Ontario cities like as Windsor could see no benefit in such a scheme, and the idea was never implemented. Meantime, Toronto is languishing and its infrastructure crumbling as it is ignored as an international tourist destination. Local areas, and especially cities, should be given the freedom to levy taxes as they see fit, according to local needs and conditions.

"Only very minor taxation, such as property taxes, responsive neither to ability to pay nor to economic expansion, is typically permitted to cities. Because city sources of public revenue are frequently inadequate to needs, so-called senior governments sporadically come to their aid with grants of public money and programs devised for using the grants. These resources are disbursed into many different localities, currently in many different situations, with unlike needs and dissimilar opportunities. Sovereign governments cannot possibly be in intimate touch with all this variation. Even with the best will in the world, the disbursers must act as if common denominators exist, and if these cannot be found, will allow idiosyncratic needs and opportunities to go unanswered."

Next time we will discuss how this problem might be rectified by the introduction of creative taxation of smart card transactions overseen by two new levels of local government, the neighbourhood and the household.

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