Pay for Use: The Problems with Government Services and Taxes

Lately I have been bombarded by a constant stream of ideologically charged banter going on about how A) We pay too high of taxes and the government should give more tax cuts/the government is bad at providing services and B) The government should not cut the budget because it needs to provide valuable social services, yet it also should not increase taxes since that damages the economy. Neither of these arguments, though especially the former, makes very much sense.

The constant debate over the size of government and over wasteful spending, etc, has completely failed to get at the central issue of taxes versus spending that faces our country. Conservative arguments focusing on "wasteful government spending" have appeared to focus almost entirely on social programs and (even more so) earmarks which make up comparatively small portions of the US budget, dominated by defense (that includes "pork" as well such as the F-15 fighter which is obsolete). Also, some programs like social security are pay-as-you-go and are funded by a separate tax--I also fight the term "entitlement" that applies to these programs since we all pay into our social security account as basically an emergency retirement fund in case everything gets screwed up; can you believe what would have happened if the Republicans had been successful in privatizing social security a couple of years ago before this stock market crash? But I digress. The real crux of the issue is that we demand a wide array of government services and we fail to pay the actual cost for them, hence we have a massive budget deficit. In any other industry, prices would rise. Similarly, it is time for us to come to terms with our demands and recognize that we cannot have a government that serves all the areas we demand and still pay absurdly low taxes. Taxes need to be treated as any other household expense is--as payment for a good or service.

Opportunistic politicians have repeatedly capitalized on the deficit to call for cuts to spending when out of power and then just cut taxes (and not real spending) when in power. This started in earnest with Reagan who began to destroy a fair tax code and replace it with one that causes us to become dependent on China and debt. This is his real legacy. My point is this: taxes are important, they pay for roads, schools, defense, scientific research, international relations, trade agreements, public safety services, and yes, social services like health care. No person is going to be happy with all spending in a government, but it all contributes to providing us a stable and prosperous society where enterprise is even possible. Taxes are way too low for us to pay the costs that we ask our government to take on. We need to reevaluate how much we pay and recognize that we have to both temper our demand and accept high "prices" for government services.

This tax code should be based on a progressive tax system that fairly values each tax cohort's receipt of government services. In other words, the wealthiest pay the most. My argument for this is shown in the example of the negotiation of NAFTA, which had a deleterious effect on a large number of blue-collar workers while benefiting those who were able to take advantage of the opportunities for enterprise across the border, in other words, the wealthy. The wealthy benefit more from the negotiation of trade agreements, our government opening overseas markets, the use of public lands, etc, the list continues. Therefore they should pay more, plain and simple. At this point, many wealthy people pay lower effective tax rates thanks to the large proportion of income they receive from stocks, which are taxed at a lower capital gains rate. An argument that is commonly presented to me at this point is that people should be able to keep what they earn, THEIR hard earned money. I counter that nearly no person (besides him who faces real discrimination) is a self-made man. We all depend on our government and society to provide for us the opportunity, stability, security, patent law, educated workers, etc, to give us the chance to achieve prosperity. Beyond being just a payment for services rendered, taxes are a payment to the society in order to keep it functioning. Too often people have claimed to me that THEY worked hard, THEY made the money, and I reply that THEY DID NOT do it alone, despite what they say. God and Country gave them their chance, and while their success is in part a product of their own work, much of what the vast majority of prosperous people achieve is done because of the opportunities society provides to them.

To sum it all up, we have to recognize what taxes are, payment for services, and to recognize the extent to which we depend on society for success. This does not mean that we should enter into profligate spending-we should definitely constantly reevaluate government programs and nothing should ever be a "political third rail (I will write more on this subject later)"-but that we should recognize where we need government and pay for the value we receive.