Of Life and Taxes
CR Lawn, 2012
“Taxes are the dues that we pay for the privileges of membership in an organized society.”1 –Franklin D. Roosevelt
We live in a time when too many with access to power are promoting great economic and social fallacies, hoping that by endless repetition their errant doctrine will come to be accepted as gospel truth adopted unquestioningly by all.
As job creators, taxpayers and citizens it is incumbent upon us to refute this fallacious doctrine that otherwise will damage us all. That is why I discuss economic and tax matters in our seed catalog.
To begin we must distinguish between home economy, business economy, and government economy. In my home economy I follow Scott Nearing’s dictum never to go in debt, even for a mortgage. That keeps me in control of my economy, never a slave to anyone who might profit from my unforeseen misfortune. As a business manager, however, I cannot follow this philosophy, for to do so would stultify our cooperative, preventing it from meeting our customers’ expressed needs. We have been fortunate in finding creditors such as CFNE, CEI and individual supporters willing to lend us capital at reasonable rates and fair terms. Without such credit our business could not grow and continue to create jobs. A government economy backed by the full faith and credit of its citizenry and empowered to levy taxes and print money (U. S. Constitution, Article 1, Section 8) is in an entirely different circumstance. We are all the government and we can collectively borrow to invest in our future. Any temporary shortfall we owe only to ourselves and we can repay over time as long as we can maintain that faith and credit.
Those arguing to shrink or eliminate government depend on two fallacies:
- that the private interest is identical to the public interest
- that unregulated competition will best serve the public interest.
#1 is false because a corporation is beholden to its owners or stockholders to maximize its bottom line without regard to whether or not that will maximize the public interest. Corporations manufacturing unhealthful products (tobacco companies), polluting natural resources (strip mining operations), contaminating organic farms with pesticides or transgenics (so-called life science companies) externalize their true costs by assigning them to the public burden. They thereby maximize their private interests but do not serve the public interest.
#2 is false because unregulated competition leads inevitably to monopoly or oligopoly (note the current concentrations among the major agricultural commodity and seed industries). As Wendell Berry so eloquently states, “The law of competition is a simple paradox: competition destroys competition. The law of competition implies that many competitors, competing on the ‘free market’ without restraint, will ultimately and inevitably reduce the number of competitors to one.”2
Government addresses those societal needs that are too complex for individuals and small groups. Who shall educate our youth, maintain our highways and infrastructure, conserve our natural resources, provide for our defense? These are public, not private interests; they are commonalities. Our founders crafted a federal system with a strong central government because the weak government under the Articles of Confederation was going bankrupt and could not fulfill common needs. As they wrote in the Preamble to our Constitution:
“We the people of the United States, in order to form a more perfect union, establish justice, ensure domestic tranquility, provide for the common defence, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.”
Those who would shrink government only to Defense and Homeland Security take note: Promoting the general welfare is not restricted to these limited functions. The near juxtaposition within the Preamble of “forming a more perfect union,” “establishing justice” and “insuring domestic tranquillity” is not mere coincidence. Freedom from foreign domination and terror, while necessary conditions for domestic tranquillity, are not sufficient. Domestic tranquillity depends on a shared sense of economic justice. To this end, Berry advocates:
- Heavy taxes on acreage beyond reasonable limits.3
- Inheritance taxes on large holdings.3
- Progressive income taxes.4
- Enforcement of laws against trusts and monopolies.5
As FDR said, “Taxes shall be levied according to the ability to pay. That is the only American principle.”6 Or, as Benjamin Disraeli warned, “To tax the community for the advantage of a class is not protection, it is plunder.”7
Those who would free capitalism from government regulation might first take a closer look at some of our major corporations. From Bank of America to Blackwater, from Arch Coal to Monsanto, from Halliburton to Massey Energy (recently bought out by the innocuous-sounding Alpha Natural Resources, but nevertheless the biggest coal mining business in Central Appalachia), all routinely subvert the public good for private gain. Given that reality, we should ask those who would privatize our postal service, our health care, our schools and even our prisons on what grounds of magical thinking they rely to suppose that the results would be any better than what we now have. The privateers have already had their way far too much and the result is goods that are not good, services that do not serve, products that do not produce, information that does not inform, education that does not educate, and jobs jettisoned to the lowest bidders, usually overseas.
There are those today who would “starve the beast,” lowering tax rates further, particularly for the wealthy. By thereby denying government needed revenues, they would deliberately create a shortfall, thence using the inevitable unbalanced budget to call for further cuts in government services—services they do not need because they have the money to buy anything—but services the rest of us badly need and cannot otherwise afford. Starving the beast ultimately starves us all, plunging our national economy into depression.
If issues in the 18th century were so complex as to require a strong government, how much more so are present times. Anyone who believes otherwise is either disingenuous, delusional or deceived. As was widely understood in the younger days of our Republic, “Rightful taxation is the price of social order. It is that portion of the citizen’s property which he yields up to the government in order to provide for the protection of the rest.”8
1 Franklin D. Roosevelt, 1936 presidential campaign address.
2 Wendell Berry, What Matters?: Economics for a Renewed Commonwealth, “The Total Economy,” 2000, p. 184.
3 Berry, ibid, “Money versus Goods,” 2009, p. 28.
4 Berry, ibid, “The Total Economy,” 2000, p. 189.
5 Berry, ibid, “Money versus Goods,” 2009, p. 27.
6 Franklin D. Roosevelt, ibid.
7 Benjamin Disraeli, speech in Guildhall, London, Nov. 9, 1878.
8 Journal of the State of Ohio, being the first session of the 46th General Assembly commencing Dec. 6, 1847.