If Deficits Don’t Matter, Why Bother with Taxes?

Source: Mises Institute.

It’s a good question.

In many kingdoms of the ancient world, taxes were a type of rent. The king owned all the land and everything in it. Subjects paid taxes to use the land and its resources. The king, in turn, raised an army to protect his subjects and invested in public works. It was a simple formula, but one sufficient to sustain a basic legal system and a generally free market for exchange.

Modern nations have for the most part replaced monarchial ownership with private property. Kings also have been replaced by governments of various types. As a result, the ultimate justification for taxes has become obscure.

Of course, modern nations still must raise armies and fund public works. But these requirements do not in themselves justify tax collection. A king could charge rent as a right of ownership. Where is a government’s right to charge rent for things it doesn’t own?

More to the point, why should a government collect taxes at all when it can simply create new money at will?

I have an answer in mind. It involves keeping money and goods in some sort of balance so that prices don’t fluctuate due to changes in the quantity of money. But as simple as the answer is to state, such a rule would be nearly impossible to implement. It would need at a minimum an inhumanly virtuous government.

13 thoughts on “If Deficits Don’t Matter, Why Bother with Taxes?

  1. I found the article pretty silly, but your thoughts interesting.

    I believe Kelton is generally speaking of the US’s rather unique position as the wealthiest nation on earth and the controller of the world’s reserve currency when she describes MMT and how we should care much less about deficit spending than we do. And I do agree that taxation should be steeply progressive to prevent single individuals/corporations from becoming as powerful as they are.

    That said, the two US political parties have a funny relationship with deficits. The Republicans can’t blow them up quickly enough with defense spending and tax cuts for those same oligarchs I mentioned earlier. Then, when Democrats are in power, “we have to get serious about this deficit.” The Democrats are more than happy to play along so that they can gut social spending all in the name of a balanced budget.

    Liked by 1 person

  2. “It involves keeping money and goods in some sort of balance so that prices don’t fluctuate”…

    Doesn’t sound like capitalism to me.

    You are all over the map on some issues – IMO.

    Like

    1. RE: “Doesn’t sound like capitalism to me.”

      Why not? Banks control the quantity of money all the time.

      Like

  3. “ Where is a government’s right to charge rent for things it doesn’t own?”

    Who said the government is charging rent? We elected the government and agreed to pay for what we want.

    Don’t like that? Then vote them out or lobby to change the laws. Or go to court.

    As Americans, we are the government.

    Liked by 1 person

    1. RE: “Who said the government is charging rent? We elected the government and agreed to pay for what we want.”

      I don’t think that is true. Technically, we elect the government, but we don’t give our representatives any sort of detailed instructions. The agreement you refer to doesn’t really exist as an enforceable contract.

      Like

      1. So if you want to overthrow the government because you don’t like some law, you can do so at will?

        We elect people to pass the laws we want. They pass them and we agree to abide by them. Then we have rights and channels through which we can make changes, but that does not relieve the citizens of their duty to follow the law.

        There are about 300, with the expectation of hundreds more, who will be charged and tried for trying to skirt the rule of law because they felt like it.

        (And so will their leader when the dust settles.)

        Liked by 1 person

  4. Well the way B**** and Democrats are throwing around trillions of dollars like it’s growing on trees in the back yard, you would think the Dem motto would be taxes schmaxes, who needs them. 2 trillion for covid when prior stimulous hasn’t even been spent, asking for 3+ trillion for infrastructure, pondering countless trillions for UBI and free college and another 32-40 trillion for M4A all just for starters in the first 50 days. Nevermind the border crisis B**** created that will cost alot. This is going to be a long 2 years before the GOP takes Congress back and gets things back to sanity.

    Like

    1. Interesting. Where was the assertion that the GOP was throwing money around in 2017 when they cut taxes on the wealthy and corporations? Oh, wait. THat was to do something that was already happening; grow the economy.

      Trillions of dollars added to the deficit then, but no cries of “throwing money” around.

      And I also heard NO complaints about the same thing when it was done while T**** was in office with the CARES Act.

      Take your hypocritical outrage and stick it in your … ear.

      Liked by 1 person

      1. Ole McB**** is a dolt eieio, with a couple trillion here and a couple trillion there, here a trillion there a trillion, oh my gosh another 50 trillion, ole McB**** is a dolt, something we all knooooooowwwww…

        Like

  5. “The king, in turn, raised an army to protect his subjects and invested in public works.”

    Well, absent the king, we’ve nailed one of the two. Of course, one might wonder if the army is protecting the subjects or their taxes.

    Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s