Taxes

Today, at some point, a conversation will begin, again, about taxes. Who pays what, what’s fair and what’s not, all that. I think it’s important to understand the idea of tax policy and why they are important, either in the way we pay them or don’t pay them.

One school of thought, the liberal, hippy school of thought, is that people, everyone, should pay taxes in order to fund our society. Having roads, free schools, all the “stuff” that we have to have in order to keep our society going, costs money.  I pay State taxes and Federal taxes. Where I live has tons of infrastructure, so I have to pay a large amount of taxes. I don’t really mind because I use the infrastructure. I take the bus, I ride the Metro, I go to free museums, I enjoy what these taxes pay for.

Another school of thought is that we shouldn’t pay taxes, or not so much. The idea is that, if people keep their money, and not give it to the government, then the people can take care of themselves.

I see the validity of this argument. If we didn’t pay taxes, the free market, in theory, would come in and take care of the problem. For example: public transportation. If we didn’t pay taxes, a private company would see the money-making opportunity of creating a private bus system, one that would provide a service. Government has no competition. Private companies do. In theory, private companies would compete to provide the best bus service for the people. Competition would keep prices in check and would also allow people not to be taken advantage of. Sort of like the airline industry: a private industry watched over by the government but at the mercy of the free market.

The problem with “Free market solutions” is that the free market only cares about people who have money. If you don’t have money, you aren’t important.

This isn’t theoretical. This is fact. Got to Target and see if you can get a pack of t-shirts for free. There is no way that’s happening besides stealing it. The free-market argument is that people without money will find money. If they don’t find money, then they don’t deserve anything for free.

The reason why the public sector has to step in and take care of people is because the private sector are greedy monsters that do not have the best interest of the people at heart. Money is more important than people to them. The 2008 crash is proof of this. Mortgage lenders scammed people to buy houses they couldn’t afford. Banks bundled this mortgages together and traded them among themselves, then bet, by buying insurance on the mortgages, which ones were going to fail. Once people couldn’t pay the mortgage that they never should have had in the first place, banks started losing money and stopped lending money to the businesses that needed the money. The 2008 crisis happened because of greed.

There has to be safety protocols to take care of the people that are harmed in the “Creative destruction” and free-market experimentation that is needed to make capitalism work.

What’s needed, I think, is a mixture of both ideals.  We need to come together as a community to deal with the problems we face. At the same time, it’s hard to argue against the innovative capacity of free markets.  It would be nice if we lived in a world that allowed government to “help out” private creation. It’s not unheard of. Just ask Bloomberg Business news.

It is a mistake….. to underestimate the innovative potential of state capitalism. Rising powers such as Brazil and India have used the levers of state power to promote innovation in critical, targeted sectors of their economies, producing world-class companies in the process. Despite its overspending on some state sectors, the Chinese government has nevertheless intervened effectively to promote skilled research and development in advanced industries. In so doing, the state capitalists have shattered the idea that they can’t foster innovation to match developed economies. State capitalists’ combination of government resources and innovation could put U.S. and European multinationals at a serious disadvantage competing around the globe…..State intervention in economic affairs runs against the established wisdom that the market is best for promoting ideas. At the same time, throughout history, the governments of many developed nations have actively fostered groundbreaking companies, from Bell Labs in the U.S. to Airbus in Europe.

Free markets are too dangerous and unforgiving.  People are always going to need things, even if they don’t think they do. There’s a moral component, as well. Sometimes it’s not about “you” all the time and what you’re getting out of something. Sometimes you should just help other people out because they need it.  That’s why we pay taxes. But how much should we pay? Should rich people pay more than others? And what should we use these taxes for? That’s for another blog post entirely.

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