Steve G.

The Powers to Raise and to Spend Taxes (Liberal Libertarians Discussion Topic #01)

In Boston Tea Party, Charles Jay, Congress, Corruption, Democracy, Economics, Fraud, History, Law, Libertarian Party-US, Libertarian Politics, Politics, Pork, Spending, Taxation, Thomas L. Knapp, US Government, War on April 15, 2009 at 7:29 pm

The single greatest factor behind the rise and development of the English Parliament was taxation. What very quickly developed, and what lasted until the British Monarchy lost its functional power as a part of government and became a marginalized figurehead position (which happened over the course of the 1800s) was that the power to SPEND tax money was separated from the power to RAISE tax money. Under that system, only Parliament could RAISE tax money but only the Monarch could SPEND tax money. If the Monarch wanted to spend anything (for wars, his houses and mistresses, public building projects, anything) they had to convince Parliament to raise the necessary tax monies and give those money to him 9or her). Likewise, if Parliament wanted money spent on anything in particular, they had to convince the Monarch to agree to spend raised money in such ways. The inherent conflict within the system required negotiation and compromise from both sides. Sometimes one side would be more powerful than the other and would dictate to the other. Likewise, Kings would often not actually spend money as they agreed to. THOSE situations would lead to further conflicts in the future. Sometimes the Monarchs would simply get sick of their Parliaments and would dismiss them and not call another to replace it, but then the King could not raise any money. In those situations, the losers would usually be the common people who were hurt by both sides.

One of the main sources of conflicts between Monarchs and Parliaments (as in ALL nations) was the exorbitant costs of the wars which the Monarchs would want to fight. Because of the unique circumstances of both WWII and the Viet Nam war, Americans now think that wars create profit. They do not. Wars are and always have been burdensome drains on the public coffers. Monarchs want wars for various reasons, but those wars HAVE to be paid for… even in a dictatorship… and, historically, most wars bankrupt their nations as well as the other nations involved. Look at the current situation with our undeclared wars in Iraq and Afghanistan. Let’s not even get into the cost to human life or to property, let us just look at the actual fiscal cost to fight them, clean them up, care for our veterans afterwards, intelligence… all of it. The problem is, in America, because of the way the power to raise and spend tax monies is allocated, the dialogue is usually focused on questioning the patriotism of those who disagree with one side; on attempts to gain power by individuals, parties, factions, ideologies or branches of government; or is hurting our ability to deal with OTHER national priorities by saying we can’t question the money we spend on our wars so we cut the pennies in order to be able to keep throwing away the dollars.

So… in all of the discussion we hear these days about taxes, we are still simply talking about the ‘symptom’ of actual taxation rather than trying to explore the root causes of the actual problems. To ME, the issue is not whether or not taxes are too high, or if they are properly spent, it is that there is no incentive or system in place to DISCOURAGE spending OR raising tax money. If you give the people who have the power to SPEND your money the additional power of determining how MUCH of your money they can take you have the fox guarding the hen house. To me, before we talk about the very real issues of tax codes and policies in America, we need to talk about the basic powers involved in the fundamental issue of taxation.

Here is my personal idea, to start the ball rolling:

01.) ONLY The House of Representatives should have the power to RAISE tax monies. The functions of government which deal with raising and accounting for the expenditures of those monies should be placed under the authority of The House… the people’s house of government. I think that the IRS is the wrong organization for our nation but before it can be dismantled, we need to figure out something to take its place because its ROLE is, and will be necessary. We can NOT destroy something which has such a key role in the operation of our government (whether it SHOULD or should NOT HAVE that role is irrelevant… it does and it must be dealt with as a reality). The House should be completely in charge of our nation’s checking and savings account. This would result in Representatives keeping THEIR jobs in large part based on how they keep taxes low.

02.) ONLY the Senate should have the power to SPEND tax monies. The functions of government which deal with purchasing, contracting, supervising, etc. the expenditures of those monies should be placed under the authority of The Senate. The Senate should be completely in charge of our nation’s checkbooks, passbooks, and ATM cards. This would result in Senators keeping THEIR jobs in large part based on how much swag they can send back home.

03.) The President should be the mediator that coordinates the efforts of the two house of Congress and makes the deals. The President would also be the one who would make sure that all agreements between the two houses on both the raising AND the spending of tax monies would be followed to the letter. The President would be the one who makes sure that every side is honest with the other. The President would also be the one who signs off on all agreements (budgets) and certifies them as satisfying all sides and being in the best interest of the American people.

04.) All three parties involved (The House, The Senate and The Executive Branch) would have complete and unrestricted access to all records, notes, documents, EVERYTHING made or kept by any of the other parties regarding ANY issue regarding or relating to taxes. Further, all finalized, ratified and signed budgets and expenditure agreements shall have full force as LAWS for their durations and any violations of any parts if those agreements and budgets can be prosecuted as such, with the individuals responsible for those violations… ALL individuals at ALL levels up and down the ‘food chain’… being PERSONALLY accountable and liable for those violations (whether it is a Senator, the members of a specific committee, or a clerk who signs a check… EVERYONE is accountable and THUS has the motivation to be honest and above board about all actions and decisions regarding taxes).

05.) All three parties involved (The House, The Senate and The Executive Branch) would create a non-partisan, non-governmental committee or board, to which they will all appoint an equal number of members, which has the power and authority to review and mediate all agreements and violations and to make final and binding non-partisan decisions regarding the same when there are ANY questions about or challenges to finalized agreements or budgets which deal with tax monies and their expenditures. Each state would also get to choose one or two members of this board. Obviously all of the exact details would need to be carefully studied and worked out.

06.) SOMEHOW, The Federal Reserve and The National Bank (and any other such relevant entities) would be brought back under full federal control and incorporated into this who system… somehow.

No matter what our own personal and unrealistic idealistic vision of our government is, taxes are real, they are not going to go away and they ARE necessary. What WE need to do is to try to figure out how to make the system work better and fairer so that it can be a positive factor in our society rather than one which puts us at each others. throats.

Ok, those are my initial thoughts. What can anyone else contribute? How can anyone else make these ideas better or give us different ideas which are better? What can we do with this?

Recommended Readings for people interested in this topic are:

1.)For Good and Evil (Second Edition): The Impact of Taxes on the Course of Civilization
By: Charles Adams (Tax Scholar and Historian, Cato Institute Fellow) http://www.amazon.com/Good-Evil-Second-Impact-Civilization/dp/1568332351/ref=sr_1_1?ie=UTF8&s=books&qid=1224912619&sr=1-1

2.)Those Dirty Rotten taxes: The Tax Revolts that Built America
By: Charles Adams (Tax Scholar and Historian, Cato Institute Fellow) http://www.amazon.com/Those-Dirty-Rotten-taxes-Revolts/dp/0684871149/ref=sr_1_1?ie=UTF8&s=books&qid=1238470625&sr=1-1

Rhys M. Blavier
Romayor, Texas

© 2009 by Rhys M. Blavier

Thank you for reading this article. Please read my other articles and let me know what you think. I am writing them not to preach or to hear myself think but to try to create dialogs, debates and discussions on the nature of our government and how we can build upon and improve it based on what we have seen and learned over the course of the 225 years of The American Experiment.

To discuss this topic, the discussion thread is going on here: http://blavier.newsvine.com/_news/2009/04/15/2688338-the-powers-to-raise-and-to-spend-taxes-liberal-libertarian-discussion-topic-01

  1. Well, your idea is partially enshrined in the fact that all new tax legislation must originate in the House, the branch of the legislature that represents the people (as opposed to the states).

  2. I think there must be something wrong. Your historical perspective is right and you use it to make a sensible arguement. It is clear that we are facing a challenge to change the way we do just about everything. All the metaphors in play, from tsunamis to global warming, for the dire nature of our world’s situation make sense. But still, as Lewis Black and others point out, we may just all have to die in order to make things better. Till then, the politicos have the stage, the banks have our money, the war goes on, and we, well we, just have to wait and see, I guess.

  3. The Federal Reserve should be abolished with haste.

    Taxation itself should also be abolished, ideally. Taxes, although indeed “real,” are not “necessary.” (1) States are not necessary, but even if they were, (2) the federal government is not necessary (especially not now that we’ve reached the 21st century), and even if it was, (3) taxation is not necessary for government to exist. Moreover, since taxation is merely “legalised” theft committed by the political class against the masses, and since theft is unethical, it stands to reason that we must always aim to bring taxation as close to 0% as we can.

    I like to compare the coercive sector of government to the voluntary sector of the ACLU. The ACLU makes a great deal of money, and it does so without having to place a gun against the heads of innocent tax-payers. It’s able to make this money because people believe in the various causes championed by the ACLU. They support the campaigns the ACLU engages in. They support its general objectives. And, so, they donate tons.

    If people truly believe in their government, they will donate willingly, just as they do to the ACLU. If they want government-provided schools, they will donate money toward that cause. If they want government-maintained roads, they will donate to that cause as well. If they don’t want government-maintained roads, they won’t donate, and the roads will fall into the hands of private owners who will aim to please consumers better than the state pleased them.

    Ultimately, government would be extremely limited under a regime of voluntary taxation, as we would not have any government in excess of that which the people are willing to voluntarily support. This would provide a huge citizen-based check on the size and scope of the government. If the public schools are efficient and do a good job teaching the kids, they’ll continue to get donations; if they are failing to teach the kids, people will take their dollars elsewhere.

    Of course, the government could get money in other ways as well, such as user fees or the lotto system.

    But I’m sure someone will ask, “What if no one donates!?”

    If no one donates, then it seems to me the people have spoken: they do not wish to have a state whatsoever. Why should a state be foisted upon the masses if the masses do not want it? Voluntary institutions, such as private, competing protection agencies can easily replace the inefficient state-monopoly police system, and private arbitration firms can easily replace the biased state-monopoly judicial system.

    In the meantime, as long as there is a government and such things as voluntarily-funded public schools (as opposed to being funded through a coercive tax system like we have today), there will be people who campaign to encourage more donation toward the public education system. Those who truly believe in such a cause will start campaigns, send out emails to supporters, &c., just like the ACLU does today. And, what happens if one of the teachers isn’t pulling his weight? Those who are busy campaigning for more donations for education will apply pressure on the bad teachers to improve or leave. They’ll apply this pressure, naturally, because they know that if the bad teachers cause the quality of public education to decline, the levels of donations will likewise decline. Thus, in this way as well we find that a regime of voluntary taxation creates all new forms of checks and balances.

    Regards,
    Alex Peak

  4. A business news needs access to credit for two reasons. First, credit allows a small business to get a loan or line of credit from a financial institution. Second, credit can let a small business buy the necessary supplies and goods. No matter why you need credit, it is giving you something of value in return for a promise of repaying all the cash in the future.

    So who provides credit to a small business? A relative will often help, but what about the bank in town or a supplier that is separated by a continent? How can someone who doesn’t know you and has never met you determine your creditworthiness?

    These companies would do exactly what you would do: they go to a reputable credit risk management agency in order to get a credit report. Through a comprehensive small business credit report, these companies can learn about all aspects of your business including your financial condition, credit history, top management and other important information. All of this is determined by your small business credit score. This single number can tell a potential lender whether or not you are a good risk. Often this score is a number on a scale, but can include alphabet letters. This score allows banks, lenders, suppliers or other creditors to determine whether or not you are likely to pay your bills on time.

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