A confession to start: I am a “pro tax” person. Let me clarify that statement by saying that I don’t enjoy being taxed. I, like most other people, would prefer to keep as much of my earned money as I can. However, I understand not only the need for taxes, but also the benefits with which they offer.
But I also realize that few three-letter words in the English language can be treated more like a four-letter word than “tax”. So, perhaps we need to take a step back and look at a broader picture of taxation – what it is and how it functions. And maybe we can get a better sense of the ways that taxes truly benefit our everyday lives. In other words, see if there is such a thing as a “good tax” and not just a good tax policy.
First off, what is a tax? In its simplest terms, it is money individuals, businesses and organizations are obligated to pay to various levels of government for the goods and services those governments provide.
The channels through which these taxes are imposed can include income, property, capital gains, payroll, sales and inheritance, to name a few. By the way, few, if any will pay all types of taxes, but everyone will experience at least one type of tax, even if it’s just sales. So nobody gets off scot-free.
What a society gets in return from the different levels of government are the various goods (roads, power grids, police vehicles, state prisons, etc.) and services (education, the military, scientific research, elected officials and their staffs, etc.) that are far too big and complicated for private citizens and industries to handle. In turn, this helps to keep a given locality, be it a municipality, county, state/province or country, functioning on a day-to-day basis – in other words, it helps to maintain civilization.
With all that in mind, what, then, is a “good tax”? What are the things we as a society value enough that a mandatory payment is not only a necessity, but a benefit as well?
Do we value physical security? If so, then appropriations for our military and civil law enforcement would seem to be a good thing.
Do we value knowledge? If so, then it would seem wise to invest in all things related to education of our citizenry.
What about good health? If so, then solid financial commitments to medical research and health care would be an obvious choice.
Do we see the need for good infrastructure and safe transportation? What about workplace safety? Or food inspection? Building codes and adherence to them? City planning? Weather forecasting? Do we value these and other segments of where and how we live, for ourselves and those we love and care about, to the point of being willing, even happy, to make a mandatory financial contribution to maintain them at a high level? If so, then it would seem that there are many “good taxes”.
And it would appear appropriate to invoke the spirit of U.S. Justice Oliver Wendell Holmes, Jr. in his 1927 dissent of Compania General de Tabacos de Filipinas v. Collector of Internal by saying, “Taxes are what we pay for civilized society.”