When you think about taxation in the United States of America, you typically will think about the government taking money from its citizens to fund expenses that the government incurs. Nowadays, we argue a lot about how much we are taxes and in what ways government taxes us — but have you considered the question of why we are taxed?
Even Dictionary.com’s definition of a ‘tax’ adheres to the common denotation of fund raising:
Tax: a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.
But the truth is that not all taxes are levied on the citizenry for the purposes of raising funds to pay for its expenses. In fact, many taxes are designed to, in some fashion, modify the collective behavior of the citizens.
These are typically ‘excise’ taxes, and their cost is hidden from the end consumer at the time of purchase. A common excise tax we routinely pay is in gasoline; the federal tax currently is 18.4 cents per gallon, and states will attach their own taxes on top of it (i.e.: New York’s is 51.3 cents per gallon). You don’t know it’s there, but next time you think gas is expensive at the pump — just remember that up to 70 cents of that is in taxes alone, and your gas could be $2.30 a gallon instead of $3+. But, there’s a more sinister question at hand: why is gas taxed? You already pay income tax, sales tax, property tax, etc. as previously discussed in the first part of this taxation series. Do we really need to raise more money?
The answer is, unsurprisingly, no. In fact, in 2010 the federal fuel excise tax amounted to $38 billion dollars — hardly a drop in the bucket given our trillion dollar budget. The original intent of this tax was to have people who drive more pay more for road maintenance and those who didn’t drive as much/drive lighter vehicles paid less. This tax is to modify behavior by encouraging you through financial penalty to drive more fuel efficient vehicles and/or drive less. By raising the cost of driving, the government is incentivizing you to modify your behavior by artificially inflating the true cost.
It doesn’t just stop at gasoline, either. There’s an alcohol and tobacco excise tax that you pay that’s hidden into the cost of those products – upwards of a dollar for a single pack of cigarettes at the federal level and usually more at the state. This is to discourage people from using alcohol and tobacco for ‘the greater good’ of society. This is an example of when the government attempts to play parent and deprive individuals of their cognitive liberty. The government is altering the conditions of common situations because it believes it is smarter than you and knows how you should live your life.
Taxes, by in large, aren’t always about the amount the money, but government sure will use the concept of money against you. Just as you are penalized for the actions the government doesn’t want you to take, it subsidizes you through tax breaks and credits in order to encourage you to do something. The income tax code encourages people to get married by taxing you less, it encourages you to buy a house (tax free mortgage interest), it gives you credits for going to school (college tax breaks), and it even gives credits for buying hybrid cars that would otherwise be an unwise economic choice. These taxation policies, while seemingly innocuous, are designed to strip away decision-making capabilities and substitute the government’s judgement for your own — and they do it using other people’s money, to boot.
Anything you do with taxes, other than to raise funds, is a corruption of taxation and a gross abuse of freedom. Without your financial liberty, your freedom of speech is greatly hampered, and by making it so the people are dependent on these credits and to avoid penalties, you will behave the way the government wants you to behave in order to maintain your standard of living. These actions taken against the single individual might not seem like much, but when considered at the aggregate scale of the entire population of the United States, they make tremendous impacts on our society.
How can you truly claim to be free when so many Americans are unaware of how the everyday choices they make (spending hard earned money) are being manipulated by the tax code? And it doesn’t just stop with you, the citizen; the government also subsidizes industries (farming) and penalizes others (tobacco) so you are never truly sure of anything.
If you needed further proof that our taxes have gone completely insane, you need look no further than the soft drink tax/bans. The government taxes you to raise money to subsidize corn farming dramatically, which leads to the cheap production of high-fructose corn syrup as a low-cost replacement for sugar in soft drinks — now, the government is attempting to enact taxes and bans (http://www.cnn.com/2012/09/13/health/new-york-soda-ban/index.html) on the very drinks it is already taxing you on to produce cheaply. That is right, the government is taxing you in order to tax you again. All this to ‘improve health’ and ‘deter soft drink habits’.
What more can be said about a tax code designed to modify the behavior of the population? This corruption of taxation has occurred, and worsened, with both Democrats and Republicans in full control of the congress and presidency.
There is no ‘lesser’ evil.