Most people know that Americans benefit from high taxes, powerful unions, limited consumer choice, and strong government control. But most people lack the training to fully understand why we derive benefits from these policies, and why government control over public anything results in unsurpassable quality. To remedy your "knowledge deficit" you can ask us any question you choose, and it will be explained by the legendary Professor Paul Krugman in a language that you can understand. From the evils of profiteering, corporatism, and economic exploitation to the rewards of regulation, social justice, and community/stakeholder involvement, Professor Krugman will use his agile mind to clarify the otherwise intimidating field of economics.

Economics Primer 13: Taxes

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Taxes enable all life to exist; their positive values are almost too numerous to list.

A) Taxes provide a stream of income to the government.

B) Taxes are a social leveler that bring the rich down to size.

C) They pay for essential services like housing, transportation, education, police, fire, sanitation, water, student loans, university grants, civil servant salaries, Medicaide, Medicare, Social Security, food stamps, school lunches, the Department of Energy, The Department of Interior, The Department of Treasury, The Taxpayer Advocacy Panel, The U.S. Centennial of Flight Commission, The Department of Agriculture, The Office of Thrift Supervision, The Vietnam Educational Foundation, The National Indian Gaming Commission, The Administration on Aging, The Appalachian Regional Commission, The National Commission on Libraries and Information Science, The Overseas Private Investment Corporation, The Interagency Council on Homelessness, The Federal Financial Institutions Examination Council, The Federal Interagency Committee for the Management of Noxious and Exotic Weeds, The Office of Federal Housing Enterprise Oversight, The National Agricultural Statistics Service, The Postal Rate Commission, The Veterans Day National Committee, The Rural Housing Service, The Disability Employment Policy Office, The Barry M. Goldwater Scholarship and Excellence in Education Foundation, The White House Commission on the National Moment of Remembrance, The Woodrow Wilson International Center for Scholars, farm subsidies, payments to grow food, payments to not grow food, and so much much much much more. And that is not even including essential state and local services!

D) Taxes are a moral imperative

Taxes are best when they are egalitarian; i.e., everyone ends up with an equal income regardless of what they are initially paid. This is economically crucial because history has shown that people are happiest when they feel no envy -- and the best tax is therefore one that leaves everyone with nothing. But obviously, this is not acceptable. For such a tax would leave no room for deductions; in order for people to pursue worthwhile activities, they must be able to deduct expenses from their taxes. Without such deductions, society would be left with nothing but greedy corporations and rich people thinking only of themselves -- no one would contribute a dime to charities, and no corporation would ever do anything beneficial.

Taxes also encourage hard work, and lots of it. For example, if 99% of your income is taxed, then you will work one-hundred times as hard to stay even with your pre-tax income. Theoretically, if 100% of your income is taxed, then you will need to put in an infinite amount of effort to stay even. But then, we run into the “deduction” issue again. Furthermore, this would be politically impractical, as conservative bigots would start screaming “slavery”.

A good government is one that controls everything, and taxes are the nourishment of the benevolent government. Taxes allow for public education, public hospitals, public transportation, public housing and all the other services that are “excellence certified” with the prefix “public”. (To say nothing of The White House Commission on the National Moment of Remembrance!) But quality is not cheap, which is why high taxes are essential. For these services require land, materials, and mostly, an army of selflessly dedicated civil servants who do indeed tirelessly work in the service of the citizenry.

Wouldn't it be ideal if all housing was like public housing?
Well, that requires taxes. Wouldn't it be ideal if we were all served by a nationalized health-care system based on typical municipal hospitals? That's what taxes can do. Wouldn't you be happier if your local supermarket was operated on par with the Department of Motor Vehicles? Taxes!

And, in the process, taxes democratize society. Is it fair that someone working twice as hard as you makes twice as much as you? No, it isn't – and taxes can address that. Is it right that your neighbor can send his children to private school? No, it isn't. And if we tax him, we can then afford to build more public schools that his children will need to attend when he is no longer able to afford private schools. Do you have a private pension plan? No? Well, taxes give other people the opportunity to contribute to a Social Security system whether they want to or not. Perhaps they won't even have enough money left over for their so-called “private” pension!

The fact is that businesses also benefit by paying taxes. Remember, they also use the roads, and hire people educated in public schools and who live in public housing. Think about it this way: Were it not for public housing, then those businesses would not be able to hire public-housing tenants. And in any event, there is a moral imperative to punish businesses anyway – which taxes also address.

And there is a moral imperative for you, dear pupil, to pay your taxes. In a world of suffering, only a monster would claim a right to his income. There is no right to be happy – especially when others aren't. And if you are happy, then something is amiss. Fortunately, they IRS has trained people who will find that “something”.

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Dear Comrade Krugman,

I have made my way into Hollywood and am now making millions of dollars writing movies with subliminal progressive truths attached. I am told by the studios to enjoy the money while advocating for higher taxes on those outside the "Industry". Based on my "artistic" profession, am I allowed to be an elitist and enjoy the fruits of my painstaking labor of remaking other peoples movies? Or, must I and others in La La land give more money back....?

Lovin' the Limo Liberals,
Chairman Meow...

P.S- The "Industry" says they are willing to give you whatever award you want if you let us keep the money, it could all be yours paulie, golden globe, oscar, guild award, Susan Sarandon............Tim Robins?? anything you want.... its yours....

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Congratulations, Mr. Meow-Say-Pun, on your career as an advocate in the entertainment industry! I would say that part of your new career is to be a spokesperson for humanity. Think of Sean Penn courageously battling the rising flood waters of New Orleans in order to selflessly bring warm cocoa to the starving children. Think of legendary actress Janeane Garafalo donating her time to plead with the corporate-military machine to please, please, stop mutilating Iraqi infants for oil profits.

Mr. Meow-Say-Pun, you have already given far more than your fair share. I think it would be your on moral obligation to keep your money -- which you will undoubtedly give to a charity anyway. You are to be admired.

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Comrade Kurgman,

I cannot tell you how much better I feel about my personal worth after reading this:

"And, in the process, taxes democratize society. Is it fair that someone working twice as hard as you makes twice as much as you? No, it isn't – and taxes can address that. "

I'll be over by that bail of hay taking a siesta (h/t Comrade Chavez). Please wake me when the commisar of finance comes by to hand out paychecks (less the 99% flat tax rate).



Comrade Krugman,

Thank you for providing the ultimate testimony of the beneficial role of taxes. I've been blinded for years until now. But the dust in my eyes from digging the dirt is finally dissipating.

I was first inspired by comrades Richardson, Daschle, and Geithner (did I miss anyone else?) and learned the positive outcome of paying taxes at some point. There've been moments in my life when I was weak and tried to hide a few tomatoes or a cup of grain from the Kolhoz. I've been a selfish monster.

Your enlightening writing helped me realize that only the common good matters. And now I feel the call to work for the common good. And I thought I'd ask for your fatherly advice:

1. In order to serve the common good I'm considering running for public office: should I pay taxes before or after I get appointed?

2. In order to prevent people from hiding their incomes, wouldn't be a good idea to eliminate taxes and have everyone simply work for the government? Then, instead of money, we (assuming that I get that party, I meant public, job,) we could give coupons to the workers, which they could exchange for bread, vodka, and a copy of the Code of Work.

Looking forward to read your reply, and with hope for a soon arriving April 15,

Thank you.

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Dear Komrade Kurgman,

I've heard this crazy old dullard with hair plugs say something to the effect that paying taxes is 'patriotic'. Now, I'm all for the good of the Party™, and believe thoroughly that I'm a moral and good person because I pay what the Party™ has declared for me to be 'my fair share' of taxes, but I understand there are some Commissars working within the Party™ that have received their positions because they didn't pay their fair share of taxes. Does this make them immoral or bad or unpatriotic comrades? Or could be this be a reason my good friend and comrade Zangeif disappeared because he asked the same question?
For the greater good! For the Collective™!

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I have just discovered Paul's section here at the Cube but I recognize the like mindedness and collectivenality. Do you happen to know where I can send extra taxes in to the government? I am currently feeling guilty about having too much, more than my share. I suggest we do like other forums and have a "sticky" with an IRS address for submitting extra tax contributions.