Many people complain about taxes, but most don’t realize that taxes are beneficial to society, and thus you. The way I see it, taxes are taking a step backwards initially. But because it brings out good benefits, the result is taking five steps forward. For example, we pay a lot of taxes for our freeways. So that’s a step backwards because we, the citizens, have to pay. But think of the benefits: you can travel across the state with ease, you don’t have to take back roads to get to a far destination, you don’t have to stop at a stop light every five minutes, you’ll reach your destination probably four or five times faster, and it boosts the economy because working people can now work at other places and not be confined to their town. So this one step backward was a cost, but you got a huge benefit from it, which is probably equivalent to taking ten steps forward.
Another way to see this is using the Laffer Curve but in all aspects. To sum up, the Laffer Curve was an idea made up in the 1980’s and they suggested a way of maximizing results from certain costs. For example, the government needs to collect taxes in order for it to spend on governmental projects. If the tax rate was 0%, there would be no revenue because everyone would keep their money and the government would get nothing. If the tax rate was 100%, there would still be no revenue because if you had to give all of you money to the government, then there would be no incentive to work and thus, there would be no taxes to collect. So here’s the question: what is the maximal point at which you’ll get the greatest revenue? And if you tax more, at what point would you get less revenue (a diminishing return, in other words)? Most economists and scholars say it’s around 30ish%. So around 30ish% is the point where you take a step back (by paying taxes), but you take some steps forward (the maximal gain from governmental projects). And since you’re part of society, you would benefit too. So let me bring up some examples of which I consider take a step back (again, by paying taxes), but you get an advantage from that cost:
3. Social Security
4. public schools
6. public universities
11. foreclosure bail-out plan
12. federal student loans
13. police departments
14. fire departments
15. sanitation department
16. Veterans Benefits
I’m not saying that everything in this list has obvious benefits, but I’m sure if we research it, we can discover how these are benefits to society.
Now, I can imagine a critic saying, “but Shaun, why should my taxes pay for public schools? I don’t have children, I’m educated, and I don’t care about how our children are doing. So why should I care?” Let me reply with two answers:
- Bentham gives this argument. Suppose you don’t pay taxes for public schools. What would happen? Well, most children wouldn’t be able to go to school and become educated. If they’re not educated, then they’re not going to help out society. After all, the reason why you benefit is because of people in society. How did you get your car, computer, house, utilities, etc.? Someone had to learn this stuff. So helping out children in your society actually benefits you. Let’s say that from a scale of 0-100, you NOT paying taxes would put you at a 45. Now, with you paying taxes, that boosts everyone (including you), and you personally would probably be at a 60 because you contribute to an educated society. Hell, in places where you work, you’d want smart people working either for you or with you. We don’t see this because I think people emphasize on the negatives and the costs (paying taxes) and hardly pay attention to the positive outcomes. After all, if the economy is good, we really don’t praise anyone. But if the economy is bad, immediately someone is to blame. We focus on the negatives and not on the positives.
- For my other example, take a look at your computer. It probably costs around $1000 (with the internet, printer, and other stuff). Let’s say that Bill Gates decides that he wants to get richer and he charges $5000 for a computer. Now, I bet with that, you couldn’t afford it. In fact, a lot of people can’t because it’s too expensive. It seems that only the super-rich can afford it. But if a smaller percentage of people can afford it, then that means Bill Gates won’t get a bigger profit. So going back to the Laffer Curve, let’s say that a computer can cost from 0-infinity dollars. Well, if it’s $0, Bill Gates won’t get any profit and he won’t get any incentive to work, which means we might get crappy computers. If it costs infinity dollars, no one could literally afford that, not even Bill Gates. So at what point would Gates get a maximal profit without diminishing returns? Probably at the price it’s at right now. The cost of selling cheap computers has a great benefit because almost everyone can afford it, and Bill Gates can still get rich. If he charged more, he would get diminishing returns and not be as rich as he is right now. Henry Ford had the same idea when he made cars.
Where am I going with this? Let’s talk about Health Care.
So what are the costs? Obviously, you have to pay higher taxes. What are the benefits? Every American is covered. So back to my school analogy: if everyone is healthy, that benefits everyone (including you) because society can function better if they’re healthy. So the cost of paying a higher tax is lower than the benefit from everyone being healthy? Again, with the analogy, it seems that the status quo puts you at a 45 on a scale from 0-100. With a nationalized health care system, you would probably be at a 60.
Of course, there’s other arguments like how the market works and the incentives of doctors and nurses. But I want to stick with this line of reasoning for now. Thoughts?