It is a question at the core of our system of governance. And it splits us into two camps.
Let’s start with low taxes.
There is something immensely appealing to the idea. You get to have more money in your pocket to do as you wish. You can start a business, put it in the bank, invest it, save to buy a home, take a vacation, enjoy a sideline or do nothing.
You are in control and it feels great.
The person who chooses to start a business is a creator of jobs. Those people employed by the new business will be paying their own taxes, and unless the money is put under the mattress, that money is circulating and generating more business activity.
You would think that the money from low taxes spurring so much business activity would be enough to take care of the welfare of the community. Unfortunately, it is not.
The majority of small businesses fail.
So it falls to government to invest in the community and its basic unit, the family, and to do that it must collect taxes from the businesses that succeed or borrow money.
Those investments are long term and its profits are measured in the quality of citizens produced.
But you and I are not in control. We have delegated the task and it doesn’t feel the same as having the money in our pocket.
It takes an effort to conceptualize how the money paid in taxes goes to work for each of us. You or I may go years without needing the help of police or emergency services, if at all. But we do use our roads and freeways daily.
Is there waste in government? Yes. (And we have to keep trying to reduce it)
But there is waste in any business endeavor, which is why good managers are worth their salt.
So, should we favor low or high taxes?
It depends on the condition of our communities.
We are not alone in our journeys.
If there is poverty, if people are not getting a good education, if they are not getting enough to eat, if they are dying from drug overdoses, if there is a high rate of unemployment, if people are begging on our streets, if they don’t have a place to live, if they can’t get health care, if there are large numbers of people in prison, if there is racism in the land, then there’s something wrong.
We can always look at people failing in life and say to them, ‘it’s your fault. Your fault you’re poor, your fault you’re begging or uneducated, your fault you don’t have a job or a place to live or health insurance, your fault you’re on drugs, you’re fault you’re in prison.’
And yes, sometimes it will be entirely their fault, or they are partly to blame, although sometimes not at all.
Blaming, however, opens the door to punishment and to closing the argument.
There is another way to look at people who are failing in life.
And that is to look beyond blame and offer a helping hand, as in saying, ‘let’s get up brother, let’s get up sister, let’s get you up on your feet and back to functioning. We’ll talk about blame later.’ (If we don’t then whatever mistakes were made will get in the way again.)
Large scale problems cannot be solved by churches or Goodwill or the Salvation Army or other philanthropic organizations, though all try and have great merit.
Large scale problems need government to act. Government with the consent of the people.
If we have healthy communities and families, then we will be producing better citizens, and there will be fewer people in prisons, and the nation’s productivity will be higher, and more people will start businesses and create jobs and pay taxes.
If we accomplish that, then we might consider lowering taxes and see if the center holds.
And if it doesn’t then we would have to raise them again.
Do high taxes lower incentives to start a business?
For some, yes. But not for those with the resolve to do something with their lives. Not for those with the conviction they have something to offer and the energy and inclination to take chances.
There is a divide between those willing to take chances and those who are not. Just as there is a divide between those with greater ability and lesser ability. That’s the way the world is.
We are not equal in terms of capacity or motivation.
But all of us should have equality of opportunity so we can develop whatever nature gave us. That is an essential feature of a healthy society.
The person who is given opportunity and, after putting in the effort, does not get to shine in their field should be able to say, ‘I did the best I could. Let me accept what the exercise of my abilities did grant me and enjoy my life.’
Equality of opportunity will not create equality of accomplishment. It will not because of the differences in people’s capacities and motivation.
Equality of opportunity can, however, narrow the gap that exists between those who accomplish more and those who accomplish less.
When people have had opportunity to develop whatever their abilities, then they have fewer reasons to complain about the disparity in outcomes.
People can still turn around and find something or someone to blame for the disparity, but sooner or later the person is bound to come to terms with the facts. Sooner or later the person has to look at themselves and say, ‘I managed to get this or that but I couldn’t get the other. Maybe I didn’t try hard enough or maybe it wasn’t in the cards.’
Sooner or later, the weight of the evidence, the wisdom of age, or a combination of the two will bring the person acceptance. And they will stop blaming. And get on with their lives and try something else.
Self acceptance is crucial in our path to gaining a sense of peace in our lives. I’m talking self acceptance after you’ve tried really hard, got knocked down, got up and tried again.
So back to people’s motivation.
If a person really wants to make cupcakes because they feel they have a special knack for it, then they ought to try making cupcakes. Or software. Or a new shoe or pencil or bicycle or table or music stand or paper cup or kite or new vehicle. Or help someone make it, for that is just as essential.
People who start businesses in our communities enrich our lives. And so we have the eateries, cafes, cleaners, bookstores, locksmiths, plumbers, electricians, roofers, carpenters, auto mechanics, ice cream parlors etc.
And on a different scale, there is Elon Musk having the time of his life transforming Tesla into a thriving car company in a field that seemed closed to competitors. Success was not a safe bet. He had to take a chance. And now he’s even sending rockets into space. So I ask you, do you think that Elon would have chosen to stay home and count the money he made in PayPal if taxes on business ventures were higher?
So, high taxes or low taxes?
The answer will need to vary according to the state of our communities, for they let us process our shortcomings, encourage risk taking and help us become better people, people who feel they’re part of what is being built.
A writer tucked away in his apartment, toiling by himself as he spins out stories needs others to get them published and read.
Elon Musk would not have built Tesla or Space X without first creating a community of highly skilled people, people with skills he does not have. People who came from healthy communities and for whom being part of a grand effort was worth their time and energy.
The writer and Elon both need a community to get their dreams out.
So, high taxes or low taxes?
High taxes might dissuade some from taking a risk on starting a new venture, but the strongly motivated will try anyway.
Low taxes that are not mindful of the health of the community, encourage waste and take away precious resources needed to improve our lives.
Meanwhile, our political leaders need to strive to build bridges between the more and the less capable amongst us for, in the end, we need everyone.
Oscar Valdes is the author of Psychiatrist for A Nation. Available on Amazon.