Spencer Heath Archive

Item 1994

Pencil notes in a notebook containing dates between August and October, 1934

 

Original is in item 1978.

 

 

 

Mr. J: “I understand you have some constructive ideas on economics, especially about taxation.”

Yes, Mr. J, there are just two very important things about taxes — how they are collected and how they are spent.

“I suppose you mean we should collect them from those who are able to pay and spend them for the benefit of all, including those who are not able to pay?”

No, that might be justified as a relief of suffering in some great and sudden calamity, but as a tax policy it would only be a racket — a taking without recompense.

“Then what would be the correct principle?”

To get at this we must recognize that government is just a special lot of people told of as public servants whose only proper acts and duties are to perform public services. The only proper use of taxes is to pay the wages of these servants and the cost or maintenance of the equipment they have to use.

“Very good, but does this throw any light on the correct principle of raising taxes?”

In just a minute .. First, I want you to realize just what it is that taxes are properly paid for — that is, for the wages and equipment of public servants. Next, I want you to observe that public services, if they are to remain truly public, must be delivered in a public way, for if they are delivered privately, that is, to particular individuals or classes, they become special privileges.

         ”Are you opposed to all special              privileges?”

I certainly am. Now the only avenues for distribution of public services are the streets and roads or other public rights of way. These ways are never established or maintained except by government authority, and all the government services delivered through them must be and are performed by public officers or servants and by public commissions, agencies or corporations created by the government for that purpose.

“Do you say these officers and agencies and corporations are paid

for their services out of taxes?”

Yes and no. Originally almost all public officers collected fees. Many of them still do, and the fee system is still in use by the public service corporations such as turnpike companies, water companies, transportation agencies and light, heat and power companies.

“Why are these last not paid wages

for their services instead of being allowed to collect fees?”

Some of them are. Notably, highway and street departments, municipal water departments, etc.; in those fields the fee system has been superseded largely by paying the wages and salaries and other costs out of the tax funds.

“You refer to public ownership?”

Yes, it is called public ownership because the government owns the capital equipment (usually under mortgage), but of course the service is not any more public than it was when fees were collected instead of salaries paid.

“Why is not public ownership with payment by public salaries and wages more general than it is?”

That is because salaried government officers generally lack the necessary skill and competency to administer the large amount of capital equipment required in most of the public services.

“This is very interesting, but what about taxation?”

I have been answering your questions that led me to show that while most of the government services are paid for out of the tax budgets as wages and salaries, there is also a large part of the public services still carried on under the fee system. If we go back now and consider those public services for the payment of which taxes must be raised, we find that these services (so far as they are public services and not special privileges) are distributed in varying degrees throughout the territory served. Now, it is clear that whatever the tax pattern may be, the costs of these government services must be met out of the wealth produced in the community and therefore by those who produce this wealth. But if taxes are levied stupidly on any or all wealth, there is great injustice and all business is demoralized. Capital and labor are driven out of business, leaving only monopolies behind.