Taxes and Slaves

Each government on earth has a right to rule, called “sovereignty”. Our governments used to assure us that their sovereignty is granted to them by God. In the Bible, read I Samuel chapter 8 to see that God granted to King Saul the right to rule. And the right to tax his subjects, collecting from them a part of their wealth or income or labor. The subjects owed to the ruler their service, including service that puts their lives at risk.

Sovereignty coming from God is still with us. Look at a Canadian coin and you will find an inscription “ELIZABETH II D. G. REGINA” which is Latin for “Elizabeth II by the Grace of God Queen”.

Whether we like it or not, taxation is necessary to support the functions of government.

Today we place less emphasis on the role of God in government; in some countries atheism is official policy. I remember meeting a little girl who wanted something. I asked her why. She answered, “Because.” I asked her, “Because what?” She replied “Just because.” Government has a right to rule us and tax us because God gave it the right is now replaced by “Just because.” But right or not taxation is necessary to support the functions of government.

We are all familiar with tax as money that the government takes from us. Another way is to tax businesses that sell us their products and services; these must raise their prices to be able to pay the tax, so we pay the tax indirectly.

In the past, money consisted of coins in gold, silver, and copper, the value of the money coming from the value of the metal, whose value depends on its scarcity. Today the government prints our paper money, whose value depends on its scarcity. If the government prints more money, its scarcity and value decreases in a phenomenon called “inflation”.

If a government needs more money, it can just print some. Ever since money became paper, this became an option.

Sometimes it also makes more metal coins, reducing the precious metal content. In the USA we have seen our copper cents replaced with zinc. We have seen our silver dimes, quarters, half-dollars, and dollars replaced with alloys of nickel and copper.

After the first world war, Germany found itself on the road to bankruptcy, and begun to print more paper money to pay its bills. This led to the value of the Mark becoming less, so more marks had to be printed.

My father as a child lived in Germany. He told me a few stories.

My grandfather deposited his gold marks in the bank. When he went to withdraw them, there was no gold. He got paper marks.

Because the value of the mark went down from day to day, nobody wanted to take home any money. Farmers would not sell their butter for marks, so Grossvater couldn’t go to the store and buy butter. One payday, he took his pay to the tobacconist and bought some good cigars. Then he walked out of town to a dairy farm, and asked the farmer if he had any butter to sell. The farmer said no. He said, “I have these fine cigars.” The farmer called to his wife, “Gretchen, look in the spring house and see if we have any butter.” The trade as made, barter for butter.

One morning my grandmother gave my father 5,000 marks and sent him to the store to buy some rubber jar rings to can some fruit. The price was 10,000 marks, so he went home empty handed. In the afternoon she sent him to the store with 10,000 marks, and he found the price was now 20,000 marks.

At last the situation became impossible, and the government issued new marks, giving one new mark for a trillion old marks.

I do not doubt that popular anger against these shenanigans had something to do with the election of the National Socialist party president, Adolf Hitler. And something to do with my grandfather’s decision to move with his family to America in 1925.

When a government prints money to pay its bills or debts, the value of the currency decreases. The money in my bank account, or even under my pillow, loses value. I am being taxed, without calling it a tax. Call it “inflation tax”.

Today we can see the government giving away trillions of dollars in “stimulus” to try to prop up the economy while we shut things down hoping to slow the Corona Virus.
The bill for spending 3.5 trillions in newly printed money runs to 10 thousand for each citizen. In return, some of us get a stimulus check for $1200. Given that this is paid for by the Inflation Tax, we don’t seem to be getting much.

Does this seem like taking a drug that will make me feel better without any actual positive on my health ? Are they putting our economy on “speed” ?

How much are we taxed? Often we look at our income tax payment to answer this. But this overlooks a lot of other taxes, including, but not only, sales tax, real estate tax, gas tax, liquor tax, tobacco tax, and inflation tax. And the tax I pay to renew my vehicle’s license and my driver’s license. And the “fee” I pay when I enter a park or drive down a toll road.

I would like to suggest that a better way to measure our tax rate might be to compare what the consumer manages to get to the pockets of the producer of goods and services with the amount that governments spend. For lack of any real data, I will guess that about half of my labor goes to taxes.

If I am a free man, my labor belongs to me. I am free to sell my labor to another person, called my “employer”. A wonderful thing is that I can sell my labor today, and I will not have any less to sell tomorrow, and even better, the labor I sell tomorrow will be more valuable because it comes with “experience”.

If I am a slave, my labor belongs to somebody else. He can use it to hoe his cotton. He can also rent my labor to somebody else, and he gets the money.

In 1858, Abraham Lincoln said, “I believe this government cannot endure permanently half slave and half free.” If half of my labor belongs not to me but to the government, does that not make me half slave and half free ?