Why Taxes Have Been Central to World Events

No taxation without representation!  This rallying cry of our Founding Fathers is a strong indicator of the effect that taxes can have on world events.  Mark Weinberger, CEO of EY, would most likely agree that indeed, tax policies have wrought immeasurable change on cultures since the government first conceived of the possibilities.  Depending on the uses of those taxes, they have the potential to benefit the entire group or fracture the whole under the weight of political revolution. 

Control The Economy...

Since the Great Depression, Keynesian Theory has been widely adopted by governments as a way to use taxation as a tool to nudge an economy as needed.  Known as fiscal policy, this manipulation allows for the Treasury Department to cool an overheating economy by increasing taxes and removing money from the system, or they can prime the economic pump by reducing the tax levels that subsequently result in more funds being available for investment and job creation.

Another area in which the government can utilize taxation, as a way of controlling the economy, is through a coherent monetary policy.  Monetary policy is simply the spending habits of the government with the people’s money that they do collect through taxation. 

Taxes as an Economic Tool...

Dredging harbors, building bridges, improving rail lines, developing communication networks, and generally supporting economic infrastructure projects has a profound effect on the economic development of a nation and the government of the United States has supported all of these and more on the taxpayer’s dime.  The economic juggernaut that emerged on the North American continent during the last quarter of the 19th century is testament to the power of taxation on the events of the world as the United States moved on to dominate the better part of the next century.

As governments are prone to do however, as often as not the tax policy is an imprecise weapon and policies gravitate towards invariably benefiting one group over another.  How that society chooses to react to these disparities can have a huge impact on the course of world events.  In the United States in recent years, questions over taxation policy have polarized congressional delegations led to virtual deadlock as the various interests attempt to parse out a solution.   

It’s within this reconciliation process that the seeds of discontent begin to sprout within the society of “Haves and the Have not(s)”

What’s Yours is Mine...

Capitalism is an inherently unequal system in that it is predicated upon the notion that there are winners and losers in the market place, and “unto the winner go the spoils.”  Invariably, as has happened in industrial economies, a succession of wins over a number of generations has the effect of stacking the deck against those members of society whose record of successes rivals those of the Chicago Cubs. 

To ameliorate the harsher sides of unbridled capitalism therefore, taxation is used as a way of redistributing wealth among a nation’s citizenry. 

Whether that assistance is administered through the funding of support programs, or through the disbursements of direct cash outlays to needy recipients, the perceptions of those footing the bill becomes an important component in changing the nation’s political dialogue as evinced by the emergence of the Tea Party in 2010.

It’s too soon to determine what effects that dialogue will have on the national scene regarding tax policies, but it’s safe to assume that it has the potential to dramatically affect the national dialogue as the country undergoes demographic changes that are estimated to take place over the next quarter century.

Death and Taxes...

For any examination of the passions excited by the debate over taxes, one need not wander too much farther than the evening broadcast.  Conservatives decry the onerous nature of taxation amid an economic recession while liberals argue that it is crucial to maintain the basic services that taxes supply to the society as a whole.  Clearly taxes have on the one hand the potential to fund social utopias, if harnessed in the service of that goal, or they can serve as the spark of social upheaval and political revolution if their use is subject to over reach by taxing authorities.  A nation’s taxation policy can be instrumental to changing the course of world events.