How High a Price for Civilization; S. Gold

In all, our nation's tax burden hovers around 35 percent of total income, not including the cost of tax compliance, future taxes made necessary by deficit spending, or regulation. Counter tax advocates: So what? More taxes simply mean more (and, by implica tion, better) government. "Every nickel that goes in comes back in some way or another, " Robert McIntyre of Citizens for Tax Justice has stated. A Des Moines Reg ister editorial defended the current level of taxation, pointing to the value of such pro grams as national defense, public schools, police and fire protection, national parks, Mr. Gold is associate director and communica tions director at the Tax Foundation, a nonprofit research organization in Washington, D.C. roads and highways, and safety nets for the unemployed, the disabled, and the elderly. Yet such ad populum arguments, while relevant, leave fundamental questions un resolved-such as, how much government spending is actually necessary? Or, to phrase it in a way Justice Holmes would appreciate, how much tax collection does it take to achieve a "civilized society"?

What Is Civilized? To answer that, we must first ask: what do we mean by a "civilized society"? In an informal sense, "civilization" simply means a modern society with conveniences, as opposed to life in the middle of the jungle Webster's definition. But Justice Holmes probably had in mind a more technical meaning, one centering on a stable system of governance that could protect life, liberty, and property, while providing due process of law for its citizens. Based on this view, the United States was civilized at its founding. The central gov ernment created by the framers of the Con stitution was, to say the least, a minimalist national government, with a primary mis sion of maintaining a military, mintingcoins, operating judicial and postal systems, and, later, helping to build roads and canals. Throw in some police, courts, and addi tional roads at the state and local level, and that was about the extent of late eighteenth68 century American government. There were no large transfer payments between gener ations and between income groups, no reg ulatory agencies, and no funding of the arts, humanities, or sciences. Nevertheless, so ciety was still civilized.

Indeed, one of its most civilizing aspects was the legal framework that protected property rights and economic freedom. As a result, the economy expanded, people grew steadily wealthier, and living standards rose. All this while federal revenues were a mere $1 per capita in 1790, almost all of which were collected through duties on imported goods. In today's dollars, that's roughly $9 per person. So not only was society civilized, but the path to civilization was economical. A little over a century later, when Oliver Wendell Holmes joined the Supreme Court, government's prime mission remained cen tered on national defense, law and order, roads, and mail delivery. In addition, the federal government had ventured into such areas as public land management, agricul ture, and regulation of interstate commerce. As a result, between 1815 and 1900 federal employment jumped 4,950 percent, com pared to U.S. population growth of 880 percent. Meanwhile, state and local govern ment had taken on the responsibility of undertaking such public improvements as street lighting, street cars, and sewage sys tems. Yet by contemporary standards gov ernment was still small, unobtrusive, and cheap. By 1900the total cost ofgovemment had risen to $21 per capita (about $380 in today's dollars), a third of which was for federal operations.

Here, then, was Justice Holmes's vision of and price for a civilized society. Maybe it was overpriced, considering that taxes were used to create Jim Crow laws and Supreme Court cases like Plessy v. Ferguson (a.k.a. "separate but equal facilities"), which served more to set civilization back. But compared with today's unimaginably large government expenditures, the price was low. What, then, of our current level of public services? Over the past 90 years the federal 69 government has aggressively expanded into such areas as income redistribution, busi ness regulation, and education, not to men tion a vast array of special interest sub sidies. To fund its growing activities, government expanded its ability to collect taxes, most significantly through the addi tion of an income tax (1913)and a payroll tax (1935)- which, combined, now account for almost two-thirds of all taxes collected.

Altogether, total taxes in 1995 average $8,303 per person, an inflation-adjusted in crease of about 2,300 percent over 1900 levels. More Civilized Today? Does this dramatic growth over the past century imply that we are more civilized indeed, 2,300 percent more civilized-than before? In terms of having the ability to uphold democratic principles worldwide (winning World War II and the Cold War come to mind), the answer would seem to be yes, which would confirm Justice Holmes's view of the purpose for taxes. That said, the increased tax burden has led to few other truly civilized trends. Gov ernment's financial generosity to certain segments of the population has only come at the expense of others, and has helped create an underclass of people highly dependent on public handouts. Government's control of private enterprise, through a tangled web of regulations, has come at the expense of economic growth and liberty. Government enterprises, like education, are in disarray.

Similar policies internationally, such as for eign aid, seem to have done more harm than good. Big government advocates may call these public policies fair and necessary, but they hardly qualify as civilizing features in the tradition of Justice Holmes. Indeed, to imply that every dollar in taxes today is necessary to maintain our civilized society is to ignore government's inevitable waste, its bureaucratic inefficiency, and the constant politicalshufflingof money to favor ite targets. How much oftoday's tax burden has gone to fund programs-started perhaps a century ago (Interstate Commerce Commis70 THE FREEMAN • FEBRUARY 1996 sion) or a half-century ago (Rural Electrifica tionAdministration}-that have outlivedtheir usefulness? For that matter, how much of the money sent to Washington could be more wisely used by the familiesand individualsif they were allowed to hold onto it? The current level of taxation in America should be a part of any future debate in Congress over tax reform. For its part, the American public needs to decide what it expects out of government and how much it's willing to pay. In other words, Ameri cans need to rethink Justice Holmes's ob;.