Tax Money Is Never Wasted

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A Waste of Tax Dollars (But I Repeat Myself)

Up here in Buffalo, they are complaining about yet another waste of taxpayer’s money. The state wants to spend eleven million dollars to paint the Skyway Bridge, which runs south from downtown along Lake Erie. Many people around here would prefer demolishing the bridge to painting it since it serves as a Berlin Wall separating the city from the lake. Naturally, the proposed contractor thinks a paint job is just what the old bridge needs. We can make a much larger point by means of Rothbardian and Public Choice analytical tools.

Those who, like Senator Proxmire (Golden Fleece Award), or Tom Brokaw (Fleecing of America), complain and protest about how this or that quantum of tax money is wasted on this or that particular boondoggle, have missed the point entirely. From the point of view of the taxpayers, all money that the taxman has taken from their pockets by force is wasted! The mere fact that the money needs to be taxed in the first place, proves beyond any reasonable doubt that, if not taxed, the taxpayer would spend the money on goods and services he deems more valuable than those projects the government intends to fund. Even if, as is astronomically unlikely, all taxpayers planned to spend their money on the exact same thing that the government planned to spend it on (and there is no way to know this in reality), we can still call the tax money wasted. There are two reasons for this. First, because the taxpayer is deprived of the satisfaction and dignity of making his own choice. For example, imagine you were thinking of marrying Jane Doe. Then, the government came along and forced you at gun point to marry her. It would not be quite the same experience, I suppose. Second, if the taxpayer was allowed to make his own choice, the funds could be transferred for a tiny fraction of the cost and inconvenience and without the need for thousands of tax collectors spending billions of dollars.

Conversely, no matter how absurd or silly or wasteful the projects that tax money is spent for might seem, from the point of view of the recipients of that tax largesse, none of it is wasted. To the fellow who sold that toilet seat for $1,000 to the Pentagon, that money wasn’t wasted. To the fellow who used tax money to create a work of "art" featuring a religious icon dipped in bodily fluid, that grant was not wasted. Thus, tax money is always wasted from the point of view of taxpayers but is never wasted from the point of view of tax recipients.

Now add the political dynamic. The beneficiaries of any government program generally derive all or much of their income from that program and will fight to the death to keep it. In contrast, the typical taxpayer pays only a tiny fraction of his income in taxes to pay for any particular program. Thus, while tax recipients will struggle mightily to keep their programs up and running, taxpayers will be rationally apathetic and will choose not to fight them because so little is at stake and they are unlikely to succeed in any event. Thus, it is the tax recipients, who generally derive most or all of their income from taxes, who tend to dominate politics.

Oliver Wendell Holmes, who usually got things balled up, famously said, "Taxes are the price we pay for civilization." This, from a man who took part in one of the most brutal episodes in American history, the tax-supported War of Northern Aggression. The essence of civilization is the abolition of the use of aggressive force in human affairs and the consequential emergence of reason as our guide. Taxation is the greatest facilitator of aggressive force ever invented. The major wars and genocides in the tax-happy 20th century were paid for by taxation. Which is why I say, "Barbarism is the price we pay for taxation."

May 27, 2003

James Ostrowski is an attorney practicing in Buffalo, New York. See his website at http://jimostrowski.com.

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