I have a question about tax history in the USA, which relates to some previous comments I made (a bit rudely) about the fact that in modern capitalism the gross wage effectively includes a legal obligation to subsidise state bureaucracies and private corporations.
The point is this: when I studied tax history in New Zealand, I discovered that the working class paid no income tax prior to the 1930s (except a negligible amount in some cases, and possibly some taxes related to home ownership and so on). It was the farmers, landowners and capitalists that paid income tax. In the 1930s depression, however, a tax was imposed on workers' wages to provide a fund such that the working class would pay for its own workfare. In the later 1930s, social security tax on wages was generalised by the Labour Government, but this tax was collected under the provisions of the Social Security Act, and could not be used for any other purposes than provided for by the Act. This was an important legal accounting principle, because (1) it meant that money paid into the state by the working class for social security could only be disbursed to the working class and not be used for anything else, (2) in the administration of the funds, it was very clear who was responsible for the management of the social insurance funds, it was a distinct and separate authority. The next step historically, however, was to universalise eligibility for welfare provisions, and then finally, with the introduction in the 1950s of Pay-As-You-Earn (PAYE) tax collected by employers (I think maybe 1953 or 1954), income taxes were all paid into the government Consolidated Account and this was considered more "efficient" and "less bureaucratic". In the mid-1980s the ne-capitalist tax system was rounded off with a universal Goods and Services Tax (GST). However, if we look beyond the "efficient" bit, it's clear that this accounting trick involved the ideological assumption that all citizens had an equal stake in the state. But not only that, it also meant that whereas previously specific taxes, paid for a specific reason, were earmarked and disbursed for a specific reason to a specific group of people according to a legally mandated authority, which could not spend the money on anything else than the legally defined purpose, now the situation changed and it was no longer possible to clearly trace transfers of income between different social classes and groups. If all income taxes were paid into the Consolidated Account, then the source of taxes (who paid them in) was severed from the government expenditure of tax revenue, the link between tax collection and tax revenue expenditures was broken, and this is the basis for the corruption of the bourgeois state, since in spending public funds, the government acts under no legal obligations to taxpayers, other than legally defined citizen's rights and entitlements in civil law, plus a "democratic mandate" delivered every three or so years through the ballot box. This gives the government a great deal of room to spend taxpayers funds as it sees fit, without explicit consent from taxpayers. The way that this corruption is to be solved, according to bourgeois fiscal theorists these days, is by corporatising the state, so that clear asset accounting is done and public services are recast as "cost-plus activities" which are "products" valued in money and linked to specific budget allocations, but what this ignores, apart from the fact that taxpayers end up paying twice-over, is the fact that these budget allocations refer only to an internal share-out of tax revenue already collected, from a Consolidated Account. In other words, the corporatist rationalisation of government expenditures refers only to the share-out of the total tax revenues already received, because the link between the collection of a tax and its expenditure is still obliterated in the financial regime. So now what I really want to know is how this works in the USA, at the state and federal level. Is it the case that the working class just provides the s tate with a guaranteed income, and that the US Government can just spend the money as it sees fit, or is there a clear relationship between tax collection and expenditure of tax revenue, in the way described above, so that no tax money can be spent other than for the purpose for which it was paid in ? Are there some good references to this issue ? If you think I am going off-topic with a reformist rant, you are wrong, because I have the blessing of Karl Marx, who wrote in relation to value-added tax (consumption taxes, indirect taxes) that they obliterated class differences and hid income transfers between social classes. All I am saying is that we ought to take this critique of taxation further, by returning to the basic jurisprudential principle that if you are going to pay tax, then it should at least be spent on what you paid that tax for, and not for something else. This is not a small matter, since, in the USA, the total tax take comprises about a third of total GDP and that is one hell of a lot of monetarily effective demand, it's more money than the total national income of quite a few countries combined. What I am suggesting here is that it should be a socialist principle, that if taxes are paid by the working class, they should only be spent for the purpose for which they are paid in, and they should be spent on the working class, not on war machinery which can be used by infants to play a game of Risk according to their defomred notions of geopolitics. A tax expert might tell me this is impossible to realise in practice because it is not practicable, but if there doesn't even exist a specific legal mandate for a government authority to spend taxes which is explicitly granted by taxpayers, of course it is not practicable in any way, and we end up with the absurdity that workers pay vastly more taxes in, compared to the benefits they receive, and as a bonus get to risk their lives in wars aiming to enrich the corporations. What I am saying here is that cronyism (as when Dick Cheney enriches Halliburton through the Iraqi killing operation) is only the icing on the cake, or the tip of the iceberg, the real structural problem is the separation of tax collection from the expenditure of tax revenues by different mandated authorities, one of which has the mandate to collect them, the other to spend them, and this is the ultimate cause of fiscal irresponsibility and the fleecing of the working class by the government. Jurriaan
