Don't touch money sign.
Without taxes many of our public services could be gone. CC by Neubie/Flickr

The American people are asleep at the switch when it comes to understanding the role taxation plays in creating the necessary revenue for basic community services. In a recent New York Times piece, Paul Krugman argues that we should all be worried over this. Services that make for safer communities, fuel commerce and education should not be slashed, but tax cuts have made it so, at least on the local level. Cutbacks run deep, and not enough tea partiers seem to recognize that tax dollars could change those fortunes.

Governments run short, but where are the taxes?

Theories differ regarding taxation, but it seems clear that they are a proven device for revenue generation. Krugman bemoans a federal government that can afford to issue bonds at 1.04 percent but not extend ample assistance to suffering local governments. More can be done. Priorities are completely out of whack, says Krugman. Where are the rich who paid more in taxes during the economically prosperous Clinton era?

Cutting back and casting jobs away

At the state and local level, governments are tightening their belts on everything, which hurts families the most. Couple that with a slow in federal spending, Krugman warns, and the United States economy will get stuck in reverse. An employed teacher serves the community and creates a definite job. But when the rich get money back through tax cuts, there’s no guarantee that they’ll do anything other than bury it in the sand of their own private beach.

Assuming the worst about government money management

Many people have little or no faith in the public sector’s ability to manage money, tax revenues or otherwise. Tea parties scream that waste and fraud are rampant. Krugman suggests it was never as bad as the right made it seem. Considering how far America has fallen in education and infrastructure while fear of new taxation has reigned, perhaps taxation shouldn’t have been the focus of the fear. Now, writes Krugman, the fear of taxation may have us on the “road to nowhere.”

Citations:

New York Times: http://www.nytimes.com/2010/08/09/opinion/09krugman.html?_r=1&partner=rssnyt&emc=rss

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