The 'Collection Plate' Narrative Of Taxation Is Poisoning Society
The most common progressive-liberal narrative about taxation actually exists wholly within a conservative-libertarian framework and is paralytically myopic, and the consequences are deadly.
Social-Welfare-Policy Advocates Have Chosen To Fight On Quicksand
Quick question: what is the common progressive-liberal narrative about taxation? about public provisioning? about how taxation works? about the purpose of taxation? and about what money is and how money originates?
You – especially if you think of yourself as progressive, as liberal, as a leftist, or as a socialist – have heard the story, the narrative, hundreds of times, and you may have even told the story yourself.
The problem is that the common progressive-liberal narrative about taxation, public provisioning, and money is dangerously wrong because it exists wholly within a conservative-libertarian framework – because it myopically accepts conservative-libertarian lies about social obligations.
That claim might seem preposterous to you, especially since I haven’t yet defined the narrative. Surely, libertarian types don’t even believe in social obligations, you might say! Yes, and what if I told you that accepting their premises about taxation, government spending, and a social obligation known as money is why we struggle to build a just world?
Accepting Libertarian Premises From The Start
For lack of a better term, we might call this myopic notion of money, taxation, and government spending the “Collection Plate” narrative – or the “Pay Into” narrative – of money, taxation, and government spending, though looking at a collection plate might give you the first tiny clue of the problem with this narrative.
What are those markings on the bills and coins? How did they get there? What do they mean?
We’ll discuss that later, but those questions are extremely important, and the reason that they are important is that the common progressive-liberal narrative about public provisioning, social welfare, taxes, and money myopically starts at the collection plate. That is its fatal flaw.
Check Your Assumptions
The first thing that we must do to examine this fatal flaw is find a good articulation – a good example – of this common progressive-liberal narrative about taxation to see what the problem is. A problem with this approach is that this narrative is so ingrained in the heads of people who think of themselves as advocates of more emancipatory social-welfare policies that there actually aren’t many readily available examples of this narrative in a well-articulated written form.
But, in late August, right after President Biden had announced a cancelation of some student debt, an excellent example of an articulation of the common progressive-liberal narrative about taxation that accepts dishonest libertarian premises surfaced in my Facebook feed!
I came to follow this Glee Violette person a few years ago, as she had gained a following due to her commentary on Trumpism, she is a great storyteller, someone who had worked on-air in radio at one time, but she is still the most minor of celebrities, and I feel bad about putting her “on blast” for something that she did as something terrible.
An Excellent, Articulate Example – Of Something Terribly Insidious
But this is just too good, in the sense that it is a good example of something that is really bad that I have been trying to point out, to not showcase for educational purposes. If you can find another example of an articulation of this common progressive-liberal narrative from more prominent source, please let me know. Here is a person arguing for student-debt cancelation by dignifying Margaret Thatcher's horrible lie. The boldface and italics are mine, as, of course, the original Facebook post lacks such things. The entire thing is worth reading, but you can get the gist of it – specifically, as relates to the problem that I am trying to illuminate – just from the few paragraphs that I have highlighted.
Seen on FB. Everywhere:
"I don't see why we should forgive student loans. People should get to keep the money they earn, instead of paying taxes, and then they can afford to pull themselves up by their bootstraps and pay their own way. I never took a F$&#!!! handout from anybody."
OK Dan'l Boone. So, you built your own log cabin, heat it by chopping wood, hunt your own food, and hooked up that nifty handmade phone of yours to a power system you built by yourself? What, you built the internet, too?
Or, are you talking about using sophisticated power grids built by and subsidized by others? Driving down public roads and highways paid for by taxes, using gas subsidized by taxes, to work a job in a corporation subsidized by taxes? Were you birthed in a hospital subsidized by taxes, educated in public schools paid for by taxes?
Do you speak English instead of German or Russian or Chinese because our military, paid for by taxes, defended America and kept our liberties intact?
Do you eat vegetables, grains and meat somebody else raised, which are subsidized, regulated and checked for safety, transported on public roads and rails, and neatly laid out in a supermarket, which is also regulated and checked for safety?
Or do you hope enough of your crops make it to harvest to keep you alive until next year, and then can them and hope they don't become tainted by botulism?
Are you fine with you or your kids getting a catastrophic illness or injury and dying when your money runs out? Are you OK with starving to death in your old age?
We live in a first-world country, dear. Not the in the backwoods or on a desert island.
Take a look at any third-world country to see how the average hard-working middle class lives. They are poor. They starve. They and their kids die of everyday illnesses and injuries. They are always subject to having everything taken away by those who are more powerful, whether a bullying neighbor, or criminal gangs, or corrupt officials.
Even in second-world countries, like those in South America, where people are forced by capitalist control to live and die on their own nickel, there are the very rich, and the very poor, and a barely surviving middle class in between. Yes, the poor can achieve the middle class, but seldom beyond. More likely, they fall back into poverty.
NOBODY wants to live in a communist regime like North Korea. But all truly civilized communities use socialism to pool SOME of their money, in order to achieve conditions where everyone gets the chance to realize their capitalistic dreams, and everyone gets the chance to survive their catastrophes.
America is not "becoming" socialist. It already is. Just like other first-world countries. Because paying SOMETHING into the common pot allows us ALL to achieve a standard of living that we could not achieve individually, and ensures a strong nation that continues to thrive, develop, and evolve.
It is ridiculous that America does not offer free college education in the first place, like other first world nations.
Yes, yes, we can still have good-old capitalistic private schools and colleges for elites who think they are more special than everybody else.
But we can also subsidize scholarships so that truly gifted kids can get a superior education in those places.
Meanwhile, free standard education would mean that every kid growing up in urban wastelands would get the chance to get out and contribute to society, instead of being sucked down into the cycle of poverty, crime and substance abuse and bring the whole community down.
And average kids living in rural communities would also get the chance to lift their families and communities as well. Instead of being sucked down into the same cycle of poverty, crime and substance abuse. Hate to burst your bubble, dear, but most people on public assistance live in THOSE communities and states.
We Americans believe in capitalism, independence, and hard work.
But we HAVE that freedom, and the opportunity to get rich and live the way we want BECAUSE we share a small portion to lift us all. And that, dear, is socialism. It's not a dirty word. It's just an everyday fact of life. It's the name we use for creating strong, safe, communities, and getting to live like civilized adults.
Violette’s essay – particularly, the parts that I highlighted – contain several huge assumptions that might be better described as conceded premises. They could also be described as unanswered questions!
That Violette has the small level of fame that she has seems to stem from her being an excellent storyteller, and I can see why! She did an excellent job of telling the common progressive-liberal story about taxation, money, and public spending!
It’s just that the story itself is wrong and harmful!
See The Plate – And Ignore The Currency’s Origin
First, I hope that you see why I called this narrative the “collection plate” myth. She speaks of a “pool of money” that we “pay into” for a “common pot.”
Doesn’t that sound like a collection plate? Doesn’t a collection plate sound like that? Yes? Good, and it also sounds like how private insurance works, but, just like with private insurance, she is leaving some extremely important questions unasked, which is to say, some extremely consequential premises conceded to her (our) ideological opponents, and we need to take another look at our collection plate to see an enormously consequential question begging us to be asked but that the progressive-liberal people who promote this narrative somehow have obviously not bothered to even ponder.
Those coins and bills, how did they get created? Who created them? And why do we even use them?
These are extremely important questions! Something that I want you to notice and keep in mind throughout your reading of this essay is that this narrative of money and taxation is defined by, among other things, its myopia. The myopia is apparent due its lack of awareness that the questions asked in the last paragraph are never pondered.
Premises, Premises
Nearly 40 years ago, arch-conservative Margaret Thatcher said the following.
Let us never forget this fundamental truth: the State has no source of money other than money which people earn themselves. If the State wishes to spend more it can do so only by borrowing your savings or by taxing you more. It is no good thinking that someone else will pay – that ‘someone else’ is you. There is no such thing as public money; there is only taxpayers’ money.
Violette is saying that she agrees with what Thatcher said here.
The common progressive-liberal narrative about taxation, public provisioning, and the social obligation known as “money” agrees with what Margaret Thatcher said here.
If you see Thatcher as representing everything that you oppose, and if you are someone who more or less agrees with the common progressive-liberal narrative about taxation, money, and public spending as described by both Thatcher and Violette here, this is a time for some real introspection.
It’s time to question your assumptions.
Society Did Not Start Here
Notice that, in this narrative, the common progressive-liberal narrative that also accepts Thatcher’s conservative narrative, the first time that the state, the government, comes into the story is when it collects currency – that comes from . . . where? – from the people who live in some already-established society with specialization of land and labor and then spends the currency. It’s as if she is saying that the state comes into existence only after this mysteriously-formed currency is taxed from people living in nuclear families!
That sounds rather myopic, doesn’t it?
By myopically treating money currency – even money currency that has the name of a country in it – as if it is just a mere natural commodity that even entire societies must first find and then ration before there can even be a government, Violette is conceding – and, thus, helping to prop up – a couple of core tenets of conservative-libertarian dogma, that, first, money, markets, and even private property somehow pre-exist social organization and, thus, the state and, second, that the state and, therefore, the “public good” is somehow an after-the-fact usurper on some pre-existing market society.
This is exactly how the conservative and libertarian movements want us to think, and getting impressionable people to think in this myopic way is how those movements are able to recruit new people to their causes. Indeed, this is how conservative commentator George Will described it.
Conservatism understands society not as a manifestation of government but as the spontaneous order of cooperating individuals in consensual, contractual market relations.
That sounds like Violette’s description!
Violette and the many people who promote this narrative are treating currency as if it is something apolitical. This is actually its own form of politics! If currency is indeed a commodity, then it is something that is ultimately outside of political control, like some metal or berries, and, as such, somehow separate from political control.
The Main Character Of The Collection-Plate Narrative
If what Violette, Thatcher, and most ostensibly progressive and liberal people are saying is true, then that gives rise to one of the most odious characters of all in political discourse: the “taxpayer.”
Please read my own essay on the poisonous nature of “taxpayer” identity and thinking, and please understand that the archetype and way of thinking has a very ugly racist history in the United States.
Camille Walsh, author of Racial Taxation, has said that "making claims to resources and entitlements on the basis of being a 'taxpayer' for most of US history has meant making claims that other people should not get resources, benefits, entitlements, and protections."
“Taxpayer” identity and thinking are ultimately tools of exclusion.
If what Violette, Thatcher, and most ostensible progressive and liberal people – look, if you are upset about being lumped in with Thatcher, well, that’s the point, as I am trying to prompt some needed self-reflection – are saying is not true, then the archetype of the “taxpayer” is meaningless and disappears, revealed as a fascist trope.
And what they are saying is not true, meaning that “taxpayer” is a hollow political artifice.
You Have Already Given Away The Whole Game
In other words, Violette and every last progressive or liberal person who operates within this myopic mythological framework are laying the groundwork for a central tenet of conservative-libertarian mythology: that the state – and, thus, the “public good” – is a parasite on regular people, and “there is no such thing as society.”
If this is true, then the money that we pay in taxes – that, again, somehow just mysteriously formed on its own – funds the government, meaning that governments are inept without our “heard-earned tax dollars,” and, if that is true, then that is a conceit of ownership that anyone opposing any kind of public spending can make, enabling him to portray the most marginalized people as leeches of his money if the state tries to help them.
Bigots and rich people understand extremely well how this false narrative works in their favor, as I described in my essay about how Rush Limbaugh used this narrative in the service of violent sexism.
In other words, the fascist mythology of “the taxpayer” stems from the dishonest premises and the myopic way of thinking that Violette is conceding here.
Playing The Game On Your Opponents’ Terms
This narrative necessarily omits the origin story of the currency, which necessarily is a story of public authority! Somehow, we are supposed to expect that we just naturally ended up living on specialized tracts of land that were someone naturally peacefully divided among people, naturally ended up making specialized goods with our specialized labor, using, as a way of settling obligations, a currency that just naturally has images of our country’s leaders on it!
Note the preponderance of passive voice in that last sentence! Note that getting people to believe in this narrative depends upon us engaging in myopic thinking!
The economic anthropologist Brett Scott calls this a “Flintstones History Of Money”. In another essay, he writes about the ideological tilt of modern mainstream economics, how it is essentially conservative-libertarian in nature.
An economics textbook often begins with supply and demand curves, representing the terms upon which fully grown adult individuals will walk into markets to contract with each other. This mentality behind this model is often then implicitly expanded and used to describe all social relations as stemming from the rational utility calculations of individuals, and this is where it all gets circular.
It’s tendency to ignore the state underpinnings of markets means the economics discipline has long harboured an implicit belief that groups are merely ‘collections of individuals’, as if in the back of the collective mind of Economics there’s a vision of people with an option to just walk off and leave society if it no longer suits them.
And this - to the eye of various anthropologists, and also feminist economists - is a deep-level structural flaw, somewhat like having a bug in the deepest layer of your discipline’s foundational code.
This is the mythology that Violette’s narrative validates. Violette is essentially validating the atrocious “barter” myth of the origin of money, and here is how Cory Doctorow describes both this myth and, crucially, its socio-political implications, with the boldfacing from me.
There’s even a folk-tale about how money came about: in the beginning (the folk-tale goes), we all bartered with one another in the marketplace. I’d bring my fat cows and you’d bring your champion-laying hens and we’d try to arrive at a “confluence of needs” in which you offered me twenty-seven chickens for my third-fattest cow.
But (the tale continues), these confluences were hard to arrive at. What if I only needed twenty-six chickens? Would our deal fall apart? Would you have to go and trade one chicken for something else I was willing to accept, like a decorative gourd or a half-bushel of wheat? How difficult (the tale insists) our trade must have been!
Then (the tale concludes), we agreed upon some intermediate, durable commodity to smooth over these seemingly intractable difficulty: gold! We chose standard quantities and purities of gold (and/or silver, copper, etc) as a unit of exchange, a unit of account and a store of value. You could have my cow for twenty-six chickens and make change with a couple of copper coins.
In this story, money came from the people, a bottom-up consensus phenomenon in which we all agreed to a coinage and therefore money comes from the people.
This story has a corollary. If money comes from the people, then taxes represent an incursion upon the people by governments, who impinge upon the private space of consensual, bottom-up trading activity with a top-down disruption.
But this isn’t a history, it’s a folk-tale. A legend.
A fantasy.
There’s no indication that coin money ever emerged spontaneously from the difficulty of arriving at confluences of needs. Rather, the historical record shows us that money is a top-down phenomenon, rooted in the needs and capabilities of states.
The progressive and liberal people who promote the tax-to-spend mythology may not believe that taxation is theft, but – and this is super, super important – they are making the argument that taxation is theft possible. They are promoting a dangerous lie that gives life to austerian forces.
Yes, I know that what I just said may seem provocative, and maybe it is. Good! As someone who grew up conservative and spent early adulthood in the online libertarian movement, I can promise you that tax-to-spend progressive and liberal people are the most effective recruiters of fascism. The idea that “they want to tax you to pay for their programs” is how the Conservative Movement recruits people to its cause, but it doesn’t really work until you say “yes, we do want to tax you or someone else to pay for our programs.”
And, most tragically, most "liberals" do that.
We Handed Them Their Script – We Can Take It Away
The best way that fascists can get away with recruiting “good people” – particularly, from the middle and lower classes – to their violent cause is to portray their violently enforced classism as merely the protecting of rightfully earned property, and about the only way that they can do that is with the “taxpayer” mythology and the “collection plate” myth of taxation.
Crucially, please understand that getting people worried that their “tax dollars” would be taken to fund services that would help them may not be the primary way that this mythology encourages people to “vote against their own interests.” As I explained in my essay about “taxeaters,” this mythology encourages people who would most benefit from emancipatory social services to be ashamed of benefitting from those services, because they are perceived to be taking “other people’s money.” I understand very well that "but my taxes would have to pay for that" said by non-rich people is probably often a cover for "but other people's taxes would be paying for my care, and that's shameful." If you think that “other people’s money” would be funding your healthcare, and if you think that that is shameful, then it’s easier to just assert the principle – the principle that nobody is entitled to other people’s money – in a way that conceals the shame of being a “taxeater,” rather than call attention to the fact that you really need the care, and the easiest way to do that is to just assert that you don’t want your money funding other people.
What is obvious to plenty of advocates of social-welfare policies is that people don’t like the idea of their taxes funding other people’s benefits. What is much less obvious – and probably not at all obvious to most advocates of social-welfare policies – but probably much, much more important is that, by maintaining that “tax to pay for” narrative instead of rejecting it, social-welfare-policy advocates make their targets imagine becoming the shameful, lecherous “taxeaters” that this narrative naturally makes beneficiaries of social-welfare-spending policies.
That is the outcome that this Collection Plate narrative of taxation promoted by Violette and tens of millions of progressive and liberal people encourages.
We could just . . . not do that!
Okay, James, But How Should We Be Talking About Money, Taxation, And Public Provisioning?
In order for you to pay taxes in some currency, there must be some currency in existence. You cannot legally create state currency yourself; you’d risk imprisonment for doing so! That right there should explain to you why “taxpayer money” is a silly lie.
So, let’s look again at this “pot” with this “pool of money” that Violette describes.
Look at the bills and coins! Stamped, as they are, with legal markings! There are obviously social forces at work here even before – long before, really – the “individuals” came together to toss their money into the pot, but the Collection Plate narrative ignores all of this, and the conservative and libertarian movements want us to ignore those social forces that create the currency in the first place, because it helps aid the conservative-libertarian tenet that individuals precede social networks and societies, a myth that other people’s myopic thinking makes easy to maintain.
That is another way in which Violette’s narrative – again, the common progressive-liberal narrative about taxation – actually only promotes a conservative-libertarian worldview: it promotes the idea that individuals somehow precede social networks. The economic anthropologist Brett Scott has written extensively about this phenomenon, how our common mythologies about economics, money, and taxation promote the mythology that individuals precede social networks, and I refer you to my essay about the barter myth in which I heavily quoted various essays from Scott.
How Currency Actually Works
Let’s return to Doctorow’s essay, which describes the work of the late anthropologist David Graeber (of whom Brett Scott is a protégé), to understand how currency actually enters modern economies. Graeber was the author of Debt: The First 5,000 Years. “Money” in the first sentence should actually be “currency,” because money is the unit of account, which preceded currency by thousands of years.
Debt describes our best, most evidence-supported historical understanding of the origin of money in the needs of the empires of the Axial Age (800 BCE to 600 CE). As imperial armies went a-conquering, they needed some way to provision the soldiers garrisoned in their far-flung territories.
The solution was elegant — and terrible. Soldiers were paid in coin, minted and controlled by the state, which punished counterfeiters with the most terrible torments. Conquered farmers were taxed in coin, on penalty of violence and expropriation.
Thus: the soldiers had coin and the farmers needed it. This meant that farmers would be willing to trade their produce for coin, which meant that soldiers would be provisioned. Tax-bills were nondiscretionary liabilities: failure to pay your tax would lead to violence and ruin.
The value of money, then, came from taxation — from the fact that farmers needed coins. This need rippled out through society: even if you didn’t farm, you would accept coins in exchange for your own labor and goods, because the farmers would accept coins in exchange for food (which everyone needs), because farmers needed coin to settle their tax-debts.
Coins became money because there was a nondiscretionary, terrible obligation that you could only fulfill with coins.
Money and conquest remained closely tied right up through the modern era. As late as the early 20th century, the British Empire used the “hut tax” to extract labor from conquered people in Africa. The hut-tax was brutally simple: every year, conquered Africans under British rule would have to pay a tax for their huts, payable only in imperial shillings. If you failed to pay your hut tax, imperial soldiers would burn it down.
Thus, “shillings” became “money.” A sizable fraction of the conquered population would accept shillings in exchange for their labor or goods, either because they needed to pay the hut tax, or because someone whose labor or goods they wished to procure needed to pay the hut tax and would therefore accept shillings in exchange.
This top-down account of money creation sounds a little counterintuitive if you’ve been raised on the barter fairy-tale, but it does answer some of life’s great conundrums: “Why do I spend so much time chasing these green slips of paper? Because these green slips of paper can be used to settle tax liabilities, and anyone who fails to pay their taxes faces terrible penalties, so there’s always someone who will sell their goods or labor for these green slips of paper, which makes them useful as a medium of exchange and of account, and as a store of value.”
So, when you pay a national currency to settle a tax obligation from the entity that issued the currency in the first place, as US residents are doing when they pay US Dollars to the Internal Revenue Service, you are not at the beginning of the government-spending cycle; you are at the end of it. You are not helping to feed your country; you’re helping it to take a poop, which is a thing that is wise to do if you’d like to be able to eat – and, thus, function – tomorrow, whether we are talking literally about your body or metaphorically about your society.
You are not funding a soldier, a welfare recipient, a government contractor, or a Congressional staffer with your tax payments; they already were paid before, their spending funded your taxable income in the first place, and, now, you, at the end of this entire cycle, are returning – because that is what the word “revenue” means – to the Government units of the currency that it previously issued by crediting the bank accounts of soldiers, sailors, members of Congress, etcetera.
As Australian heterodox economist Stephen Hail explains, the purpose of currency taxation is nothing more than various ways of influencing people’s behavior, to create a demand for the currency, to maintain the currency’s value, to affect the distribution of wealth, and to discourage activities and arrangements deemed worthy of discouraging. This is nothing new. At the end of World War II, Beardsly Ruml of the US Federal Reserve Bank wrote that the experience of the war had revealed that “taxes for revenue are obsolete.”
How long ago was that? And we are still talking as if “getting the money” is the point of taxation? We still have supposedly “progressive” politicians saying stuff like this?
Do you see how what she is saying both puts rich people on a pedestal and makes excuses for inaction on desperately-needed mass mobilization against climate change? Do you see how she is setting rich people up to be heroes?
The Fallacy Of Money Consumability
The common progressive-liberal narrative of taxation and public provisioning, as described by Violette and others, is infused with another assumption, a particularly strange – and terribly myopic – assumption that I have seen only one other person describe but that I first observed in my first paying job in high school, an observation that led me to my writings and my advocacy on these topics: the assumption that the money that the government spends is either itself ‘consumed’ by either the government or a benefits recipient or that it simply ceases to exist.
For example, the mythology surrounding our Social Security program tells us time and again that workers are somehow burdened by giving up a little bit of their production – but, crucially, not goods but cash – so that old people can eat, when it's the old people buying food that creates part of the taxable income for the workers being taxed in the first place, and, yet, the mythology doesn’t mention that!
The person who survives off of government benefits has no money at the end of every month. The money is in the hands of people who provided what he consumed. And, yet, we act like these very same people were burdened with “paying for” these benefits for the other person that supplied their income in the first place! That’s a textbook example of myopia right there!
If it is true that, as Violette and others say, our tax payments are a sacrifice that we are making for the greater good to fund government spending, then it must also be true that, as Violette and others do not bother to say, the personal income from which we pay our taxes comes in no small part from government spending. We supposedly pay Dollars to the soldier and the welfare recipient, but the whole point of paying soldiers and welfare recipients is that they will then take those US Dollars and buy stuff from other people – and then those people will then take those US Dollars and buy stuff from other people, and then those other people will then take those US Dollars and buy stuff from other other people, and then those other other people will take those US Dollars to buy stuff from other other other people.
Well, those other other other people are . . . us.
And other other other people buy stuff from us, putting currency into our pockets.
And with that currency, we . . . pay taxes . . . to . . . supposedly . . . fund the government . . . that then pays people . . . who . . . fund us.
The Entire Mythology Really Does Depend Upon Myopic Thinking
So, even if and to the degree that it is true that the “taxpayer” funds the government, it is no less true that the government funds the “taxpayer,” making the idea that the “taxpayer” is some legitimately-aggrieved, oppressed person burdened with funding other people to be completely hollow and farcical – completely dependent upon people myopically thinking that the money that governments and benefits recipients spends just somehow ceases to exist when it is spent.
But Violette and others who promote the common tax-to-spend narrative make no mention of this. If you didn’t know what money was, you would read her narrative and get the notion that money was, like corn or wheat or nuts and berries, some consumable commodity, handed to soldiers, students, and welfare recipients who just eat them and convert them into feces, that we constantly have to put some of our earned food – that we gathered in the fields and forests ourselves, I guess – to put into the “common pot.” I have written before about how the way in which we talk about taxation and government spending actually does make sense if it was applied to in-kind taxation!
Modern liberal people tend to think of themselves as more intelligent and educated than their political opponents, but they seem to not have grasped object permanence when applied to currency! Remember how I said that this Collection Plate narrative is defined by its myopia?
This fallacy of money consumability is another way in which the Collection Plate narrative ignores the origin of the currency supposedly being “paid into” the “common pot,” as if what is being put into the common pot are actually just materials and labor. As we have learned from Doctorow’s essay summarizing Graeber’s work, the purpose of taxation is to get you to contribute to society, but the contribution is not the tax payment! The obligation to pay a tax in the currency induces you to perform labor for the currency in which to pay the tax. It’s the labor that you perform, not the payment of the tax, that constitutes your contribution to the public good. Can you see why these “Collection Plate” and “taxpayer” narratives are so valuable to wealthy rentiers?
How It Actually Works Now
I will allow James K. Galbraith, author and professor of government and business relations at the University Of Texas, to explain it, as he did in 2013 when explaining the debt ceiling, the boldfacing being mine.
In the modern world, when the Treasury writes you a check, your bank credits your account. That's how money creation works. The Treasury then issues bonds to absorb that money. Banks like this because bonds pay more interest than reserves. But there is nothing economically necessary about the bonds. This is obvious since the Federal Reserve buys back many of them, leaving the public with the cash it would have had in the first place.
Could the Treasury skip the rigamarole and pay its bills without bonds? Economically, sure. Why doesn't it? Well, the Fed has regulations governing “overdrafts” -- but apart from these, the answer is plain: to do so would expose the “public debt” as a fiction, and the debt ceiling as a sham.
That’s it. US Dollars are created when and only when The US Government credits bank accounts. US Dollars are deleted any time that the US Government ‘receives’ them in payment – including when you pay your taxes in US Dollars to the US Government.
This is extremely important. Any and every US Dollar is created when the US Treasury credits a bank account. When a soldier, a sailor, an airman, a marine, or any other US Government employee gets paid in US Dollars, those US Dollars were created in that very same process.
Therefore, when we think of “government spending,” we should think of the resources themselves - as opposed to the Dollars - as the things being spent, with the US Government mobilizing resources by paying people with currency that it issues in the process.
Currency can come from only one source: legal-political decisions.
By dignifying the mythology that currency comes from “taxpayers,” Violette and others are only telling a dangerous lie that promotes a conservative-libertarian vision of society and only undermines goals like student-debt cancelation and the enactment of tuition-free higher education.
Destructive Pathologies That We Must Stop
From this way of thinking, various destructive pathologies emerge.
One of the most obvious is that most progressive and liberal people act as though any proposed new spending must be “paid for” by either collecting (more) Dollars from some people in taxes or cutting some other public spending, setting up very toxic either-or fights that are completely unnecessary.
This pathology is more or less invariably comorbid with another pathology: acting as though the difference between the quantity of US Dollars that we issue in one year and the quantity of US Dollars that we delete in the same year constitutes some kind of “deficit” – and we even use that horrible word!
A third pathology that is comorbid with the two aforementioned pathologies is the idea, heavily promoted by libertarian types but accepted by most progressive and liberal people, that price inflation is caused primarily by increases in the size of the so-called “deficit.” Even our supposed anti-fascist President, right as his party just lost the House Of Representatives because voters blamed it for price inflation, has said so!
That is not true! If you want to know why voters trust Republicans more on inflation than they trust Democrats even though Republicans have/had no real plan to address price inflation, the answer is staring you in the face right there in that tweet from President Biden: he and almost all Democrats agree with Republicans’ lies about what the primary cause of price inflation is.
“Printing money” does not cause price inflation, and the Quantity Theory Of Money, the theory on which the myth about the money supply causing price inflation rests, is wrong; its own author even questioned it not long before his death!
So, we must take a good look at the progressive people in the mirror before we can make the world a better place.
We must make that change.
Okay, So, How Should We Talk About Provisioning For The Public Good?
Well, first, we must stop being myopic! Seriously, this is an important topic that deserves another long article on its own (which is a future project for me with this essay as a source material), but I’ll provide some small guidelines and examples here.
Second, please notice from Violette’s essay here that taxpayerism has killed the idea of “the commons”; in the mythology that Violette is promoting here, the private sector comes first, and any commons that we develop comes only from and after taking some people’s private property, some people’s rightfully-earned private property, meaning that, if it doesn’t come by a consensus on sacrificing what individual “taxpayers” contribute, it comes by theft of individual’s rightful personal property.
What Violette is articulating is an argument based on the Metallist or Monetarist conceptualization or theory of money, promoted by libertarian types. Doctor Stephanie Kelton wrote a scholarly paper nearly quarter century ago on why Metallism is wrong, and you should read it along with my commentary.
I have said before that I got into this work in the first place because I noticed that, while the way that most people talked about money, taxation, and government spending did not make sense, it did make sense if taxation and spending were in-kind rather than in currency, which is to say, the government taxing actual goods from people, because, unlike currency, actual goods are consumed and cease to exist when people spend them.
What Violette is describing would make perfect sense if you assume that we’re all independent subsistence farmers who find ourselves losing out some of our surplus grain – that we would have either bartered off, given to our families and friends, or used to be able to work less – when the tax man cometh, because we are being forced to give some of our grain to the government, but, not only is that not what is happening, the idea that we’re all independent subsistence farmers and that government comes in only after the fact is a dishonest libertarian myth.
I cannot stress that enough, that the common progressive-liberal narrative about taxation that Violette is articulating here exists entirely within a libertarian framework built on lies.
There Is No “Common Pot” Of Currency
Progressive-liberal acceptance of this dishonest, myopic libertarian myth is the fatal flaw of the progressive/socialist/leftist/liberal narrative about taxation, fatal because it poisons our efforts at building the world that we want.
Let’s review this paragraph of hers.
America is not "becoming" socialist. It already is. Just like other first-world countries. Because paying SOMETHING into the common pot allows us ALL to achieve a standard of living that we could not achieve individually, and ensures a strong nation that continues to thrive, develop, and evolve.
The “common pot” trope is very telling, as is the idea that we pay something “into” it. If we were all subsistence farmers, and grain or other produce from our farm were what we were “paying int” this “pot,” then what she said would make some sense, but why do we think of ourselves as independent subsistence farmers? Who told us to think that way? Who benefits from us thinking that way?
In this narrative, the public good is wholly dependent upon the confiscation of currency that people previously earned - and that somehow previously existed - in some market that itself somehow preexisted the state. Essentially, public spending becomes a form of forced charity from unconnected individuals, rather than a matter of predistributive justice.
This is not a truly progressive, emancipatory, universalist narrative about taxation. This is a libertarian caricature of a progressive narrative that, most tragically, nearly all progressive people have swallowed.
There Is a Commons – Not A “Common Pot” – Of Resources, Though
A true progressive, emancipatory, universalist narrative about public goods and about money would say not that we all pool some of our individually-earned money – that just so happens to be a national currency! – to create a system of healthcare for all; a true progressive narrative about public goods would say that the services of the nurses and physicians themselves are what are deemed to be a public good, a public commons, that nobody ever owned them or their services - because it's not "MY MONEY" funding them - in the first place, that we, as a collective, fund those resources with the currency that we collectively issue and allow everyone free, fair, and impartial access to those resources.
That is why the question of whether we “can afford” universal healthcare is a dangerous category error. Either we decided to allow every person free, impartial, and unconditional access to any and all healthcare resources employed by the state, or we don’t. There is no question of affordability; it’s a legal-political decision to allow everyone free, unconditional, and impartial access to society’s healthcare resources.
A true universalist narrative about money and taxation would recognize that currency is a public monopoly that is, always and forever, created by legal-political decisions. In a democracy, we should assert that we have a place in issuing the promises in the first place, not merely collecting them after the fact in a collection plate. We must understand our power and our authority – know the difference between the two – to issue the currency in the first place. If we want universal healthcare, then we decide that everyone will have free, impartial, and unconditional access to care, that nobody will be sent a bill for care, and that we issue currency at will to all employed nurses and physicians; we adjust the tax rate as needed to maintain price stability, just as we should already be doing anyway even if we didn’t – or though we don’t – have universal healthcare.
In this actually-progressive narrative that we must embrace, the resources that are being 'pooled' are not currency units that somehow originate with "taxpayers" who earned them from some mysterious source in the market that somehow pre-existed the state; the resources that would be pooled are the nurses, surgeons, and hospitals themselves. They would be a "commons," just like air and just like the sea.
Do you see the gigantic difference between those two narratives?
Do you see that one of those narratives is about sharing – by threat of punishment – something that is actually yours and something that you can actually claim as your rightfully-earned property, while the other does not?
Do you see that one works within a libertarian framework, while the other does not?
Do you see that one of those narratives does not recognize a preexisting public commons, while the other one does?
See It – Spot The Hallmarks
The idea of “pay your fair share” is based on a dishonest libertarian mythology about money.
The idea of taxes “paying for” things is based on a dishonest libertarian mythology about money.
The idea of a “pot” or a “pool” of money from which we draw – and into which some of us previously contributed – is based on a dishonest libertarian mythology about money that demands that we myopically ignore how that currency was created in the first place.
The idea of taxes “going to” some”where” or some”thing” is based on a dishonest libertarian mythology about money that demands that we myopically ignore how that currency that is paid in taxes was created in the first place.
The idea of “pay into” when applied to paying taxes is based on a dishonest libertarian mythology about money that demands that we myopically ignore how the currency being “paid into” whatever was created in the first place.
The point of the libertarian narrative of money - currency - preceding the state is so that the ghouls can claim that taxation is theft, the real point of which is to say that universal healthcare itself is theft, because it allows them to make private property claims - and, if they are "net payers," exclusionary private property claims - on the services of nurses and physicians.
If you accept this narrative, then, as I wrote in my essay about how Rush Limbaugh demonstrated the cruel heart of the “taxpayer” way of thinking that stems from the Collection Plate notion of taxation, it really does make sense for pro-forced-birthers to say stuff like "I don't understand why it's your body, your choice, but my financial responsibility," and this is a big factor in the limited access of reproductive-health services, because even most pro-choice people validate the notion that "other people's money" would fund it.
That is where this very common progressive/socialist/liberal narrative about taxation and public goods that Violette is dignifying and promoting ultimately leads.
That's why it must be rejected.
The Call Is Coming From Inside The House
The mythology of “taxpayer money” that stems from the Collection Plate notion of taxation must also be rejected, and “taxpayer money” is an atrocious concept. It not only gives many people the false impression they are funding welfare recipients, which pits people against people, it also valorizes the biggest wealth extractors, turning them into altruistic heroes, perceived benefactors of society.
I cannot enough stress that this is exactly how reactionaries want you thinking of taxation. The reason that we never win is that we always agree to fight on their turf.
We can win only if we can get ourselves off of their turf.
But the commodity-money – i.e., monetarist – brainwashing in the contemporary liberal world runs extremely deep, unfortunately.
If currency is the thing that we think that we are spending, then we end up thinking that one government expenditure comes at the expense of another government expenditure, that they have to compete for Dollars, all while we don’t think about how either compete with private-sector spending.
“Don’t let them define the debate,” Takei says, right after he does exactly that in a tweet favorited by nearly 100,000 persons.
This myopic Collection Plate idea of taxation must be rejected. The archetype and the political identity of the “taxpayer” must be rejected. The idea that money currency is a mere apolitical commodity must be rejected. The Commodity Theory Of Money must be rejected. The Credit Theory Of Money must be understood and embraced.
As The Trumpers Would Say, Facts Don’t Care About Your Feelings
I realize that some of you are very emotionally invested in this dumb, myopic, deadly tax-to-spend narrative. I get that change is difficult.
But if you actually do want to see a better world, you must reject this horrid, dumb, inaccurate, myopic, and completely and paralytically self-defeating narrative, and you must work to purge it from the brains of your ideological and political associates.
Because, clearly, it is not working to our advantage.
And it is also a complete reactionary lie anyway!
And it’s exactly how our reactionary ideological opponents want us to think and speak about money and taxation!
For the love all of the marginalized people about whom you claim to care, please stop fighting on the enemy’s chosen field of battle!
I’m a big fan of the “fallacy of consumability” of money, as you call it. A poor person’s food stamps allow him to buy food from the merchant who in turn can hire workers etc. And I’ve read Graeber and understand the history. And I’ve read Prof Kelton and agree that we can (should) fund needed social programs without a wrong-headed “fund it first” mentality. So overall, I’m supportive of these arguments. However, I have three suggestions for powerful follow-on essays:
(1) Short simple stories that illustrate the point: Darn right that Violette is an effective story-teller. I had hoped to see her same powerful post later in the essay with the couple suggested edits that preserve its strength while avoiding the Thatcher Trap.
(2) Address the evidence of one’s own eyes regarding reallocation of societal resources. There is a positive sum outcome to be had by funding social programs, yes! And yes we can afford that better future. But didn’t I “get to keep my paycheck” under one administration and “had to cough up hard-earned dollars to the public coffers” under another administration? This is too powerful of a first-hand experience to address without simple, clear, and true narratives. It seems to me that there really is some reallocation going on within a broader positive sum context. That reallocation needs to be addressed more directly. I either send in that tax check or buy a car — those are not identical situations. I’d love to see this personal-level point addressed - within a powerful narrative frame.
(3) I think the reader does ultimately require a healthy morality no matter how persuasive the economics. There’s a reason eugenics and libertarianism have strong linkages. How many people, and which people, should society help boost? I’d suggest a thought experiment. Suppose the US could safely support one billion people in 5 years; would you support that? Now suppose the US were to have 10% of its population wiped out (not you, dear reader) and all their property were auctioned off. Would this be a +/- or neutral? Many (most) people would say no to the billion, which I think is morally reasonable. Only a monster would find the second scenario interesting. But that same mindset lurks in the mind of many who hear that food stamps story and wonder, Did we really need that guy in the boat? The morality question is there, and if we look away because it is so ugly (focusing instead only on the academic side), we let it fester too.
Lastly, credit to you and to Violette for passionately working to usher in a better world.