Taxation: The First 10,000 Years — Part 2

As we’ve already seen (Taxation: The First 10,000 Years) taxation as been around as long as humans have gathered in groups of more than one.  It is one of the two absolute certainties of life.   Not only that, but, throughout most of history, the financial arrangement between the taxer and taxee has remained the same.  In essence, I, the taxer will determine how much tax you will pay and when; you, the taxee, will pay it.  Also, I, the aforementioned taxer, will spend the money any way I please, and you, the aforementioned taxee, will shut up about it and go back to work.  It wasn’t an optimal system, but it served us well for thousands of years.  In that time, there has only been one fundamental change to the tax structure — but it was a biggie.  Around 250 years ago, a bunch of wealthy Virginia famers got together with a crew of Boston lawyers and compared notes.  They took a look at their W2s (or the colonial equivalent) and said, “Hey!  Wait a minute!  That’s our money.  We’re not getting half the good stuff we’re paying for.  What’s the deal?  Come on, George!  Treat us right or give us back our sixpence.”  They convinced the local populace that taxation without representation was tyranny, a novel idea at the time, but one whose time had apparently come.  After the revolution, the American experiment with democracy and taxation with representation caught on.  For the next 200 plus years, it was the ideal (with a few notable exceptions) that most societies strove for.  That was then; this is now.

For the last several years, we have been going through another fundamental change in our tax structure.  We are slowly turning taxation with representation into representation without taxation.  This metamorphosis hasn’t been as abrupt as the American Revolution but it is taking just as firm a hold on most western societies.  The will of the people to determine just how and why their money is spent is being eroded to the point that representative democracy itself is at stake.

You don’t have to look any further than last year’s Occupy Whatever! movement.   This fair weather protest, with its Eat the Rich branding slogan, shifted our society back into a class warfare skid.  The influence of several thousand vocal protesters vastly outdistanced their financial ability to pay for the changes they sought.  Now, eight months later, on the verge of another protest season, taxing the rich has become a mantra in most government circles.  Agree or disagree with the Occupy Movement; their ability to set the political agenda is a game changer.  Yet their contribution, in terms of sheer numbers alone, is minimal.

It works the same with non-profit organizations.  They are increasingly using the money they raise not just to fund their organization and the work they do but also to directly influence lawmakers for legislation favourable to their cause.  The National Rifle Association is a perfect example of this; so, too, is ACORN, regardless of what they’re calling themselves this week, or the Keystone Pipeline lobby which is trying to leverage both sides of the political spectrum.  But that’s the point: single issue politics, fueled by tax-deductible donations, have found a way to punch far above their weight class in the halls of power.  The problem is these one trick ponies aren’t interested in the common good; they simply want to protect their particular interests.  That’s why they’re called special interest groups, and their influence is growing.  Lobbyists in America now outnumber lawmakers!

This is happening all over the western world.  In Canada, the Fraser Institute, a declared conservative think tank produces right wing policy papers while denying any political agenda.  Tides, a Canadian subsidiary of an American environmental group, has focused its vast resources on local elections, targeting candidates unfavourable to its cause.  Both of these groups enjoy tax exempt status!  In France, vocal and violent farmers have parlayed their small numbers into enough power to receive far more in agricultural subsidies than they ever pay in taxes.  This financial support is not only paid for by the general public, but it is also keeping food prices artificially high.  The ripple effect of this incedible arrangement is being felt throughout the European Union, and to a lesser extent the entire world.  Also across Europe, public service unions, whose wages and benefits are paid for by tax revenues, are increasingly waging war against austerity measures meant to stave off national bankruptcy.   Again, one-issue politics are trumping the common good.

As this new idea of representation without taxation gains credibility in our society, the results will be disastrous.  With no financial stake in the game, who will care how much money is spent or on what?  Waste means nothing when somebody else is picking up the check.  Even as we speak, we’ve already mortgaged our children and grandchildren to maintain a non-renewable lifestyle.  And all those pet projects of all those groups with loud voices and serious financial backing are taking precedence over the mundane work of government.  Sewers aren’t sexy.

This is a new tyranny, built on the ubiquitous special interest group.  Like the splendid kings of old, they don’t care where the money comes from.  They want their monuments built.  They see it as their right to have what they want, when they want it.  And, like those splendid kings, they will bankrupt our society with their excesses.

Friday: How the New Tax Structure Works

 

Taxation: The First 10,000 Years

When I was a kid, there were troops of old farts kicking around, whose sole purpose was to make a nuisance of themselves and dispense wisdom in the form of colourful homilies.  Any time anyone under the age of 40 screwed up, they would lean back like balding owls and pronounce: “There’s many a slip ‘tween the cup and the lip” or “A fool and his money are soon parted” or some other such nonsense.  My favourite was “There are only two things certain in this life: death and taxes.”  I always treated that one with “roll your eyes” respect because, as a student, I didn’t notice (or care) what taxes I paid (there simply weren’t that many.)  Furthermore, my youth came with a prepackaged shield of immortality that protected me from the Grim Reaper (who was only an ugly rumour anyway.)  In other words, both concepts were foreign to me.  In my world, people were supposed to pay their fair share of taxes.  After all, I did, and if they were unfortunate enough to get old and die, it was their own damn fault.  Luckily, these days we don’t let our old people hang out with us anymore.  We warehouse them in seniors’ facilities where they can wither away as they see fit and keep their smartass remarks to themselves.

The idea of death is easy to understand; all you have to do is live long enough, and it will come find you.  Taxes, however, are more complicated.   They are beautiful in their simplicity but downright grotesque in their execution.  In essence, taxation means, as a society, we are going to gather our money together to buy things we can’t afford individually.  Sometimes these things are tangible items like roads and boats and buildings, and sometimes they’re conceptual — like education, security and health care.  Regardless, we use taxation to pay for the common good.  The complication comes, not from what is the common good (I think we all agree on that) but how we get there from here.  This question has plagued most societies since before Kofu the Egyptian decided he needed a bigger tomb than his dad and somebody was going to have to pick up the tab for it.  In those days, however, it was pretty easy to figure out who did the paying.  Basically, when the pharaoh said it was tax time, you threw in your pennies or the next voice you heard was the guy with the whip, hollering “Pull.”  After all, pyramids don’t build themselves.  My point is, for most of history, it was the local Pooh-bah who decided what constituted the common good, and taxation without representation was a universally accepted concept.

This arrangement worked for thousands of years.  There were some bumps in the road — like Robin Hood and the Magna Carta, peasant revolts and the English parliament — but in general, people shut their mouths and paid their taxes.  The money disappeared into wars, royal mistresses and monuments and society thrived.  Unfortunately (or fortunately) this all came to a screaming halt in 1763.  This is an extremely tangled bit of history, but here’s the Twitter version.

Immediately following the Seven Years War (which many consider the first genuine World War) Britain found itself in dire straits financially.  They’d just beaten the crap out of the French … again, but they’d had to mortgage everything but the Tower of London to do it.  In a word, the Brits were broke.   They looked across the Atlantic at their American colonies and saw a bunch of fat and happy farmers with coin in their breeches.  It looked like a no brainer.  Parliament would tax the thirteen American colonies to pay for, not only their part in the recent war but also any future administration and protection.  To the English, this was a win/win situation; to the Americans, it was highway robbery.  Actually, the Americans weren’t opposed to taxes as such (no more than usual, anyway.)  They were much more concerned with who got their mitts on the money.  As freeborn Englishmen, they wanted some colonial representation in Parliament to oversee the coin they were shipping across the Atlantic.  They had the radical idea that if they had to pony up the cash, they should at least have a say in how it was spent.  It was a new Golden Rule (If I provide the gold, I make the rules) brought on by reading too much Voltaire and Rousseau by candlelight.  Lord North’s government in London called this outrageous school of thought treason.  The Americans, not known for prolonged discussion even then, reached for their muskets.  As we all know, insurrection is only wrong if it fails.  The Americans didn’t fail, the thirteen British colonies became the United States of America and for the first time since Pericles was a pup, taxation with representation was more than just a philosopher’s fantasy.

The odd thing was this New World idea caught on.  Pretty soon, French peasants wanted a say in how their government was run and how their money was being spent.  Then it was Haiti and the nations of South America; then Greece, and pretty soon, people all over the world were demanding this new taxation with representation.  It was a worldwide phenomenon and the first and only fundamental change to the tax system — until now.

Wednesday: Contemporary Taxation: A Fundamental Change

Titanic: Myth and Mystique

Unless you’ve been lost at sea for the past couple of months, you realize that the world has taken a particularly nautical turn.  The 100th anniversary of the sinking of the Titanic is upon us, and everybody from James Cameron to Julian Fellowes is cashing in.  Titanic stories are sharing website billing with Brooklyn Decker’s new look and the latest Tweets from Lady Gaga.  There are documentaries, books, a miniseries (or two) a couple of “mystery solved” productions (What mystery?) and a 3-D re-release, just to round out the wall-to-wall coverage.  Like Woodstock and Wilt Chamberlain’s 100 point night against the New York Knicks in ’62, everybody is digging up their particular connection to this moment in history.

Our fascination with the tragedy of the Titanic has been around since Jack Phillips tapped out the last SOS from Titanic’s radio room on April 14th, 1912.  In actual fact, as the radio records clearly show, Phillips used the older CQD distress call throughout the night; the SOS story came later.  This is only one of the many myths surrounding the Titanic.  There are tons more.  That’s part of what feeds our fascination.  People tend to mythologize tragedy to make it more palatable: to give it humanity and separate it from random slaughter.  The voyage and eventual destruction of the Titanic is ready-made for the tales people tell.  It’s a classic snobs vs slobs fable; the only thing missing is an unlikely love story and James Cameron supplied that.

But far be it from me to dispel the legacy of a legend; the media myth makers have been doing that for more than a month.  These days, Titanic experts are ten a penny, and by the close of business Sunday, no one from the ship’s designer to the guy who poured the after-dinner drinks will have escaped their gaze — with mixed historical results.  So, rather than trying to see through the mystique called Titanic, let me add to it.

Under the heading “believe it or don’t” there’s a weird case of coincidence surrounding the Titanic.  In 1898, Morgan Robertson published a book called Futility, or the Wreck of the Titan.  The story itself is one of those overblown Victorian tales of redemption.  The hero, John Rowland, is a disgraced naval officer who, through a series of adventures, rebuilds his life and reputation.  It’s simple 19th century pap, read by old men and schoolboys and quickly forgotten — except for one thing.  Robertson’s literary device that triggers Rowland’s rejuvenation is a luxury ocean liner called Titan which hits an iceberg in the North Atlantic and sinks.

In Robertson’s 1898 book, the Titan is the world’s largest luxury ocean liner, on a voyage across the Atlantic.  He describes it as 800 feet long with a displacement of 45,000 tons and a top speed of 25 knots.  The voyage is uneventful until one dark night in April, approximately 400 miles west of Newfoundland, the ship collides with an iceberg on its starboard side.  Within minutes, all is lost and the captain orders the crew to abandon ship.  Unfortunately, the Titan was considered “unsinkable” by its designers and builders, and there aren’t enough lifeboats.  As a result, before help can reach them, nearly half of the ship’s 2,500 passengers drown in the freezing North Atlantic waters.  If any of this sounds familiar, it should: it’s a fictional carbon copy of the factual Titanic’s story.  The kicker is Robertson wrote it fourteen years before the Titanic cleared dry dock.

There is no rational explanation for Robertson’s story.  However, one nerdy night at a Sci-fi convention in Portland, Oregon, I was told Robertson could have been a time traveller looking to make a few bucks on the side.  (Reasonable as anything else, I guess.)  My point is Robertson’s novella is just another part of the Titanic legend.  It ranks up there with the ship’s band playing “Nearer, My God, to Thee” as the Titanic sank beneath the waves.  They did play but only until the increasing tilt of the sinking ship made it impossible to stand on her decks.  One of the most famous stories is about John Jacob Astor IV, who put his pregnant wife into a lifeboat, casually asked the crewman for the number, and then wandered off to smoke a cigarette with mystery writer Jacques Futrelle.  His body was later identified by the monogram sewn into his clothes.

There is talk, as there has been for twenty years, of raising the Titanic.  Personally, I think the recovered jewelry alone could pay for that little adventure.  Someday we’ll have the technology to do it, but I don’t think we will.  There are certain things that need to remain out of our reach; it’s better that way.  The dark waters of the North Atlantic may shroud the facts of what happened to RMS Titanic one hundred years ago, but they, too, are part of the legend.