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Monday, May 28, 2018

Economic security

JUST PUT IT ON OUR TAB: WAR FINANCING AND THE DECLINE OF DEMOCRACY


War taxes, like conscription, used to be synonymous with war. In addition to generating revenue, taxes also created an accountability linkage between leaders and their conduct of war. As Charles Tilly put it in his observations on fiscal sociology, taxation “constitutes the largest intervention of governments in their subjects’ private life.” Centuries earlier, Adam Smith recognized this when he worried that leaders might sidestep war taxes — which he favored as an equitable and financially sound way to finance wars — out of concern for “offending the people, who, by so great and so sudden an increase of taxes, would soon be disgusted with the war.” It was exactly that possibility of disgust, however, that provided accountability. If leaders of democratic political systems had to introduce taxes to pay for wars, they would think twice about the wars they started and keep them shorter and less costly.
Until the Vietnam War, American presidents regularly introduced war taxes, seemingly less worried about offending the people than about financing the war. In some cases, the government had to work to elicit fiscal sacrifice, for example, with a pro-tax Disney cartoon in 1943 that touted “Taxes to Beat the Axis” during World War II. In most cases, the taxes did not actually offend the people. 

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