Taxes are payment for services rendered

They’re not payment for future services, and certainly not benevolent gives from corporations and the wealthy.

In the text for one of the economics classes I took last semester, I found the following in a section on taxation:

[The government] can use this tax revenue to provide services, such as roads, police, and public education, or to help the needy.

The authors of this economics textbook are misrepresenting taxes, making it seems as though taxes are something that profitable corporations and rich people benevolently give to governments.

You see, a company doesn’t pay taxes for future public services; they pay for services that have already occurred.

A company pays corporate tax for services that have made its existence possible to that date. That company, for example, employs workers who have already been educated in the public education system. They pay for the roads that have already been built for their products to get to market, and so forth.

It’s payment for services rendered, not an investment in future services provided.

Same goes for consumers. The tax they pay covers what it cost for governments to make it possible for that product to exist: customs officers to inspect and regulate raw materials that crossed the border, roads that helped transport those materials to the business and the finished product to the store, utilities that kept the factory and store running and clean, and so on.

It’s payment for services rendered, not an investment in future services provided.

When we buy a product, we pay for the product that was already produced. We’re not paying for the possibility that we might buy a product from that company at some point in the future.

It’s the same with taxes. When we pay taxes, we pay for services that we already consumed.

The fact that governments will then use that money to stimulate futures services and projects is no different from a company using sales revenue to stimulate new product lines or open a new store. Neither of those means we’re paying for a future product or service.

How do economists not understand such a simple concept as paying for services already rendered?

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By Kim Siever

Kim Siever is an independent queer journalist based in Lethbridge, Alberta. He writes daily news articles, focusing on politics and labour.

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