Cutting Off Our Nose to Spite Our Face

By Joel David Palmer

We tie ourselves in knots developing strange moral equations to demonstrate why it’s ok to punish with impoverishment those we think don’t deserve an income. And we do it almost exclusively to rationalize a desire to not pay taxes. Our lives are hard enough, we say, without paying someone else’s way too. We suffer all kinds of anxieties – bad bosses, low wages, fear of layoffs, worry about having enough for retirement – and we are prone to resenting anyone who seems to have gotten even a slight advantage on us without, apparently, working so hard. Another tax? To increase not my income but the income of this group, or that group? Why can’t they do for themselves? There’s work for anyone who’s sufficiently motivated. If they can’t pull their weight, they don’t deserve what I’ve got. I’ve seen those people at the dollar stores. I’ve seen them walk away from their cars in the disabled parking spots – they don’t look disabled to me. I don’t want my tax dollars going to help lazy and irresponsible people.

But from the perspective of modern monetary operations, we see that federal taxes don’t actually pay for anything; taxing simply un-prints or destroys the taxed money. Our agent, the federal government, as the issuer of a sovereign currency, can spend new dollars into existence, as many as we need to hire the unemployed, to buy otherwise unsold goods and services for public purposes, and to supplement incomes to ensure that all our fellow citizens can live dignified lives of at least modest means. We can do this without borrowing and without collecting additional taxes. From this perspective, at times like these of economic downturn, it makes sense to say both that federal taxing should be decreased and spending should be increased. If the private sector cannot or will not hire us all or pay us living wages, We the People can make up the lack for ourselves, with real resources, i.e., our ability to actually produce goods and services, as our only constraint.

The dominant paradigm, however, is that tax money is taken from me and given to others, and we want to believe that this is unjust because we believe we don’t have enough for ourselves. But when we deny even a very modest income to the poor among us, our disabled, unemployed, and elderly fellow citizens, on the grounds that they are undeserving or unproductive – or even that because we will then have a little less for ourselves – we harm everyone else whom we might agree is deserving and productive. About the only thing a person receiving a modest federal transfer payment can do with the money is spend it on private sector goods and services created and sold by productive and therefore, presumably, deserving people.

Businesses don’t care where customers get their money, or about their work ethic, their morality, or the circumstances of their lives – only that they spend money. If we are truly concerned about how much it costs us to support and help up those on the lowest rungs of the economic ladder, we should understand that the costs will be much greater than federal income subsidies if those persons end up on the street, have only emergency rooms for health care, turn to crime, or become disaffected and utterly unproductive. It takes only a moment to imagine oneself in their place to understand how much better it would be if the disabled and poor could buy their staples in grocery stores instead of receiving handouts at charity pantries, rent a regular apartment instead of being warehoused in a tenement, make an appointment with a doctor instead of standing in line at a free clinic…

Our attitudes about taxes and government spending are largely formed and reinforced by the news and opinion media. I should think that politicians, pundits, newspaper columnists, and other social critics would be very reluctant to face a critical examination of their own “productive” value to society, and instead stress the importance of public policies firmly grounded in sympathy and compassion for the less fortunate. Assisting those fellow citizens is not just about giving them a little extra money, and it is certainly not about “paying” for this with taxed dollars. This vital public purpose has the dual benefit of providing the means for more dignified and capable lives, and of creating customers for basic goods and services that are not in short supply relative to our productive capacity and which would otherwise go unsold. To do otherwise as a nation is to cut off our nose to spite our face.


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