Why do we levy taxes, anyway?

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A reader writes, in response to my Upside of Anger column on taxing Wall Street bonuses:

You appear to have a positive outlook regarding the government using the tax system to punish entities they don’t agree with.  And you dare use the term “CAPITALIST” in your byline??  How hypocritical can one get??  Here is my take on the punishing taxation thing:

About the time one thinks it can’t get much worse in Washington, it gets worse. In this case a lot worse. It is despicable when the government proposes to use their power of taxation to quell some displeasure or to address some perceived wrongdoing. It is beyond despicable in my opinion; it is downright criminal. Taxes are levied to pay the government debt. PERIOD.

You also seem to place the burden of our troubles on Wall Street.  No doubt some greed has contributed; always has; always will.  But you ignore the recent history of the politicians coercing the financial institutions to make obscene loans to further their “great society” type agendas.

Maybe you should rethink the “The Curious Capitalist” thing.????

I used to get a fair amount of “how dare you call yourself a capitalist?!?” e-mails and comments. This is the first one months and months and months. I’d say the political atmosphere has changed a little.

Anyway, the most interesting thing to me here is the line:

Taxes are levied to pay the government debt. PERIOD.

Historically speaking this is of course nonsense: U.S. lawmakers been choosing which taxes to levy on whom on the basis of considerations other than pure revenue generation since the begininning of the Republic. Tariffs, sin taxes, you name it. Nowadays the tax code is loaded with provisions meant to steer behavior in one direction or another. Wildly overloaded, you might say. To the point that maybe we would be a lot better off if we simply levied the taxes that most efficiently raised the amount of revenue we happened to need, and left it at that.

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