… is from page 197 of James Buchanan’s and Roger Congleton’s 1979 paper, “Proportional and Progressive Income Taxation with Utility-Maximizing Governments,” as this paper is reprinted in Debt and Taxes (2000), which is volume 14 of the The Collected Works of James M. Buchanan:
It is evident that a constraint or limit on the taxing power or authority of government means little unless this constraint is also accompanied by constraints on the spending power. If a government can implement direct transfers in a discriminatory manner, then members of any ruling coalition can capture for themselves any desired share of the total income of the exploited group independent of any structural tax-side constraints that might be constitutionally imposed.
DBx: The amount of resources consumed by government is the amount that it spends. And so whenever a government spends an amount greater than the amount that it rakes in as tax revenues, some group will be taxed to the tune of this difference (in addition to the taxation of those who pay the amount raked in as tax revenues explicitly). But the taxation used to fund government budget deficits is surreptitious.
Sometimes this surreptitious taxation is in the form of inflation. By spending newly created money, the government gets resources that would otherwise have been acquired by private people whose money holdings are reduced in value by the inflation. Other times this surreptitious taxation is in the form of government borrowing, which imposes tax obligations on future generations.
Anyone who truly believes that no group should be taxed that is not represented – that is, anyone who truly opposes taxation without representation – should steadfastly oppose government borrowing, or at least support meaningful, constitutional-level constraints on the ability of government to run annual budget deficits.
