Anyone who is anti-war should also be anti-tax, yet it seems like a large majority of those who are anti-war have no problem with high federal taxes. Gary North claims in a recent article that “[t]hree factors have made possible the modern world’s wars: graduated taxation, the central bank, and the abolition of the gold coin standard”. He essentially goes back in history to just before WWI when in 1913 the 16th amendment authorizing an income tax was ratified, and the Federal Reserve central bank was created, stepping away from the gold standard. And this is why these things made massive spending on wars possible: with the cash flow created by the income tax, the government would have more money to spend on wars, but not just the amount raised in tax revenue. Now the government could borrow money and go into debt, because the creditors knew that the taxpayers could back up that debt. This allowed deficit spending to rise, because the government could always just take more of the citizens money in the form of income taxes to pay it back.
Since the central bank is the one printing the money, the government knew that money borrowed in 1914 would be worth more than when it had to be payed back years later, because money would be printed in the meantime, causing the value of one dollar to decrease. Debt could therefore be payed back with inflated dollars. This worked for the government because the amount of value lost in inflation, was placed in the government coffer, because they are the ones who controlled the money supply. This back door tax known as inflation was necessary for the levels of spending over the last century, because it allowed the government a secret tax that did not have to be approved or voted on, simply printing more money would extract the value from people’s bank accounts, and place the value in the newly printed bills which the government controls.
So this is why I don’t understand the people who have no problem with taxes, but criticize all the things the government does around the world with their tax dollars. It is as if people think that the taxes they pay will only go toward the government programs they want. But we don’t get to choose where the government spends the money it takes from us, so what we should be focusing on is limiting the amount of money the government has available to work with in order to force prioritization. I don’t want the government to be able to sit around and think of things to spend my money on, so I would prefer that they have just enough to do the necessary responsibilities of the federal government as laid out in the Constitution. Remember most states have income taxes, but individual states cannot start wars with other countries. By limiting the money, and therefore power of the federal government, they would have to focus on defending America rather than using force and intervention overseas to expand American interests globally. And that is why the Constitution was designed to give states more power than the federal government, so that a militarized society with a strong central government would be prevented.
America would be just as powerful as a whole with 50 powerful states. The difference would be that the states would have individual interests which do not always match up, so all the money, and therefore power, would not be in the same place. Certainly 50 strong militias would be able to repel an invasion, but unlikely to agree that sending troops to the middle east would be beneficial for each individual state. Even if ten states thought they could get some benefit from intervening overseas, they would need the resources of the rest of the states to do it. They would be unable to force other states into doing something not in their best interest. Today, all 50 states have decisions made for them in Washington D.C., so if a foreign intervention could benefit a few, they just need to know the right people to make it happen. Sometimes people criticize decentralized power because “nothing can ever get done”. Sometimes that is the point.
By spreading out the power that the federal government currently has, it would be harder to bring together enough people who agree that war or overseas intervention is the solution to problems. If the money was not so easy for the government to get, instead of the President sending troops here and there, he would have to appeal to congress for the funding because the financial decisions made at the federal level would have to be prioritized. If there is no “infinite” source of federal money–the income tax–than there would be no infinite lending to support deficits, and therefore prioritization at the federal level would be a necessity. And since any reduction in legitimate things that the federal government funds could be replaced by the state governments, there is really no down side to a scenario where the federal government answers to the states, instead of the federal government dictating to the states. The original Constitution had it right with respect to who should hold the power; the states should be more powerful than the federal government.