Joseph Schumpeter Quotes
The state has been living on a revenue which was being produced in the private sphere for private purposes and had to be deflected from these purposes by political force. The theory that construes taxes on the analogy of club dues or of the purchase of the services of, say, a doctor only proves how far removed this part of the social sciences is from scientific habits of mind.
Schumpeter, Joseph A. Capitalism, Socialism and Democracy. Harper & Brothers, 1942, p. 198.
Although the Professor was often right about this technique, at the time he made this statement, the Clinton administration was actually cutting spending and using much of the revenue to pay for the deficit—just the opposite of what the Professor was worried about. It was successful and the deficit was eliminated and surpluses were projected. However the succeeding administration more closely followed the professor’s pattern and increased spending enormously for serious needs, but also cut taxes, so that we went during the Bush administration from the largest projected surplus in American history to the greatest deficit in American history.
This has long been a principle of most politicians responsible for taxation and national budgets. A forced loan, was a practice where instead of taxing and industry like banks, the government requires that the loan the government a certain amount which the government pays back with interest. For the banker, this is preferable to a bank tax which he will never get back,, but then the interest has to be paid by everyone. If the benefit or its potential is to accrue to all citizens, then all the citizens should share in the burden—hence general taxes. See {639883} for a similar contemporary view.
Joseph Aloïs Schumpeter was an Austrian political economist. Born in Moravia, he briefly served as Finance Minister of Austria in 1919. In 1932, he became a professor at Harvard University where he remained until the end of his career, eventually obtaining U.S. citizenship. One of the most influential economists of the 20th century, Schumpeter popularized the term "creative destruction" in economics.
