From an L. Neil Smith piece entitled "Wouldn't it be nice?" to which I found a
link at Two-Four:
The first thing Americans should know is that between the federal, state, and local governments, about half of what they earn every year is taken away from them in the form of taxation. (As usual, you will find that different sources offer have different opinions about this -- the Tax Foundation tells me it's "only" 32.7 percent -- I got my original information personallly, from LeFevre, and have since been able to confirm it on other websites.) What this all means is that if you paid no taxes at all, you'd have twice as much money to save or spend.
Similarly, every individual or company from whom you buy goods or services pays about the same percentage of their income out in taxes, one way or another. However here it's just considered a cost of doing business, a cost that gets built into the prices you and I pay for everything, doubling what everything would actually cost in a tax-free society.
Without all these taxes, competition would soon drive prices down to half their current level, which means that your money (which, if you'll recall, you have twice as much of) would buy twice what it does now -- that's an effective quadrupling of what's called your "real wealth".
How can government eliminate poverty? Poverty is government's stock in trade.
But who would pay for Edward's haircuts??
ReplyDeleteSomehow this pushes me even further toward more support for Fairtax. For that matter, if you want services only the .gov can provide, pay for them as you use them as an individual, not a collective.
ReplyDeleteSorry, been reading too much Roswell, Texas lately.
Regards,
Rabbit.
Some dozen or so years back I "ran the numbers" with the 1040 tables. I pretended I was still Mr. Middle Class with two kids, the usual house/cars/lifestyle.
ReplyDeleteIRS was nowhere near the problem. Around 13% of my assumed gross, the $55K I'd have been making in my old job.
City/county/school/state/excise and use taxes and fees, and don't forget good ol' FICA: At least 35% more, as best I could estimate--and part of my professional life included estimating costs.
Half is a helluva lot more likely than a third.
Art
I have to agree with Rabbit. The most desirable services would be able to be maintained on their own. The services that people did not deem useful would die a paupers death.
ReplyDeleteThe more obvious point overlooked is that, when a resource is plentiful, its value is reduced overall. If all incomes doubled,when taxes were ended, the surplus funds would very probably be used to bid UP the price of a purchase in order to secure it.
ReplyDeleteAnd yet there is never enough money for the various governments to do infrastructure -- the things we can't take care of as individuals. But there is always money for NEA, NEH, on and on and on.
ReplyDeleteThe really important and unmentioned side-benefit of ending all taxes to zero would mean that there would be virtually no government. Wouldn't that be nice!
ReplyDeleteI did a piece a couple of years ago about this problem:
ReplyDeleteThey're taking half our money.
I think Art's right. It's closer to a half than a third. Even a back-of-the-envelope calculation will get past 40%, if you include the employer-paid portion of Social Security.
Anonymous at 2:34 is wrong. People would not bid the price of goods up to double the value with the extra money they have. The government doesn't just stick all those tax dollars in a big vault for Senators to swim around in like Scrooge McDuck; it spends them buying things. If people had those tax dollars back, they would use it to buy more things, but government would have to buy less things. All the resources that went to building stuff for the government functionaries would go to building stuff for private people. So, the additional private consumption would not bid prices up because it is balanced by decreased gov't consumption.
ReplyDelete"The government doesn't just stick all those tax dollars in a big vault for Senators to swim around in like Scrooge McDuck; it spends them buying things."
ReplyDeleteYeah, but the problem with that is that so much of what they're buying is crap that we don't effin' need, let alone want. I'd rather cut back on the spending, retire the deficit, balance the budget, then start trimming the government back to a fraction of the bloatware it is now.
I'd also like to have a pony, but ya gotta have dreams, y'know?
Regards,
Rabbit.