Tuesday, June 18, 2013

What – Me Worry about Taxes?

If you think income taxes don’t matter to you because you don’t pay any, think again.
If you are a working person with a modest income who pays little or no federal income tax, how the system is rigged still matters to you, for one simple reason: it hits your employer (or potential employers) directly; the more your ‘rich’ boss has to pay in taxes, the less likely it is (s)he can give you the raise, or even the job in the first place.
Profit, or surplus of revenue over expenses, is what makes investment in the next round possible. Capital investment and innovation is what makes wages, salaries and standards of living rise over time. It is because private property rights and economic freedom have been defended better in the West in general and the United States in particular than around the rest of the globe, that working people here have the highest standard of living that the world has ever seen.
But the more that profit or ‘surplus income’ is taxed away by the government, the less is available for capital investment, to bid up wages and salaries. Inefficiencies inherent to government (an agency that doesn’t register profit and loss based on providing the best product or service that the consumers demand, at the lowest cost) ensure that those dollars don’t go as far to increase wealth for the whole society.
Government and unions have a role to play, but it is a supporting role, not a primary one. Government’s proper role is to act as an impartial referee, to ensure everyone plays by the same rules and to punish and prevent wrongs, from civil fraud to violent crime; but not to pick winners and losers. Unions can be a positive force as the legitimate agency of workers who pool their resources voluntarily to coordinate their negotiations with employers.
But granting special legal privileges (including looking the other way at violence) to particular, politically-connected unions at the expense of taxpayers and other equally worthy workers lacking the same connections, is a violation of the principles of liberty and equality, and a recipe for economic crisis. Unions did not create the prosperity of the United States of America. The countries and industrial sectors that have the most powerful unions also have the most sickly economies. The once-proud and mighty General Motors is on government life support due in part to the abuses of the United Auto Workers. The entire nation of Greece is collapsing under the weight of its public-sector pensions. Europe has very powerful unions…and stagnant economies, with 10%+ unemployment ALL THE TIME, not just during recessions.
Depending on your own personal situation, you may see it as your goal to become a member of a powerful union, or to maintain and expand the privileges that you already have. But choking the host industry or country to death is not a sustainable model for a healthy society.
On the other hand, a low-tax, reasonable regulatory regime that permits people like yourself and the entrepreneurs who employ you to keep the fruits of their honest labor and decisions, and save and invest it in more productivity, leads to higher wages and better working conditions than any union or government program can offer, and is sustainable until the end of time.
Vote OUT the statists, and replace them with citizens who have created jobs with their own money.
Even though half of all Americans don’t pay any federal income taxes, yet 66% believe that the tax burden in America is too high. The consensus in America is that the government should not take more than 20% of anyone’s income, yet we’re way above that already and headed for … Europe. In the Old Continent, whose ways we once repudiated with the Declaration of Independence, they have individual income tax rates that are higher than ours and national sales taxes (value-added taxes, or VATs) on top that average 20%.
And what do our friends have to show for these economic policies? Before the recent downturn, the US created four times as many new jobs every year as the European Union. The average resident in our poorest states is wealthier than the average European. And the shocking double-digit unemployment we’re suffering is just business as usual over there.
Prosperity doesn’t come from taxation. It comes from entrepreneurial capitalism; liberty constrained only by the equal liberty of every other person to life, peace and (private) property.
Yet the Democrats still believe that we (if not all of us then certainly those with enough wealth or income to potentially employ the rest of us) are not taxed enough, and they want to add the glorious VAT to our portfolio of tribute. Where will it end?
In the early 1770’s we petitioned King George III of England for relief and it fell on deaf ears. Now we are getting European taxation with Democratic Party representation. It’s time to change both.