“The mode of taxation is, in fact, quite as important as the amount. As a small burden badly placed may distress a horse that could carry with ease a much larger one properly adjusted, so a people may be impoverished and their power of producing wealth destroyed by taxation, which, if levied in any other way, could be borne with ease.”
a19th-century American economist
Beyond giving everybody a collective headache when tax season rolls around, taxes have a tremendous influence on our way of life. From daily decisions like where to shop to life’s major decisions {where to buy property, where to establish a business, when and where to retire, and how to plan for death}taxes are there to push us one way or the other, often practically dictating what we can do.
Progressively higher income tax rates – or “taxing the rich” – cause many productive people to work less and retire earlier, draining the economy and destroying jobs. These stair-step tax rates also bump married couples into higher tax brackets, take an unfairly large chunk out of a one-time spike in income, and increase tax evasion.
It has been said that democracy is two wolves and a lamb voting on what to have for dinner, and many sages have warned that the majority in a democracy may oppress the minority. We have seen this scenario play out in tax policy many times.
Some of the most foolish taxes have been enacted by the many on the few. This was true of the income tax in 1913, it was true of the Alternative Minimum Tax in 1969, and it will be true of the tax increases that Congress is proposing right now.
For a century now, it has always been just a handful of “the rich” or “greedy corporations” that will supposedly bear a new tax, but over time we learn that almost everyone is paying those taxes and that we should defended the rights of the few more vigorously.
“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
—Winston Churchill
© 2008, Bruce Mc. All rights reserved.
