No one likes taxes, but they are necessary. It is the price we pay for civilization. We have town taxes, county taxes, state taxes, and federal taxes. All very necessary.....but it does add up. Every state in the Union, with the exception of New Hampshire, has either an income tax or a sales tax (often both). So should we all move to New Hampshire? Probably not since they have the highest property tax in the nation. Tax Freedom Day (the day when if our income went to pay all federal, state, and local taxes, we would have completed the payments) in 2012 was April 17th. So for the first 107 days of the year we are working for the government. On April 18th we could start paying our personal bills and maybe indulge ourselves with a night on the town.
We do have this constant battle between public and private. The public sector (governments) needs the private sector to pay its bills. But the private sector generally doesn't mind since they get needed services in return...fire protection, police protection, schools, national defense, etc. But there must be a balance between the two. It is a fine dance as to where that balance should be, and when we are reaching a tipping point. To keep it simple, let's focus on federal taxes.
All federal policies (which always affect taxes) should be based in the dictum "Primum Non Nocere" (First, do no harm). If we spend a massive amount of money on national defense, or eliminating poverty, what could be the harm? The answer is pretty straightforward. The study of economics is all about the spreading of limited resources among unlimited wants. History shows that very quickly we do bump up against limits. How can you go beyond these limits? Quite simply, by going into debt. Will it do harm to keep increasing that debt? If we are to answer this strictly from an economic viewpoint and not a political one, the answer is "yes!".
One way to reduce the debt is to increase taxes, to pay for a new jet fighter or to pay the poor man. But who ever heard of a poor person spending themselves to prosperity. And raising taxes will always result in a drop in the taxed activity. In short, a clear violation of the Primum Non Nocere dictum. What is really needed is a growth in the economy. That will happen if we expand production and expand employment. To do that you must lower taxes on production and employment, not raise it. Tax policies that punish work, saving, and investing, create less work, saving, and investing.
If you want more taxes from the rich, you've got to make the rich richer. To make the rich richer you lower taxes. The dream of America has always been to make the poor man rich, not make the rich man poor.
A final thought....We can walk away forever from a bad boss, merchant, or customer, but we cannot walk away from the government. Therein lies the paradox. We have concentrated power in public guardians in order to protect us from private violence, theft, and fraud. But, having done so, who will guard us from the guardians?
