Tuesday, June 21, 2011

The Problem with Taxes

In a free market economy, individual people get to choose winners and losers. We do this by purchasing goods and services at specific privately owned businesses that provide us a good product at a good price. Businesses that do not provide that aren't patronized, and eventually go out of business. Businesses that cater to their customers grow.

It is this free interaction between individual citizens that makes the system work -- through millions of individual interactions every day.

No private business can force individuals to purchase their product or service, nor can the business force anyone to work there. Their product must be something both affordable and desired. Likewise, employment at a private business is an individual contract between the employee and a representative of the business owner to perform specific tasks for a set fee.

The individual wanting the job must decide how much the portion of his/her life he is giving to the employer is worth, while the employer must decide what that person's experience, skills, and effort is worth to the business. If one or the other decides it is not worth it, they go their separate ways.

The individual holds all the cards under the free market.

Government businesses and services are different. Doing business with the government means you have no choices. They can force you to pay for a product or service regardless of whether or not you use it. It is able to seize a portion of your life in payment for services you don't even receive.

We are not forced to send our children to local schools. We are allowed to personally pay for our children's education at private schools or to teach our children ourselves.

However, home owners are forced to pay for the education of the masses, regardless of whether or not they use that government service.

Government holds a near monopoly on primary education in San Angelo. They don't have to turn a profit. They can charge whatever they believe they can get away with, as they can force people to pay for an inferior service. They can lavish employees with benefits not found in private businesses, such as free health care and defined benefit pensions. Their budgets never take into account economic fluctuations that private business has to consider.

When government competes directly with private business, private businesses generally lose. The government doesn't have to turn a profit. When government holds a monopoly on a product or service, they have all the power.

The worst part is that every dollar seized by government is a dollar that cannot be spent by the individual in the local economy. It is largely a "zero sum" game.

When the local government (or government school district) raises taxes, that money can no longer be spent in the local economy. Writ large, the federal $800 Billion "Stimulus Package" failed precisely because most of the money went to state and local governments. That provides very little impact on the economy, which depends on individuals, not government, having the money.

The government's role in the economy is the same as it should be in other aspects of one's life: to protect the individual from those who would infringe on their rights by force or fraud.

Nothing more. Nothing less.


  1. what is your take on a federal tax on the people?
    and the funding for defense, military spending? should we always have a choice on whether we pay for those?
    i already know that income tax is illegal.

  2. The libertarian response would be no "income" taxes, however, the federal government has Constitutional responsibilities that take money to accomplish.

    I would say any Constitutional responsiblity would be a burden for the people to finance, as we live under the protections of the same Constitution. So, in my opinion we should not be allowed to choose whether or not to support, for example, national defense. However, there are many ways to raise funds for the federal government.

    For the next question, income tax is not "illegal," per the Supreme Court of the United States; however, it is unethical and immoral.

    Income is compensation for giving up a portion of your experience, knowledge, and physical being to someone else in exchage for you own personal needs: food, shelter, etc. In our current economy, that generally means cash.

    Forcing a person to give up a portion of their labors was specifically outlawed by the 13th Amendment to the Constitution. Further, the 14th Amendment specifically grants all citizens "equal treatment under the law."

    Our current progressive income tax system violates both principles.