alea iacta esto

We need a revolution in taxes

According to Arthur Laffer, economists who don’t understand that cutting taxes boosts government revenue don’t know their Econ 101. His most famous contribution to economics is the Laffer curve, a hump-backed con of a curve that attempts to prove what governments have known for millennia, that 0% or 100% tax rates equal zero government revenue and that the optimal tax rate is in between both extremes. This has become a baton with which to beat those who argue for a fairer society around the head. The fact that the rich and their economists own the media, most of the academic press, have more favoured access to the corridors of power, are better funded and better organised means this story is all the play in the news. The Laffer curve does not demonstrate the overarching goodness of cutting taxes. In fact it shows that low taxes decimate government revenues. The real question then becomes who should have the money: the government or you. Why should the government take “your” money? Here’s why.

(1) While you were working for “your” money the government was watching your back. Without the government there would be no law and order. You would not be able to work safely. Only the super rich would be able to hire mercenaries for protection. (2) The “invisible hand” of the free market that apparently helped make you rich is a wild and chimerical spectre. Without the government to enforce contracts your business or professional life in our capitalist economy would be stuck in a go-slow. (3) Those educated folks you were working with and who as colleagues, partners or employees helped you become moneyed would not be there if it wasn’t for the government. Without government support the quantity and average quality of education would nose-dive. No doubt, some people would be ok with private eduction but like in medieval Europe this would be limited to the aristocracy and you’re not one of them. (4) Who’s going to fight your corner in foreign lands? (5) The physical infrastructure on which you built or are building your success could not have been built, at least not to the extent it has, without massive government support. (6) The bill for sorting yourself out in a land without a government will be much higher than what it is now. Collectively, we can afford the police, the fire brigade, the law courts, an administrative system to run things, hospitals and an underclass not pushed to revolution because it’s better than death. But on our own … words fail me. (7) Rich people already have all they want. The only activity left is for them to poop on the rest of us. Middle income to poor people will spend their money (and/or benefit transfers) on necessities and are, by sheer numbers, almost certain to spread the money around a wider economic base. I think that’s enough.

Yes, we need a revolution. A revolution in tax education. We need it proclaimed loud and clear: the rich should pay more taxes because they gain more from (sensibly spent) taxes; the rich should pay more because it insures a community from chaos thereby protecting private property of which the rich own more; the rich should pay more because they own more. We promise not to tax them too richly.

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One response

  1. Dimi

    To follow the argument of the laffers logically, one would get Somalia.

    September 15, 2010 at 6:01 am

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