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Saturday, 3 September 2011

An Argument against Taxation

I have bleated about taxation before on this blog. My conclusion is that, in general, at best, for-the-time-being, taxation is a necessary evil.

The other day I saw something (and I think it was being articulated by Ronald Reagan) to the effect that when you tax something, you get less of it; when you don't, you get more.

All over England there are reminders of the window tax. In 1695 Parliament legislated to tax windows – the larger the area of glass in your house, the more you paid. Overnight people bricked up some of their windows. Frequently they plastered over the bricks and painted the plaster black to give a not-very-good illusion of glass.

In the present day we use taxation (ostensibly) to discourage certain behaviours – smoking, for example. The effect is that fewer people smoke than would do absent (nice Americanism) the tax.

When you tax wealth, you immediately get less wealth. Over and over it has been shown that when punitive tax rates are lowered, the take actually increases. I saw some graffiti: MAKE THE RICH PAY! They do pay and because they do they therefore have less to invest – and there are fewer jobs for oiks like you.

All legislation costs money to implement. Perhaps some of it is worthwhile. But good and bad legislation alike make society poorer. Your Caribbean holiday might have been worthwhile but you are cash poorer for having taken it. Government employees are paid out of cash expropriated from you. Moreover hundreds of thousands of these people are in unproductive and unnecessary jobs instead of working to create wealth.

In Britain we are consumed by the politics of envy. Americans are increasingly succumbing to it. Happiness is good. We should not want to put a limit to anyone's happiness. Likewise wealth. The more billionaires the better. A billionaire who doesn't keep his fortune under the bed cannot help benefitting his fellows. Either he spends it on himself and his family, thereby giving employment to others or he invests it in ventures which create wealth. Billionaires also happen to have rather a good record of charitable giving.

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