First, it’s important to define what taxes actually are.
Taxes are the #2 factor in economic life after income. Taxes are simply theft under the guise of the State. A good definition of theft is “the wrongful taking and carrying away of the personal goods of another.” This definition does not go on to say “unless you’re the government”! There is no difference between a gang of thugs, such as the mafia, demanding payments at gunpoint, and the IRS doing the same thing- meaning, the IRS is essentially a legalized mafia.
The propaganda surrounding what taxes really are has been swirling around the country at full speed since the inception of the income tax in 1913 (an alarming example of American propaganda is this government/disney video used during World War II to spin the meaning of taxation). Usually, right before the April 15th deadline, promoters of big government and drinkers of the taxation-as-morality and taxation-as-necessity Kool Aid drum up the nonsensical and illogical arguments in favor of this legalized plunder. Supreme Court Justice Oliver Wendell Holmes once said “Taxes are the price we pay for civilization.”
Holmes must have had some extra servings of kool aid that day!
If a lie is big enough, and repeated often enough, it can continue to be accepted, no matter how illogical or against human nature it is.
In reality, the opposite of what Holmes said is true. Mark Skousen, economist and author, once said “Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned totalitarian state is a complete failure of civilization, while a totally voluntary society is its ultimate success.”
You can get endless tips on how to cut your tax bill, but they are not nearly as important as the big picture- how taxes effect the economy and investments.
Income taxes reduce most people’s income by 20-60 percent. Taxes also increase the cost of everything you consume. Take for example, gas prices. Here in California, about 1/4th of the price of gas at the pump goes to government!
When you add together all the taxes that we pay, including sales taxes, license fees, transfer taxes, stamp duties, property and inventory taxes, excise taxes, import duties and endless layers of government-mandated expense, the result is the “multiplier effect”. Take a car, for example. With each part, there are several taxes imposed (iron ore to build it, railroad to transport it, the steel to build it, the auto manufacturer, the auto dealer each have to pay their own tax), and of course, all these costs are passed on to the consumer.
The cumulative effect of taxation is mind-boggling. Taxation simply prevents progress. This becomes clear in examples like Dubai, where there is no income tax, resulting in cutting edge developments like this ultra high tech building.
Of course, we do get some services from the taxes we pay, but these so-called benefits are almost always overpriced and sub-par in quality and satisfaction. Beyond that, most tax revenue goes to pay for government debt, subsidies, welfare programs, and endless regulatory bureacracy that further prevents progress.
On top of all that, do you really want any services provided at the barrel of a gun?
In part two of this series, we’ll look at the future of taxation and what you can do about this madness.