“The power to tax is the power to destroy.”
– Supreme Court Justice John Marshall, 1819
Most people dislike taxes but see at least some level of tax as inevitable, even necessary. Surely some of our dislike for taxes is driven by the fact that it’s human nature for us to want to keep more of what we earn and to direct where it’s spent rather than abdicate that decision to another person.
Some of our dislike is driven by the fact that we inherently oppose wastefulness and don’t like to see our money spent on things we believe are inefficient or unnecessary. Some of our dislike comes from seeing our money spent on activities that we consider immoral or unethical.
And many of us dislike taxation because we believe it takes money away from producing things that people want – its best use – and instead is diverted into uses that are less valuable to society, and even are often used to prop up government-sponsored monopolies that the private market isn’t allowed to compete with, preventing us all from having a better quality of life.
But one thing is sure, the taxes you pay out of your earnings are dollars that you will not be able to spend to improve your life or reinvest in your business to create additional goods or services, increase your workers salaries, hire new workers, donate to a charity, or spend in your community.
Every dollar taken from your business is a dollar you can’t spend at another business, use to send a child to college, or donate to a charity. Every dollar taken from you is a dollar you can’t lend to another business owner.
If politicians are truly serious about stimulating the economy, they will cut taxes. Period.
America already has a deeply flawed tax system. In fact, the Tax Oppression Index ranks America in the bottom half of Industrialized Nations, and our ranking is set to plummet further.
Taxation often sends a discouraging message, “You cannot be trusted to do with your money things that will make the world better off, therefore it must be confiscated and given to those who know better than you.”
Have no doubt that many politicians would like take everything you earn, and give you back whatever they feel is “just,” if only you’d keep working. They’ve learned, though, that at some point the burden is just so great that many people finally throw up their hands and won’t work.
The federal government – and many state and local governments – treats the country as something it owns and allows you to use, so long as you pay your “dues.” Don’t believe it? Think you “own” your “property”? Try not paying your property taxes. You’ll ultimately lose “your” property. That’s the “dues” you pay for the privilege of the government allowing you to “own” something. The way they see it, they own the country, you rent from them.
Even your own body and labor. They own it, to the tune of whatever they decide. Sometimes they decide to own 10% of your work. Sometimes 40%. Sometimes 90%.
They claim you and everything you possess.
Taxation without your consent is theft, but what can you do?
What you can do is educate others to see the reality of our system today so that it can be reformed.
It starts with an understanding that government is not a magic institution that can wave its wand and turn us into a utopia, if only we feed it. It’s an institution made up of people who are no more benevolent and competent than the people and businesses they take from.
It starts with an understanding that, yes, we can be trusted with our lives, our liberties, and our properties, and that we can use those resources we have earned better than those who have not earned them, but merely confiscated them from us.
It starts with an understanding that every dollar of taxed income incurs an opportunity cost, which is the choice you no longer have and can’t make because that dollar was taken away from you.
It starts with an understanding that competition lowers prices, an understanding that when a government carves out a monopoly for itself in any market, and does not allow for competition, we’ll all pay way too much for the “service” provided.
Here are some exercises you can use to teach your employees and coworkers about the “hidden costs” or “perils” of taxation. Embedded in the message is a warning that if they value job security and personal prosperity, they should never vote for a tax increase on themselves or on anyone else.
Let’s look at a couple of simple profit and loss statements – two companies with identical performance, but one is not taxed at all, while the other is taxed at 40%.
|With 0% tax||With 40% tax|
|Profit before tax||$100,000||$100,000|
|Profit after tax||$100,000||$60,000|
Now, assume that every $30K reinvested each year creates one job. This may or may not be accurate for your business, but it is for mine, so it will work for illustration purposes.
|Amount reinvested to grow business; machines, inventory, etc||$100,000||$60,000|
That’s a 65% increase in job creation. That’s enormous.
That money could also be used to fund an employee retirement plan, or give employees a raise, or just have a big enough savings that during an economic downturn a company can weather the storm and not have to lay off employees. That’s job security.
And, remember, the money we spend with other companies creates jobs there, too! That cash is either reinvested in business, reinvested somewhere else, or spent in some local economy.
Now, what happens if your customers’ individual tax rate goes from, say 20%, to 0%?
They have more money to spend on your goods or invest in or loan to your business.
What happens if the rate goes up? Just the opposite. Resources and cash are diverted away from your customers (and potential customers).
Help employees understand that sales taxes reduce the amount of money customers spend with you. If a customer has only $100 of discretionary income they’re willing to spend with you, $94 of their available income will go to you and $6 will go to the government. That 7% extra you could have makes an enormous difference over the life of a company.
When a politician says, “I’m going to take from someone else – not you – to pay for my pet program,” we must all remember that other person who has been targeted may someday be – or already is – our customer.
We should never vote to take away someone else’s purchasing power. Even when politicians are making Robin Hood arguments and saying they’re going to take from someone and give it to us, we must resist the temptation to burden others. We should, “Do unto others as we’d have done unto us” and all that.
A tax increase is a freedom or choice decrease. It takes away options from businesses and individuals. A tax decrease is a freedom or choice increase that provides new opportunities to individuals and businesses.
Just as someone’s death leaves us wondering “what might have been” had they lived, taxation leaves us wondering what “might have been” had we been able to determine how our money would be used.
What children weren’t able to go to college because their parents were overtaxed? What businesses were never launched, what discoveries were never made, what lives were not saved because of innovations never pursued, all because the resources and money that could have been used in those pursuits was confiscated?
Now you might be thinking, what about schools? What about roads? What about . . . ? Those are valid thoughts.
While some may argue for the abolition of all coercive taxes, and others may oppose that or think it unrealistic, I think we can all agree that lower taxes is good for everyone.
Let’s assume all tax is abolished. What might happen?
Well, the dollars you were spending on tax for school funding, or roads, or downtown arts centers is now back in your pocket. All the money you spent on any government service is now back in your pocket.
Will we all just go without?
Any service provided by government that was of any value will find lots of people in the free market (who now have more money to invest and spend) who are willing and able to meet those needs.
That saved money will still be invested and spent, but it will now be at your discretion and by your choice.
Let’s also remember that if a service is received where the tax is paid, it more closely resembles free trade.
If a service is not delivered where the tax is paid, it more closely resembles theft.
Taxes paid should be paid where the benefits for paying them are delivered directly to those paying them.
Most people are willing to pay a local tax to support a local school where their children or the children in their community attend or to pave roads in the communities where they live. At the local level these things are best worked out.
Most of us are not willing to pay a federal tax used to support abortion delivery services in Mexico – whether we’re opposed to abortion or not – or funding opera in Washington DC, or financially backing research on the sexual behavior of gay Argentines.
Last year many of us worked 2-4 months out of the year for the government. That is, when the year was over the government took roughly 15-35% of our incomes.
The American Revolution was fought because of burdens far less than that!
We must educate our employees and co-workers about the benefits of low taxes (and of lowering taxes), of services rendered where taxes are paid.
You can use the examples above to show them how low taxes gives them job security and increases their earning potential.
When people are taught free market principles, they understand them. They can see through the smokescreen that Big Government propagandists throw their way if you help them see through it.
If you own a business, consider showing your employees how taxation affects your profit and loss statement and how personal income taxes limit what people can spend with your business. It will help them understand that high taxes directly affect them and limit their current and future choices and freedoms. Help them understand the immorality of voting for a tax increase on someone else while exempting themselves.
Please share your ideas with us in the comments below. Is this sort of educating feasible in your workplace? Are people responsive to this message or apathetic? What more can be done?
If SBABG.org were to prepare printable fliers or pamphlets that contain this information in a summarized form, would you be interested in distributing them to your co-workers or employees?