The simple economic truth about the impact of raising taxes.

There is little that confounds me more than people who actually believe that higher taxation will somehow encourage economic growth. However, there are plenty of them out there who truly believe that higher taxes will make people want to work harder, and encourage them to make more money for the government.

Let’s just go over a few common sense aspects of taxes.

My first point today concerns the emotional impact taxation has on those who work and earn money. When a tax is increased, or new taxes are imposed, those who work and pay those taxes are not going to be happy, to say the least. Sure, some who earn significant amounts of money and can afford to pay the tax may be more inclined to apathy regarding the tax, but anyone who cares about their financial well-being and aren’t well off cannot afford such a luxury as apathy, and notice when more money is being taken from their paycheck to fund the government bureaucracy.

If you know you will have more money taken from you for working harder, why work harder? What is the incentive to generate greater revenue if you are not going to be earning more for your effort? When more money is taken from the working man, he is inclined to work less hard, and earn less money, since the more he earns the larger the percentage he will pay in taxes.

Second in today’s taxation equation; the circulation factor. I’ve gone over this point before. If you earn a dollar, and the government takes fifty cents for taxes, then that fifty cents taken for taxes is virtually dead, and produces no future tax revenue. However, if the government only takes ten cents, then there will be ninety cents, rather than fifty cents, being spent again and again, generating more tax revenue through circulation. More people earn more money, so more tax money will be collected from more people, and the individual burden is less. If all the money just gets grabbed from the first earner, then they cannot employ or patronize others, and those others do not generate that extra revenue, and therefore less tax revenue is generated. It is simple math, for anyone with a grade school education.

My third point ties in with my second; the employment factor. If people are able to keep more of their money, then they will hire more people to do jobs. If someone keeps an extra thousand dollars, instead of paying a higher tax rate, then they will feel more inclined to pay a laborer to fix their cellar wall, or paint their house. This will, in turn, allow other people to earn a living and pay taxes, rather than find themselves in need of government welfare or charity to survive. If more people are able to work, then need for taxes to fund welfare will plummet, thereby saving tax revenue for more constructive public projects, such as highway repair.

Overall, it is a very ignorant thing to believe that higher taxes are a good thing for the citizens of America. Limited taxation may be required for the smooth functioning of modern society, but there seems to be nothing “limited” about taxes these days. It’s time bureaucrats both in Washington and in state legislatures and local municipalities stopped mismanaging the tax revenue they are getting and demanding more to make up for their corrupt handling of it. There is more than enough money going to every governing body across the nation today. The only problem with monetary shortfalls comes from their poor financial planning and lack of common sense, and in some cases plain, old fashioned greed is to blame. They desire more money, more power, and more control for the rising social class of career politicians. It’s time people stopped falling for their lies.