In principle the State needs money to fund its operation. The less the State does, the less money it needs, naturally. The more it does, the more it needs, naturally. When a State has expanded enough it starts to feel the need to tax more. Nothing new here. However, at some point it seems the State has to override the unwritten laws of fairness and justice and tax beyond the lines of common decency.
According to hard logic the State should collect a fixed amount from every person. Everyone is getting the same police-protection, the same access to a legal-structure of courts and procedures and everyone has to obey the same laws. When the State expands, this kind of taxation wont cover the expenses of it. The need for a proportional tax arises - everyone pays the same fixed percentage of their income, of the prices of products bought, etc. But again the State expands and the point of unjustifiable discrimination starts. Some people are made to pay higher percentages than others. Some products are taxed more than others. Some behaviour is rewarded and some other is punished. The balance of paying everyone's expenses versus keeping those expenses down forces the State into the road of discrimination.
When this point is reached the taxation starts to hurt those who have the least. Prices on everything rise due to taxation. Low-income people loose their incentive to work harder because margin-taxes from rising tax-percentages eat up all the benefits of higher wages. Owning a car becomes an almost impossible burden. Smoking becomes a trap because high cigarette-prices hit the poor hardest, creating an even more stressful life, making it less and less likely that a relaxing stop-smoking-course is put on the agenda. The society truly becomes a society of the rich at the expense of the poor. And the strangest thing of all is that the Left, above all, is the main force behind that development. By expanding the State the poor are made to bleed.
The alternative is to go back to flat, low taxes with a small, restricted and a well-defined State that focuses on keeping the law. Those who truly need help are a very small group, easily helped by compassionate humans (or at the very most a very small governmental institution). By taxing everything in order to help someone only makes the total need for help bigger and thereby increases the need for more funds to help those who need help, which again increases taxation, which again increases the need for help.
I believe the so-called "welfare state" will be a historical memory before 30 years have gone by. The sooner that better and for the sake of the poor.
4 comments:
Your argument makes sense, if looking at society's problems from a purely economic point of view. Unfortunately, our world is much more complex and there are other factors at work (sexism, racism, etc.) that make these equally dispersed state benefits not so equal after all.
I think the thought of using the State as a tool for distributing this and that (money, treatments, "equality") is an idea that won't work, hasn't worked or works reversely. The Nazis tried to distribute racism and the social-democrats try to distribute income. The result is discrimination based on law.
But then who should distribute this and that? Who will hold innately selfish people to be accountable to those less fortunate?
No-one, and there is no need to. If you want to have laws for everyone in order to force the selfish 1% to act in a certain way you loose more than you gain.
Most people will co-operate, join forces, help each other out and do good, even in complete absence of laws, taxes and regulations. The "free-loaders" shouldn't force the State to regulate the rest of us.
See Free Riders: Austrian v. Public Choice for some related thoughts about the issue.
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