The Panama Papers have stirred up a lot of controversy on the liberals’ side. From accusations of evading tax “obligations” to saying that people should pay their “fair” share, the left is parroting its usual “greed” talking points.
But for intelligent people, the Panama Papers’ revelations are simply the symptom of a much larger disease: Big Government.
Indeed, as Arthur Laffer once said, “Too much tax kills the tax.” He was proven right time and time again, and the Panama Papers just proves him right one more time.
(Image via Ken Teegardin/SeniorLiving.org/flickr)
Taxes in industrialized countries are so high that people, being moved by incentives, find ways to keep more of their money. They work fewer hours, under the table or move the money to better “havens.”
Because for every fiscal haven there is a fiscal hell. Take a look, for example, at the Tax Foundation’s most recent Tax Freedom Day chart – how long you have to work to pay all your yearly taxes. The people of Connecticut have to work until May 21 until they can pay all their taxes (sales, income, property, etc.). On the other hand, people from Mississippi, Louisiana, Tennessee, South Dakota and Alabama are already done paying their taxes.
While they may not be the most prosperous states, having such low taxation certainly makes them more attractive for investment. Tennessee has gained a lot of auto jobs compared to Michigan, who will achieve its tax freedom on April 22.
Taxation is Theft
But beyond the fact that people can be motivated by lower taxes, no one seems to ask a crucial question: why are there taxes?
If your answer is “build roads,” then congratulations you have fallen in the worst statist cliché possible. Private roads (and canals and railways) have existed in the past, and they still do today. They are generally better-maintained than their public counterparts since they operate on a for-profit basis.
Bankrupted cities like Detroit see private security forces thrive, and the local police admit that crime is decreasing. And as for education, public charter schools (public funding per student with private administration) fare far better than their fully public peers in Memphis, Atlanta and Harlem.
In other words, “traditional” government roles are better-served through free-market initiatives. There’s a reason for that: freedom breeds competition and innovation. On the contrary, when government takes over something (by nationalization or tax incentives) it tends to stagnate. Had Germany not been separated, the poorly-designed Trabant would have never seen the light of day because people would have preferred more efficient cars.
So the next time your annoying social justice warrior sister complains about fiscal “evasion” from the Panama Papers, ask her one simple question: how much of that money are you entitled to? If you are, take responsibility and go get that money yourself rather than use government posies to get it.
And even if one admits that government has a role in society, it certainly doesn’t require a marginal tax rate of 39 percent for salaries over $250,000. Because if taking 100 percent of one’s production is slavery, at what percentage does it stop being slavery?
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