Monday, January 18, 2010

Tax Me Please!

The question should not be whether or not Michigan taxpayers would be willing to ante up more to government in the form of taxes. The question should be whether anteing up more in taxes will help or hurt the economy, help or hurt job creation, help or hurt the creation of wealth, or help or hurt the state of Michigan.

A recent survey funded by the W.K. Kellogg Foundation found that

a majority of 314 Michigan residents said they would support an increase in the sales tax to balance the budget and cut business taxes to create jobs.
There was a day when I would have supported paying a bit more in taxes to turn things around. That was until I discovered that paying exorbitant taxes pushes the economy in the exact opposite direction.

Consumer spending is what drives our economy. It is not driven by government bureaucracies or by the wealth confiscated to keep it afloat, regardless of how willing individual taxpayers are to give a little more. (Or, better yet, willing to require that other taxpayers give a little more.)

The rules of economics are as steadfast as those of physics, particularly when dealing with huge sample sizes. The People's Republic of Michigan, with its 10,000,000 citizens, is an economy large enough to prove economic laws without a whisper of error. More taxation, whether given willingly or under the threat of jail, will do nothing but further impede economic growth in an economy already taxed as heavily as Michigan's is.

Take an additional $10 from me a month and I will certainly spend $10 less. How will I pare my personal budget back by $10? It sounds manageable enough and it probably would be. I will buy a couple fewer cups of coffee, stay away from one high school sporting event, go without a snack of sunflower seeds on my next trip to Lansing, and let that inefficient furnace filter go another couple weeks.

Voila! Problem solved.

Except that each of these personal consumer decisions, multiplied by millions of other consumers all of whom have had a $10 bill removed from their wallets by the pickpocket of government, add up to a significant decrease in consumer spending which will do nothing but add further malaise to our Michigan economy.

How many private sector jobs will be lost because of this?

Being cooperative in the fleecing of our own wallets, as many survey participants seem willing to do, makes us nothing more than agreeable targets of government grifters who cannot return this money to the economy without cutting its effectiveness and efficiency.

By definition, bureaucrats cannot improve these dollars' efficiency even if they wanted to (and many of them don't want to.) We might feel we are helping out by contributing to the greater good by voluntarily being taxed beyond a reasonable amount, but we are hurting ourselves and prolonging our economic predicament.

Many Americans already spend nearly 50% of their incomes in the support of government. They do this through income taxes, property taxes, sales taxes, excise taxes, usage fees, and licenses, etc. In the grand scope of things perhaps it seems easy to find another small portion of income to toss into the government kitty.

Can most of us survive another small tax in support of our government? Sure, but do we benefit the economy by doing so? The answer is no, of course, but that doesn't seem to matter an awful lot to people who scoff at economic certainties in the face of a benevolent government's well run public relations scam.

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