It is possible for income to be depressed due to the tax burden, to be sure, but it is not necessary. The fact that one would have a greater income with tax relief is misleading. It is rather like experiencing a deflation in the currency, where the buying power is increased, leading to a windfall. In the future, all it means is that raises will be adjusted downward, until a new equilibrium is reached. What is true is that if costs cannot be efficiently passed on, there will either be a marked depression of income or a loss of jobs. What is also true is that continued tampering with the tax code, such that there is no predictability, can easily lead to havoc in the negotiation of wages.
Now, the general burden on the economy of high taxes is a separate issue. Some if it is simply the inefficiency of creating high compliance costs, when more productive use could be made of the money. Some is the temptation to use the tax code as a way of creating incentives or disincentives for various actions, thus distorting the economy. Also, the more revenue raised, the more freely government will interfere in economic decisions, again causing distortions in the price structure and consequent inefficiency. My point is not the high taxes are no problem, but that moralizing about them in such terms as claiming "theft" is not analytically sound....... |
