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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (27457)	4/4/2008 5:12:57 PM
From: TimF	Read Replies (1) \| Respond to of 71588

The changing of behaviors is part of the cost of the taxation. And its the part that most often gets overlooked. The costs are 1 - The obvious direct costs. A $10 tax cost you $10 2 - The enforcement costs (IRS employees don't work for free) 3 - The compliance costs. 4 - Costs to legally avoid or illegal escape tax burdens. Setting up tax shelters costs money. Paying tax lawyers etc. cost money. 5 - The reduced efficiency from investment directed to have a lower tax cost rather than the highest real risk adjusted return. 6 - Suppression of economic activity, but people reducing the amount of work or investment they do because of lower post tax rates of return on the work or investment due to higher tax rates, also reduction of consumption because of taxes leading to lower demand and eventually less investment to meat the demand. 7 - Non monetary costs from people changing their behavior because of tax rules. Ex: If you get a smaller car because larger cars get higher tax, you may pay less for the car, so there is no dollar figure that can easily be applied to represent your costs (although the manufacturers indirect cost could be the lost profit he would have gotten from the larger car), but settling for a car you don't like is much still is a cost to you. Add up 2 to 6 and the total may be similar to, or at least half of the obvious direct costs. And then there is the real, but not dollar cost in #7.