Ethereal
04-15-2014, 01:31 PM
Three Cheers for Tax Scofflaws (They Keep Us Afloat and Limit Government's Reach) (http://reason.com/blog/2014/04/15/three-cheers-for-tax-scofflaws-they-keep)
J.D. Tuccille | Apr. 15, 2014 12:40 pm
(Reason) - FoterToday is Tax Day, the day by which Americans' tax returns must be postmarked or electronically submitted in order to avoid the wrath of the shakedown artists at the Internal Revenue Service.
<excerpt>
Seventy-six percent of respondents to our recent Reason-Rupe poll say that private charity does as well or better than government in getting mileage from their tax dollars. That means Americans are unlikely to knuckle down and submit to a bigger bill without protest. That's no small concern when you consider that the U.S. has traditionally had the highest income tax compliance rate in the world, and the smallest shadow economy—that is, people engaging in otherwise legal economic activity, but out of sight of the tax man and regulators.
But that's changing.
In recent years, the income tax compliance rate in the United States dipped to 83.1 percent. That's still high, compared to the United Kingdom at 77.97 percent or Switzerland at 77.7 percent, but the gap is closing.
The U.S. shadow economy has also traditionally been smaller than that of other countries. But last year, estimates that it had reached $2 trillion and might account for the country avoiding a return to recession made headlines.
<excerpt>
Why the sudden growth?
Schneider, the shadow economy expert mentioned in that CNBC story quoted above, remarks, "In almost all studies it has been found out, that the tax and social security contribution burdens are one of the main causes for the existence of the shadow economy." He adds, "The bigger the difference between the total cost of labor in the official economy and the after-tax earnings (from work), the greater is the incentive to avoid this difference and to work in the shadow economy."
<excerpt>
Cohn and his friends may not like to hear it, but the tax scofflaws who flee the high taxes he favors have already been credited with keeping America out of recession, and Spain functioning at all. Let's hear it for their scofflaw efforts.
It's basic economics that a tax increases the costs of producing, which in turn increases prices. This has the effect of reducing the quantity of the good or service supplied, which decreases our standard of living. This is called a "deadweight loss" in economics.
http://i629.photobucket.com/albums/uu20/KEG1984/d494a7fd74467664f5833216fd11a43e_zps7f0df567.jpg
But people, by and large, won't sit idly by while their standard of living is reduced by taxation. That is why we have underground economies, because they are how people defend their standard of living from taxation. I'm glad that more and more Americans are dodging taxes and transacting under the table. They are keeping production stable, which increases the supply of goods and services we can purchase at an affordable price. No civilization ever became prosperous because of taxation, so let's encourage more people to transact under the table. It's good for the economy.
J.D. Tuccille | Apr. 15, 2014 12:40 pm
(Reason) - FoterToday is Tax Day, the day by which Americans' tax returns must be postmarked or electronically submitted in order to avoid the wrath of the shakedown artists at the Internal Revenue Service.
<excerpt>
Seventy-six percent of respondents to our recent Reason-Rupe poll say that private charity does as well or better than government in getting mileage from their tax dollars. That means Americans are unlikely to knuckle down and submit to a bigger bill without protest. That's no small concern when you consider that the U.S. has traditionally had the highest income tax compliance rate in the world, and the smallest shadow economy—that is, people engaging in otherwise legal economic activity, but out of sight of the tax man and regulators.
But that's changing.
In recent years, the income tax compliance rate in the United States dipped to 83.1 percent. That's still high, compared to the United Kingdom at 77.97 percent or Switzerland at 77.7 percent, but the gap is closing.
The U.S. shadow economy has also traditionally been smaller than that of other countries. But last year, estimates that it had reached $2 trillion and might account for the country avoiding a return to recession made headlines.
<excerpt>
Why the sudden growth?
Schneider, the shadow economy expert mentioned in that CNBC story quoted above, remarks, "In almost all studies it has been found out, that the tax and social security contribution burdens are one of the main causes for the existence of the shadow economy." He adds, "The bigger the difference between the total cost of labor in the official economy and the after-tax earnings (from work), the greater is the incentive to avoid this difference and to work in the shadow economy."
<excerpt>
Cohn and his friends may not like to hear it, but the tax scofflaws who flee the high taxes he favors have already been credited with keeping America out of recession, and Spain functioning at all. Let's hear it for their scofflaw efforts.
It's basic economics that a tax increases the costs of producing, which in turn increases prices. This has the effect of reducing the quantity of the good or service supplied, which decreases our standard of living. This is called a "deadweight loss" in economics.
http://i629.photobucket.com/albums/uu20/KEG1984/d494a7fd74467664f5833216fd11a43e_zps7f0df567.jpg
But people, by and large, won't sit idly by while their standard of living is reduced by taxation. That is why we have underground economies, because they are how people defend their standard of living from taxation. I'm glad that more and more Americans are dodging taxes and transacting under the table. They are keeping production stable, which increases the supply of goods and services we can purchase at an affordable price. No civilization ever became prosperous because of taxation, so let's encourage more people to transact under the table. It's good for the economy.