Freedomlaw.com References on Taxation Issues

References on Taxation Issues

If Only the US Were as Free as Hong Kong: "Direct government spending is less than 15 percent of national income in Hong Kong versus 40 percent in the United States. Indirect government spending via regulations and mandates on private individuals and businesses is negligible in Hong Kong but accounts for around 10 percent of national income in the United States." [Nobel-winner Milton Friedman]

The Numbers Tell the Story: Economic Freedom Spurs Growth: "Chile, Portugal, Pakistan, and Mauritius, the four less-developed countries that became significantly freer, grew much more rapidly than the four less-developed nations--Honduras, Iran, Nicaragua, and Venezuela--that greatly raised government involvement. ... These new estimates provide persuasive evidence that economic freedom is essential for economic growth. Countries suffer unnecessarily because their energies and imagination are not allowed to flower in a free environment." Nobel-winner Gary Becker. Another interesting article on the same topic from Cato Institute.

Revolution in a Small Country: "New Zealand's Revolution -- and that's what people there call it -- turned the country around. The income tax rate was cut from 66% to 33%, inheritance taxes were abolished, and import duties (very important in a country that has to import almost all manufactured goods) slashed. Subsidies were eliminated. Huge government enterprises that lost millions of dollars every year were sold off to private owners. Regulations were eliminated, and competition was allowed in areas where competition had never been known." Liberty Magazine. If this link breaks, go to their main web page and find the March 1997 issue.

Chile's Success Story:"Previously, the employer/employee wage tax in Chile was 60-70 percent of wages— obviously a major taxation. This was reduced to 20 percent. In changing the tax structure, corporate tax was reduced. So corporations could save, and the money was not taxed if it was invested rather than spent." James M. Buchanan Institute. [Sep99. Sorry, link is dead.]

Flat Tax Alternatives: "Hong Kong's celebrated flat tax system is really a 15 percent alternative maximum tax. The vast majority of Hong Kong residents opt voluntarily to short-circuit the complexities of the normal tax system and pay the simple flat tax instead." Cato Institute.

How To Think About Taxes: "The family first pays taxes on their own income (perhaps their wages). That is tax one. They save some of that after-tax income in the form of corporate equities. But the corporation pays corporate taxes (on behalf of the family as a shareholder). That is a second tax. Then the family pays taxes again when it receives dividends or capital gains ... That is a third tax on the saving. If the family is fortunate enough to accumulate, even at a few thousand dollars a year compounded over a lifetime, enough to leave a taxable estate, the saving is taxed a fourth time." Michael Boskin, Hoover Institute. Chairman of the Presidents Council of Economic Advisers (CEA) from 1989 to 1993.

The Hidden Burden of Taxation: How the Government Reduces Take-Home Pay. "One of the most confounding economic trends in the United States during the past 20 years has been the relative stagnation of workers' real wages. One of the primary reasons for flat wages is that taxes and other government mandates on employers have been expanding steadily, crowding out worker take-home pay." Cato Institute.

How Excessive Government Killed Ancient Rome: "The fall of Rome was fundamentally due to economic deterioration resulting from excessive taxation, inflation, and over-regulation. Higher and higher taxes failed to raise additional revenues because wealthier taxpayers could evade such taxes while the middle class--and its taxpaying capacity--were exterminated." Cato Institute.

The ABCs of the Capital Gains Tax "The capital gains tax is so economically inefficient--because of its punitive effect on entrepreneurship, thrift, and investment--that the optimal economic policy for the United States would be to abolish the tax entirely. ... 'You're looking at a poor man who thinks the capital gains tax cut is the best thing that could happen to this country, because that's when the work will come back. People say capital gains are for the rich, but I've never been hired by a poor man.' --New Jersey painting contractor." Cato Institute.

Tax Rates, Tax Revenues and Economic Growth: "In the presence of high tax rates, people increasingly conduct their economic activities in the 'underground,' 'black market' or 'informal' sector of the economy - where they escape official scrutiny and costly government regulations as well as high taxes.... The worst possible tax system is one which imposes very high marginal tax rates and collects very little revenue. The high marginal tax rates wreak havoc on the private sector economy, and if tax collections are low government gets very little benefit in return for the harm it causes." National Center for Policy Analysis

National Sales Tax: The Economic and Civil Liberties Case For Replacing US Income Tax. "There are two points of general bipartisan agreement on the defects of the U.S. tax code. First, the U.S. tax system reduces economic growth through punitive tax rates on savings and investment. Second, the needless complexity of the tax code imposes large costs on American businesses and workers." Cato Institute

Creating The Zero-Tax State: Why Oregon should replace taxes with user fees. "The shift from coercive taxation to voluntary user fees would place Oregonians back in control of their own spending, and force government and private service providers to improve the quality and cost-effectiveness of their services." Cascade Policy Institute.

Flat Tax or Sales Tax? A Win-Win Choice for America: "The tax laws undermine the country's prosperity by imposing needlessly harsh penalties on work, savings, and investment. Although many taxpayers face confiscatory tax rates and often are forced to pay more than one layer of tax on their income, the politically well-connected can take advantage of special deductions, credits, preferences, shelters, and loopholes to minimize their own tax liability. The result of this double standard is a tax system that not only penalizes productive behavior, but also violates the fundamental constitutional principle of equal treatment under the law." Heritage Foundation.

The Broken Window Fallacy: "A young hoodlum heaves a brick through the window of a baker's shop. ... the misfortune has its bright side. It will make business for some glazier... The glazier will have $250 more to spend with other merchants, and these in turn will have $250 more to spend with still other merchants, and so on ad infinitum. ... the little hoodlum who threw the brick, far from being a public menace, was a public benefactor." An excerpt from the classic little book, Economics In One Lesson by Henry Hazlitt.