High Taxation? Taxes reduce the payoff to entrepreneurship, investment, and work effort. If taxation is too heavy, these disincentives will weaken a nation’s economy. But at what point does the harmful impact kick in? And how large is it? Below are the effects of high taxation;
INADEQUATE INCOMES
The total outcome of all of the effects listed below is a large tax burden. And only workers feel the brunt of this burden, because only workers create wealth. When all of these effects are combined, the tax burden on the average worker is currently about 73 percent of income. So people can’t live on their incomes.
LOW WAGES
Multiple governments levy so many taxes on businesses that “taxes” is the highest budget items on the ledger sheets of most businesses. These taxes take away some of the money otherwise used to pay wages. So employers can’t pay good wages. High taxation is very bad.
HIGH PRICES
Multiple governments levy so many taxes on businesses that “taxes” is the highest budget items on the ledger sheets of most businesses. Businesses have to raise prices to get money to pay these taxes. So product prices go up. This leads to inflation.
ALSO READ: Obesity And Its Health Complications…
SHODDY PRODUCTS
Multiple governments levy so many taxes on businesses that “taxes” is the highest budget items on the ledger sheets of most businesses. These taxes take away money otherwise used to improve quality. Instead, businesses must cut corners to make the products and pay the high taxes. Many recalls are the results of businesses cutting too many corners, to save money so they can pay the high taxes.
PRODUCT UNAVAILABILITY AND DISCONTINUATION
Because high taxes cost businesses more, they can’t provide as many products as they used to be able to. Property taxes make it expensive to stock products with lower quantities demanded. And manufacturers can’t afford to produce the low-demand products and also pay their taxes. The result is that people with allergies to the mainstream products can’t buy any products they can use.
LOST JOBS
Many businesses go bankrupt, because they can’t afford to operate after government takes its cut. Other businesses flee the country, to escape the high taxes. And still other businesses must cut their payrolls to stay within their incomes. The result in each case is the loss of jobs those businesses provided in the economy. High taxation effect.
FORECLOSURES, EVICTIONS, AND HOMELESSNESS
Because taxes are so high, people who originally entered into mortgages or rental contracts with the ability to pay them now no longer have the money to pay the monthly payments. Landlords also can’t pay their taxes and their mortgages, causing the loss of the rental units.
And if the taxes are not paid instead, government quickly seizes the property and sells it at auction at a sheriff sale. Thus, high taxes cause foreclosures and evictions.With the foreclosure or eviction comes homelessness, because these victims of government greed can no longer afford to pay rent or mortgage payments. So high taxes cause homelessness. High taxation.
POVERTY AND HIGH CRIME
Because more people can’t afford to live on their incomes, the poverty rate goes up. This causes an additional drain on the budgets of government social programs. This means that each poor person can’t get enough to live on.Many poor people, unable to find jobs because government overtaxed the economy, turn to crime to get the money needed to support their families. This causes the crime rate to go up. And since many of those crimes are robberies, the violent crime rate goes up too.
CHRONIC RECESSION
The high taxation takes so much away from the economy that it enters a permanent form of recession. If government tries to boost the economy with increased government spending, the result is stagflation (simultaneous high inflation and unemployment) instead of prosperity. The only cure for stagflation is to cut both taxes and government spending. But this takes time to happen, keeping the effects of overtaxation in place for a time after the overtaxation ends.
LOW REAL TAX REVENUES
The permanent recession and losses of jobs caused by the high taxes cause a drop in government revenue, as economic production drops. If government then raises tax rates to recoup the lost revenue, production drops again, and the revenue drops even more. In addition to this, the increase in prices caused by the increased taxation prevents government spending from purchasing as much.
So high tax rates cause lower real tax revenue collection. Government causes its own revenue shortages by wanting more money than it should have – a victim of its own greedy ways. The size of government is naturally limited by the size of the economy around it. Attempts to make government larger than this limit cause economic trouble. High taxation.
1 comment