The LA Times ran an article entitled Can California survive 'no new taxes'?, and I thought it merited a comment. However, it turns out that they only accept comments of 650 CHARACTERS or less. Here's what I tried to post...
There are taxes and there are taxes. There are taxes which damage the
economy, and there are taxes which don't. Which taxes we choose does
matter.
As Henry George (1839-1897), the author of a (currently) much-neglected book on political economy, Progress & Poverty, put it:
Taxes that reduce the rewards of producers lessen the incentive to produce. Taxes based on the use of any of the three factors of production -- land, labor, or capital -- inevitably discourage production. Such taxes introduce artificial obstacles to the creation of wealth.
The method of taxation is, in fact, just as important as the amount. A small burden poorly placed may hinder a horse that could easily carry a much larger load properly adjusted. Similarly, taxes may impoverish people and destroy their power to produce wealth. Yet the same amount of taxes, if levied another way, could be borne with ease. A tax on date trees caused Egyptian farmers to cut down their trees; but twice the tax, imposed on land, had no such result.
Now, taxes on labor as it is exerted, on wealth as it is used as capital, or on land as it is developed will clearly discourage production -- much more than taxes levied on laborers whether they work or play, on wealth whether used productively or fruitlessly, or on land whether cultivated or left idle."
[That's from a recent abridgment of P&P, available online at http://www.henrygeorge.org/pcontents.htm)
California has performed the amazing feat of tying its own hands, via Proposition 13, and forcing itself into using the taxes which most burden the economy and the worker, while minimizing the effectiveness of the only tax which does not! They've managed to survive 30 years of this, and most have managed to look the other way, and look in every other corner for solutions, perhaps because the light was brighter in those corners.
What we tax matters greatly. When we tax that which we shouldn't tax, we get negative effects. And equally important and more ignored, when we fail to tax that which ought to be taxed -- what the classical economists called "LAND" -- we get very undesirable effects. We ignore their wisdom at our peril.
See http://lvtfan.typepad.com/ and http://www.answersanswers.com/ for more on the wisdom of the classical economists with regard to taxation, justice, efficiency and prosperity.
Get smart, California. It isn't too late. Tax the right things. Life will get better.
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