Why We Need Low Taxes

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Camden, NJ is closing its libraries. Aren’t libraries important? Why would the city close down its libraries?

Imagine if the headline read a little differently. “Social Security recipients to lose benefits.” “Medicare bankrupt, patients left in the cold.” “Food stamp program runs out of cash, the poor run out of food.”

Liberals, communists, and socialists love these social programs that are paid for by the taxpayers. However, they fail to realize where the money is coming from, and believe there is a magical endless supply to it. As economists have shown time and time again, there is no endless supply of money, and if you treat money that way very bad things happen.

Let me educate our liberal, communist, and socialist friends. There is nothing that is of value except labor. The only way you can create labor is to convince people to do it. Books won’t sort themselves onto the library shelves!

The best way to convince people to do labor is to persuade them to do it. Slavery and threats of violence work for a while, but lead to sub-standard labor and eventual revolt. The most valuable labor is created when people are happy to do it.

How can you convince people to labor? We have found the best way of all: Pay them for it. Some people need only a little money to work. Others need a whole lot of money—millions or even billions of dollars. In all cases, however, we must ensure that the labor we get is worth much more than the money spent. How do we ensure that?

The great thing is that you don’t have to do anything to ensure there is some sort of efficiency in the production of labor. Just let people spend their own money in the way they see fit, and earn their own money in the way they see fit. People are very creative, and will do things you can’t anticipate.

When government taxes and spends the money to hire people to do things they wouldn’t otherwise doing, they are interfering with this natural process of labor creation. A little bit of taxes, however, is quite tolerable, and the people will do what they normally do and take the hit. As taxes rise, people start figuring ways around the economic activity, and as they reach a certain point, the behavior stops altogether.

Now, let’s say your goal is to provide as many libraries as possible to as many people as possible. That means you’re going to need as much money as possible. Which level of taxes would lead to the most revenue?

  1. No taxes at all.
  2. Very light taxes that don’t make people rethink their economic plans.
  3. Medium-heavy taxes that make people obsess about how they will still make a living with the threat of taxes over their heads.
  4. Excessive taxes that punish and injure people for economic success.

Right now, we are living under 3 and all signs point to arriving at 4 shortly. The natural effect is that people stop behaving in sane economic ways. They stop producing labor because they don’t get paid for it, and they stop asking people to produce labor because they don’t want to spend on it. That’s why unemployment is going up and our economy is going down.

Presidents Reagan and Bush, and to some degree, President Clinton, tried to move from 3 to 2. Reagan and Bush were the most successful at this. As the economy realized that the taxes weren’t so bad and they didn’t have to worry about them too much, they started engaging in economic activity that was sane and responsible. People had jobs, and people had money.

Another interesting artifact that is indisputable is that tax revenue rose with a lower capital gains tax. That is, by lowering the tax rate, the amount of money that came in increased.

That’s a lot of libraries that could be built.

Lower taxes until they don’t even hurt anymore, and you will have all the money you want to build libraries and feed the poor. Raise taxes, and you won’t have enough money to keep your libraries open.

But you know what? When people have plenty of money, they are more than willing to share it. You will not even need taxes to build and maintain libraries if you have a hundred billionaires in town.

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