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  Quotations - Tax  
[Quote No.37927] Need Area: Money > Tax
"[Whether 'progressive' taxation is 'fair' is in the eye of the beholder. Here's an example of 'progressive' taxation, in 2011 in the US, where the wealthy pay more not only in dollars but in percentage of their incomes:] • The top 1% of U.S. taxpayers pay 38% of all individual federal taxes. The top 10% pay 70% of all taxes, the top 25% pay 86%, and the top 50% pay 97%. • That leaves the bottom 50% of all taxpayers paying only 3% of the total. • About half of Americans pay no federal income tax, and almost 25% pay no federal taxes at all. • The average federal income tax rate for the top 1% of Americans is 23% (and for the top half it's 14%), while the average rate for the bottom half is 3%." - Howard Marks
Quote from the article, 'It’s All Very Taxing', published on www.johnmauldin.com. November 16, 2011.
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[Quote No.38049] Need Area: Money > Tax
"By a continuing process of inflation [the government's 'hidden tax'], governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens." - John Maynard Keynes
British economist
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[Quote No.38215] Need Area: Money > Tax
"By a continuing process of inflation [a deliberate but unpublicised government policy of monetary inflation to reduce the real cost of private but especially government debt and increase government tax revenue by pushing more people into higher tax brackets within a progressive tax regime], government can confiscate [tax], secretly and unobserved, an important part of the wealth of their citizens [which is especially damaging to those who have prudently saved or those that live on fixed incomes, for example - the retired, unemployed or disabled]." - John Maynard Keynes
Economist
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[Quote No.38216] Need Area: Money > Tax
"I do not think it is an exaggeration to say history is largely a history of [the secret tax] inflation, usually inflations engineered by governments for the gain of governments. [Governments gain because inflation allows them to repay their debt with deflated currency and to increase tax revenues through 'bracket creep' which is a term that denotes more people moving into higher tax brackets in progressive tax regimes]." - Friedrich August von Hayek
Economist
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[Quote No.38526] Need Area: Money > Tax
"I am not going to let the most vulnerable suffer but I am not going to get into this class warfare business, where certain people are more important than others or deserve more attention than others [when proposing lowering tax rates by 10 percent for everyone, even the highest earners, in New Jersey, USA in 2012]." - Chris Christie
New Jersey Republican Governor. Quoted on 22nd February, 2012. [http://globaleconomicanalysis.blogspot.com.au/2012/02/chris-christie-to-warren-buffet-write.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+MishsGlobalEconomicTrendAnalysis+(Mish's+Global+Economic+Trend+Analysis) ]
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[Quote No.38527] Need Area: Money > Tax
"Now, some in this [political] chamber may want to return to the days of outrageous state spending growth. To gimmicky programs that take money out of the taxpayers right pocket, and have Trenton [the capital of the U.S. state of New Jersey] keep most of it. Then return far less of it in their left pocket, take a bow and call it tax relief. Now, New Jersey has seen 30 years of this as Trenton's solution to fix property taxes. It never has fixed a problem and it never will fix the problem. And New Jerseyans will not fall for the same old Trenton politicians' trick again. We know that the only way to ensure that Trenton politicians will not waste your money is to not send it to them in the first place. [The way to avoid more waste and mismanagement from government is to give them less tax revenues.]" - Chris Christie
New Jersey [US Republican] governor. Quote from February, 2012. [http://globaleconomicanalysis.blogspot.com.au/2012/02/chris-christie-to-warren-buffet-write.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+MishsGlobalEconomicTrendAnalysis+(Mish's+Global+Economic+Trend+Analysis) ]
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[Quote No.38583] Need Area: Money > Tax
"In general, the art of government consists of taking as much money as possible from one party of the citizens to give to another!" - Voltaire

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[Quote No.38585] Need Area: Money > Tax
"I predict future happiness for Americans [or any other country] if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." - Thomas Jefferson
(1743 - 1826), an American 'Founding Father' who was the principal author of the United States Declaration of Independence (1776) and the third President of the United States between 1801 and 1809.
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[Quote No.38589] Need Area: Money > Tax
"The government is good at one thing. It knows how to break your legs, and then hand you a crutch and say, 'See if it weren't for the government, you wouldn't be able to walk.'" - Harry Browne

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[Quote No.38726] Need Area: Money > Tax
"We are living in a sick society filled with people who would not directly steal from their neighbor but who are willing to demand that the government do it for them." - William L. Comer

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[Quote No.38761] Need Area: Money > Tax
"We still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping at the spoil of the multitude. Invention is continually exercised to furnish new pretenses for revenue and taxation. It watches prosperity as its prey and permits none to escape without a tribute." - Thomas Paine
'The Rights of Man', 1792.
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[Quote No.40329] Need Area: Money > Tax
"In the absence of the gold standard, there is no way to protect savings from confiscation through [the government's deliberate, secret tax, called] inflation. There is no safe store of value." - Alan Greenspan
Economist and Chairman of the US Federal Reserve.
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[Quote No.40331] Need Area: Money > Tax
"Christmas is the time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell government what they want and their kids pay for it. [They pay for it through the higher taxes they have, when they eventually go to work, in order to pay the interest and principal back for the money the government borrowed to meet the budget deficit, demanded by their parent's greed for more government spending than their government had from tax revenue. Deficits met by borrowing are just a way to borrow from the future and therefore from your kids and the next generation. Governments may even attempt to raise inflation and therefore interest rates as well on your children in the future due to deficits from the past. Keynesian economics recommends large deficit spending to increase aggregate demand with the hope that future growth will raise income and tax revenue so high as to make the deficits payable but this does not always happen as hoped and other unpleasant adjustments in the economy take place like massive inflation or share market crashes, etc. as a result]." - Richard Lamm

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[Quote No.40334] Need Area: Money > Tax
"[The following quote is about how the destruction of the Roman Empire through the taxation channel made people 'slaves,' in other words how serfdom emerged. This is always the danger from allowing government to become too big and powerful and therefore too needy for tax revenue and too intrusive into people's lives.] Rome had its socialist interlude under Diocletian. Faced with increasing poverty and restlessness among the masses, and with the imminent danger of barbarian invasion, he issued in A.D. 3 an edictum de pretiis, which denounced monopolists for keeping goods from the market to raise prices, and set maximum prices and wages for all important articles and services. Extensive public works were undertaken to put the unemployed to work, and food was distributed gratis, or at reduced prices, to the poor. The government – which already owned most mines, quarries, and salt deposits – brought nearly all major industries and guilds under detailed control. In every large town, the state became a powerful employer, standing head and shoulders above the private industrialists, who were in any case crushed by taxation. When businessmen predicted ruin, Diocletian explained that the barbarians were at the gate, and that individual liberty had to be shelved until collective liberty could be made secure. The socialism of Diocletian was a war economy, made possible by fear of foreign attack. Other factors equal, internal liberty varies inversely with external danger. The task of controlling men in economic detail proved too much for Diocletian's expanding, expensive, and corrupt bureaucracy. To support this officialdom – the army, the courts, public works, and the dole – taxation rose to such heights that people lost the incentive to work or earn, and an erosive contest began between lawyers finding devices to evade taxes and lawyers formulating laws to prevent evasion. Thousands of Romans, to escape the tax gatherer, fled over the frontiers to seek refuge among the barbarians. Seeking to check this elusive mobility and to facilitate regulation and taxation, the government issued decrees binding the peasant to his field and the worker to his shop until all their debts and taxes had been paid. In this and other ways medieval serfdom began." - Will and Ariel Durant
Famous historians. Quote from their book, 'The Lessons of History'.
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[Quote No.40404] Need Area: Money > Tax
"To take [tax] from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it." - Thomas Jefferson
(1743– 1826), American Founding Father who was the principal author of the United States Declaration of Independence (1776) and the third President of the United States (1801–1809). Quote from a letter to Joseph Milligan, April 6, 1816.
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[Quote No.40413] Need Area: Money > Tax
"It's time to stop stripping [taxing] bare the productive citizens of America and funneling their hard-earned income into the Federal bureaucracy." - Ronald Reagan
US President
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[Quote No.40414] Need Area: Money > Tax
"No private embezzlers or bank robbers in history have ever plundered people's savings on a scale comparable to the plunder perpetrated by the [tax and spend] fiscal policies of statist governments." - Ayn Rand

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[Quote No.40415] Need Area: Money > Tax
"Taxation of earnings from labor is on a par with forced labor [slavery]. Seizing the results of someone's labor is equivalent to seizing hours from him and directing him to carry on various activities. [Therefore there is no morally justifiable reason that it should be any more than the barest possible to meet the minimum needs of the group that they cannot provide for in any other way.]" - Robert Nozick
(1938 – 2002), American political philosopher, most prominent in the 1970s and 1980s. He was a professor at Harvard University. He is best known for his book 'Anarchy, State, and Utopia' (1974), a libertarian answer to John Rawls's 'A Theory of Justice' (1971). Harper's magazine, in reviewing 'Anarchy, State, and Utopia', stated ‘No contemporary philosopher possesses a more imaginative mind, broader interests, or greater dialectical abilities than Robert Nozick.’
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[Quote No.40416] Need Area: Money > Tax
"An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation." - John Marshall

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[Quote No.40417] Need Area: Money > Tax
"Why does a light tax increase cost you two hundred dollars and a substantial tax cut save you thirty cents?" - Peg Bracken

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[Quote No.40418] Need Area: Money > Tax
"From the earliest records of civilization, tax laws have taken away liberty more often than foreign invaders." - Charles Adams

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[Quote No.40717] Need Area: Money > Tax
"[Big, paternal government - communist, socialist, etc - tax and spend politicians and bureaucrats should remember this famous comment to his staff by Sir Ernest Rutherford, the father of nuclear physics,] Gentleman, we have run out of [other people's] money. It is time to start thinking." - Sir Ernest Rutherford
(1871 – 1937), New Zealand-British chemist and physicist who became known as the father of nuclear physics.
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[Quote No.40757] Need Area: Money > Tax
"Thank heavens we do not get all of the government that we are made to pay for [through our taxes. The average voter that asks for more government intervention, doesn't know enough economic history, because, even more dangerous and debilitating than a larger tax burden is a larger government with more responsibilities to the people. Economic theory and history has shown that government public service is much less efficient and effective than private service at meeting people's needs. Therefore the more responsibilities government takes on the less well the citizenry is served and the more money in taxes it costs them]." - Milton Friedman
winner Nobel Prize for Economics, 1976
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[Quote No.40801] Need Area: Money > Tax
"[Politicians and voters should remember that every cent that the government spends on a citizen has to be taken from another citizen] There’s No Such Thing As A Free Lunch [TNSTAAFL]. " - Milton Friedman
winner Nobel Prize for Economics, 1976
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[Quote No.40808] Need Area: Money > Tax
"You cannot help the poor by destroying the rich!" - Milton Friedman
winner Nobel Prize for Economics, 1976
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[Quote No.41073] Need Area: Money > Tax
"The essence of etatism [big, paternal, interventionist government] is to take from one group in order to give to another. The more it can take the more it can give. It is to the interest of those whom the government wishes to favor that their state become as large as possible… The system of discriminatory taxation universally accepted under the misleading name of progressive taxation of income and inheritance is not a mode of taxation. It is rather a mode of disguised expropriation [theft]… Nothing is more calculated to make a demagogue popular than a constantly reiterated demand for heavy taxes on the rich. Capital levies and high income taxes on the larger incomes are extraordinarily popular with the masses, who do not have to pay them." - Ludwig von Mises
[1881 – 1973], an Austrian-American economist, historian, philosopher, author, and classical liberal who had a significant influence on the modern free-market libertarian movement and the Austrian School of economics. Refer the website [ mises.org ].
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[Quote No.41123] Need Area: Money > Tax
"An essential point in the social philosophy of [big, paternal government] interventionism is the existence of an inexhaustible fund [of a less powerful political minority] which can be squeezed [taxed] forever [regardless of their equal human rights, which are creatively negated, diminished and dismissed as obviously less important]. The whole system of interventionism collapses when this fountain is drained off: The Santa Claus principle liquidates itself. [Like Margaret Thatcher said, ‘The problem with socialism is that eventually you run out of other people’s money’ to confiscate and spend on buying the votes and political support of a favored segment of the society in order to stay in power.] " - Ludwig von Mises
[1881 – 1973], an Austrian-American economist, historian, philosopher, author, and classical liberal who had a significant influence on the modern free-market libertarian movement and the Austrian School of economics. Refer the website [ mises.org ].
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[Quote No.41163] Need Area: Money > Tax
"[Big, paternal, interventionist] Government is the great fiction, through which everybody endeavors [by claiming to the government a special need and therefore] to live [better with government support] at the expense of everybody else [through their taxes]. " - Frederic Bastiat
French lawyer, politician and statesman.
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[Quote No.41165] Need Area: Money > Tax
"A democracy ...can only exist until a majority of voters discover that they can [vote in big spending politicians who don't worry about how they will have to pay for their promises and thereby] vote themselves largess out of the public treasury [necessitating borrowing and taxing, usually the minorities, more...which ultimately leads to inflation, high interest rates, government bankruptcy and the end of law and social order.]" - Alexander Tytler

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[Quote No.41167] Need Area: Money > Tax
"[Here is an article that gives a moral and historical perspective on progressive taxation. It is titled...] ‘The Progressive Income Tax and the Joy of Spending Other People’s Money’ - On August 31, 1910, Teddy Roosevelt traveled to Kansas to make a stirring speech in support of a federal income tax. ‘The really big fortune,’ Roosevelt said, ‘the swollen fortune by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes.’ Those two sentences helped focus the Progressive worldview. First, the United States needed an income tax to capture large chunks of revenue. Second, someone who had a large fortune, ‘by the mere fact of its size,’ had to be treated differently from other wealth holders. Property rights became variable. One group would be treated one way, other groups would be treated another way [i.e. unequal treatment before the law - discrimination by wealth even though they are equal in other respects and are buying the same services from the government. This needs to be studied to see if it really differs from other forms of discrimination which most civilized societies now see as immoral and therefore make it illegal, for example discrimination - by gender - sexism, by age - ageism, by race - racism, by nationality, by sexual orientation, by disability, by religion, etc.]. Third, the nation needed a ‘graduated income tax’ to redistribute wealth from the haves to the have-nots. The new tax slogan would be ‘ability to pay' [being the concept 'From each according to ability, to each according to need' developed by Karl Marx for communism, where the state's rights are more important than and therefore dominate any individual's rights including their 'inalienable rights of life, liberty and the pursuit of happiness']. Author Delos Kinsman, writing while Roosevelt was president, said, ‘Individuals should contribute to the support of the government according to ability.’ And ‘income is the most just measure of that ability.’ Enlightened leaders like Teddy Roosevelt would redistribute wealth in the national interest. Roosevelt’s thinking was a profound change from the views of the Founders. To them, government existed to protect property, not redistribute it. Americans had a right to pursue life, liberty, and property, not an entitlement to it. Thus the Founders never considered raising revenue through an income tax, least of all a graduated one. They wanted consumption taxes—levies on imports or on luxury goods. Why? Because, as Alexander Hamilton said in Federalist 21, ‘The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources.’ Hamilton added, ‘If duties are too high, they lessen the consumption; the collection is eluded; and the product in the treasury is not so great. . . . This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.’ American law also reinforced the use of consumption taxes. ‘All duties, imposts and excises shall be uniform throughout the United States,’ the Constitution reads. What could be more uniform than Congress’s first excise tax of seven cents a gallon on all whiskey produced in the United States? Not Good Enough: Progressives, however, disliked consumption taxes as the major source for revenue. They were too small, too cumbersome to collect, and sometimes too regressive—wealth never properly redistributed itself through consumption taxes. Taxes on whiskey, tobacco, and imported olives from Spain shifted very little, if any, wealth from rich to poor. In 1913 the House Ways and Means Committee observed that federal revenue rested ‘solely on consumption. The amount each citizen contributes is governed, not by his ability to pay taxes, but by his consumption of the articles needed.’ Swollen fortunes, as Roosevelt might say, went untaxed and became more swollen while some immigrants lived in poverty. The Sixteenth Amendment was ratified in 1913, giving Congress the ‘power to lay and collect taxes on incomes from whatever source derived.’ It did not rule out ‘ability to pay’ as the basis for the levy. The amendment became law just as Woodrow Wilson was coming into the presidency. As a Progressive, Wilson wanted to start small, establish a precedent, and then increase rates over time. Under the new tax law, exemptions were so high that few Americans earned enough to pay any tax. Rates started at 1 percent and rose slowly to a high of 7 percent on all income over $500,000. Progressives easily sold this tax plan to the voters. Fewer than one American family in 100 paid anything, but politicians could promise audiences that they might receive benefits from the revenue. And who would dare to suggest that billionaire John D. Rockefeller did not have the ability to pay 7 percent of his huge income to the government? Ability to Pay: Yet that raises an interesting question. At what tax rate did Rockefeller, or other wealthy men, cease to have the ability to pay? If they could pay 7 percent, could they pay 15? Apparently so, because in 1916 Wilson and Congress raised the top rate to 15 percent. Unlike with a consumption tax, under the income tax politicians judge ability to pay and they choose the rates they think rich people can afford. If politicians choose rates too high they may lose the support of the rich, but they may gain support of those larger groups receiving subsidies from the tax revenue. If wealth really needs to be redistributed, should we trust people to do it with their own money or politicians with other people’s money? Rockefeller, for example, was the best and cheapest oil refiner in the world. His charitable giving included the Erie Street Baptist Church, a cure for meningitis, and funding for Tuskegee Institute. That was how he redistributed his own wealth. Andrew Carnegie, the steel baron, built libraries, and banker Andrew Mellon built the National Gallery of Art in Washington, D.C. In the political realm, President Franklin Roosevelt supported high taxes and gave subsidies to silver miners, farmers, and the Tennessee Valley Authority to make cheap electric power. Charitable givers and politicians both pursue their self-interest, but the politician’s self-interest includes winning votes. That means, if possible, channeling subsidies to voting groups to win reelection at the expense of taxpayers in general. Rockefeller’s gifts to Tuskegee did not cost anyone but him any money. FDR’s subsidy to silver miners, by contrast, cost millions of taxpayers small amounts of tax revenue. It helped FDR carry several western states each time he ran for president. His redistribution efforts were essential to his being reelected. Thus U.S. politicians had incentives to steadily increase the income tax in the 1900s. The top rate went from 7 to 15 percent in Wilson’s first term. World War I took it over 60, then over 70 percent. It didn’t drop below 50 percent until 1924, and was about 25 percent the rest of the decade. The rate rose to 63 percent in 1932 under Herbert Hoover and then 79 percent in 1935. The World War II years pushed it over 80 percent, and in 1945, FDR’s last year in office, the top was 94 percent on all income over $200,000. Wealthy people apparently had a very high ability to pay, and politicians had a very high desire to fight wars and win elections." - Burton Folsom, Jr.
He is a professor of history at Hillsdale College and the Foundation for Economic Education's senior historian. He is the coauthor (with Anita Folsom) of ‘FDR Goes to War’ (Simon & Schuster) and blogs at www.BurtFolsom.com. Published in ‘The Freeman’, May 2011 (Volume: 61, Issue: 4) by the Foundation for Economic Education (FEE). [http://www.thefreemanonline.org/columns/our-economic-past/the-progressive-income-tax-and-the-joy-of-spending-other-people%E2%80%99s-money/ ]
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[Quote No.41171] Need Area: Money > Tax
"We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle." - Sir Winston Churchill
(1874-1965) Prime Minister of the United Kingdom. Quote from 1903.
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[Quote No.41172] Need Area: Money > Tax
"Eight decades of amendments... to (the US Tax) code have produced a virtually impenetrable maze... The rules are unintelligible to most citizens... The rules are equally mysterious to many government employees who are charged with administering and enforcing the law." - Shirley Peterson
Former IRS (Internal Revenue Service) Commissioner. Quoted 28th February, Citizens' Truth-In-Taxation Hearing, Washington D.C.
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[Quote No.41173] Need Area: Money > Tax
"When a new source of taxation is found it never means, in practice, that an old source is abandoned. It merely means that the politicians have two ways of milking the taxpayer where they had only one before." - H. L. Mencken
(1880-1956) American Journalist, Editor, Essayist, Linguist, Lexicographer, and Critic
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[Quote No.41174] Need Area: Money > Tax
"The question is not what anybody deserves. The question is who is to take on the God-like role of deciding what everybody else deserves. You can talk about 'social justice' all you want. But what death taxes boil down to is letting politicians take money from widows and orphans to pay for goodies that they will hand out to others, in order to buy votes to get re-elected. That is not social justice or any other kind of justice." - Thomas Sowell
(1930- ) Writer and economist
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[Quote No.41175] Need Area: Money > Tax
"It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder." - Frederic Bastiat
(1801-1850) French economist, statesman, and author. He did most of his writing during the years just before - and immediately following - the French Revolution of February 1848. He made this quote in his book, 'The Law', published 1848.
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[Quote No.41177] Need Area: Money > Tax
"No matter what anyone may say about making the rich and the corporations pay taxes, in the end they come out of the people who toil [namely the consumer of the corporations' products and services. So when a government campaigns on 'taking from the rich to give to the poor', while it may sound good especially to the poor, all it is really doing would be forcing business to increase prices, and thereby inflation, in order to collect the extra taxes from their customers, including the poor, to give it to the government, so that the government can give it to itself first in wages and staff and then to give the remainder to a selected minority of the population the government wants to support, or only be seen supporting, often to 'buy' their vote, so that government and it's politicians and bureaucrats can stay in power and keep their well-paid employment.]" - Calvin Coolidge
(1873-1933), 30th US President.
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[Quote No.41180] Need Area: Money > Tax
"I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom. And to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or [government] profusion and [public] servitude. If we run into such debt, as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our calling and our creeds as the people of England are, our people, like them, must come to [debt and tax slavery and] labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses; and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes; have no time to think, no means of calling our mis-managers to account but be glad to obtain subsistence by hiring ourselves to rivet [fasten] their chains on the necks of our fellow-sufferers. Our land-holders, too, like theirs, retaining indeed the title and stewardship of estates called theirs but held really in trust for the treasury [or a soverign or feudal lord], must wander, like theirs, in foreign countries, and be contented with penury, obscurity, exile, and the glory of the nation [and our political 'masters']. This example reads to us the salutary lesson, that private fortunes are destroyed by public as well as by private extravagances [spending beyond our means especially for pleasurable consumption rather than sensible production with a return on investment significantly above the cost]. And this is the tendency of all human governments [and therefore they should be kept as small as possible so their costs and spending - especially their fiscal deficit spending, can be kept as small as possible too]. A departure from principle in one instance becomes a precedent for the second; that second for a third; and so on, till the bulk of society is reduced to be mere automatons of [debt and tax] misery, to have no sensibilities left but for sinning and suffering. Then begins, indeed, the 'bellum omnium in omnia' [i.e 'the war of all against all'], which some philosophers observing to be so general in this world, have mistaken for the natural, instead of the abusive state of man. And the fore-horse [i.e. leading horse] of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression." - Thomas Jefferson
(1743-1826), US Founding Father, drafted the Declaration of Independence, 3rd US President. Quote from his letter to Samuel Kercheval, Monticello, July 12, 1816.
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[Quote No.41237] Need Area: Money > Tax
" ‘The End of the Age of Entitlement’... --Introduction: I wish to thank my friends at the Institute of Economic Affairs for the opportunity to discuss an issue that has been the source of much debate in this forum for some time....that is, the end of an era of popular universal entitlement. There is nothing much new in the debate other than the fact that action has now been forced on governments as a result of the recent financial crisis [referred to as the Great Recession in the USA and the Great Financial Crisis of 2007-9 elsewhere]. Years of warnings have been ignored but the reality can no longer be avoided. Despite an ageing population and a higher standard of living than that enjoyed by our children, western democracies in particular have been reluctant to wind back universal access to payments and entitlements from the state. As we have already witnessed, it is not popular to take entitlements away from millions of voters in countries with frequent elections. It is ironic that the entitlement system seems to be most obvious and prevalent in some of the most democratic societies. Most undemocratic nations are simply unable to afford the largesse of universal entitlement systems. So, ultimately the fiscal impact of popular programs must be brought to account no matter what the political values of the government are or how popular a spending program may be. Let me put it to you this way: The Age of Entitlement is over. We should not take this as cause for despair. It is our market based economies which have forced this change on unwilling participants. What we have seen is that the market is mandating policy changes that common sense and years of lectures from small government advocates have failed to achieve. And we have subsequently witnessed over the last twelve months a raging battle. This has been a battle between the fiscal reality of paying for what you spend, set against the expectation of majority public opinion that each generation will receive the same or increased support from the state than their forebears. The entitlements bestowed on tens of millions of people by successive governments, fuelled by short-term electoral cycles and the politics of outbidding your opponents is, in essence, undermining our ability to ensure democracy, fair representation and economic sustainability for future generations. Perhaps we could re-apply noted British philosopher, AC Grayling’s words on liberty to our debate by declaring that we may record that the age of entitlement might have passed its best point, ‘after so brief a period of flourishing...’ And flourish it did. Government spending on a range of social programs including education, health, housing, subsidised transport, social safety nets and retirement benefits has reached extraordinary levels as a percentage of GDP. However an inadequate level of revenue has forced nations into levels of indebtedness that, in an age of slowing growth and ageing population, are simply unsustainable. The social contract between government and its citizens needs to be urgently and significantly redefined. The reality is that we cannot have greater government services and more government involvement in our lives coupled with significantly lower taxation. As a community we need to redefine the responsibility of government and its citizens to provide for themselves, both during their working lives and into retirement. As part of this process, we must emphasise that government spending should be funded from revenue rather than by borrowing from future generations in whatever form that may take. --The Problem: Entitlement is a concept that corrodes the very heart of the process of free enterprise that drives our economies. All of us would agree that there are some basic community entitlements. For generations we have all sought to define those basic rights. For example, in the United States constitution the founding fathers determined that citizens are entitled to life, liberty and the pursuit of happiness. You will remember it was Margaret Thatcher who interpreted community entitlements as the right for our children to ‘grow tall and some taller than others if they have the ability in them to do so’. This broader and timeless conservative definition of our end game lays down some foundations for the role of government. Equality of opportunity rather than equality of outcome is my preferred model for contemporary society. Thankfully the modern capitalist economy is centred around the satisfaction of personal wants and needs. Commercial transactions are at the core of the system. And it is a simple and proven formula for willing buyers to engage with willing sellers. If we want a product or service we go and buy it with the dividend from the fruits of our own labour. The producer is happy and the customer is satisfied. The problem arises however when there is a belief that one person has a right to a good or service that someone else will pay for. It is this sense of entitlement that afflicts not only individuals but also entire societies. And governments are to blame for not portraying taxpayer’s money as something removed from the labour of another person. In our collective effort to win votes, political leaders deliberately portray a new spending commitment as if it is coming out of their own [the politician’s] personal bank account. Political leaders rarely thank taxpayers for their funding of the policy. To pay for all these good policy initiatives, governments have taken the easy option and borrowed money from that mysterious and amorphous group defined as ‘bondholders’. We all know this is simply a case of borrowing money from the taxpayers of tomorrow for spending initiatives of today. Of course I say with irony, it gets even better when some governments borrow more money to pay the interest on current debt so existing taxpayers and voters will never notice the pain. This is the public sector equivalent of those much maligned ponzi schemes. The sovereign debt problems we are seeing in Europe and the US today are the outcome of countries wanting a lifestyle they cannot afford but are quite happy to borrow from others to pay for. Of course in recent months in some countries in Europe the ‘borrowings’ have turned into permanent transfers of wealth as those countries have become unable – or unwilling – to repay the loans. Richer countries are either writing off the debt of poorer countries or they are subsidising the debt repayments with sophisticated transfer payments. As a parent I want to give my children everything they wish for. As a democratically elected legislator I want to give my constituents everything they wish for. The hardest task in life is to say NO to someone you care about. So perhaps what we are witnessing is a chronic failure of the democratic process. A weak government tends to give its citizens everything they wish for. A strong government has the will to say NO! Being profligate is easy and politically popular in the short term, particularly when the political cost of raising sufficient revenue is avoided by resorting to debt. But painless revenue makes for reckless spending. Whether it is defence, law and order, income support, social programs and so on, the outcome is the same. Eventually the piper has to be paid. Since World War 2 western communities have enjoyed prosperity that has exceeded all expectations. This has been fuelled by innovation, materialism, globalisation, free trade and debt. Of course these are not malevolent developments. Rather they are the lauded natural outcomes of a free and successful society. Moreover these initiatives, which have fuelled a massive improvement in global economic productivity, have driven the age of prosperity. Arguably this has delivered the most dramatic improvement in the material quality of life since the beginning of humanity. In effect the rapid rise in private prosperity has been matched with demands for an equal improvement in state provided prosperity. This is understandable. We all want the best available health care, the best education, the best pharmaceuticals and so on. The difference is that the handbrake on private demand is income. Unless a consumer can borrow money, it is their income and wealth which determines whether they can buy a new television or renovate the family home. But for governments with seemingly unlimited capacity to borrow money, that handbrake on expenditure is not real. While the Keynesian model of Government-led stimulus during the inevitable downturns in the economic cycle is well documented, governments who have turned on the fiscal tap seem completely incapable of turning it off when the cycle turns upwards. So we have witnessed a continual over-commitment in many countries, funded by the lure of cheap and easily obtainable debt. It is a problem which is not new. We might think by now we would have learnt the lessons. But clearly that is not the case. --A Tale of Two Systems: In September last year I travelled to Hong Kong – a city of 7 million - which sits at the edge of the Pearl River Delta – home to over 100 million additional residents. As a Special Administrative Region, Hong Kong is now serving as a conduit between China and its global trading partners, particularly those with business directly to the north. So even though its destiny has changed, Hong Kong continues to maintain its own currency, laws and Parliament but is now totally wed at the hip to Beijing. Without a social safety net, Hong Kong offers its citizens a top personal income tax rate of 17% and corporate tax rates of 16.5%. Unemployment is a low 3.4%, inflation 4.7% and the growth rate still respectable at over 4%. Government debt is moderate and although there is still poverty, the family unit is very much intact and social welfare is largely unknown. The system there is that you work hard, your parents look after the kids, you look after your grandkids and you save as you work for 40 years to fund your retirement. The society is focussed on making sure people can look after themselves well into old age. The concept of filial piety, from the Confucian classic Xiao Jing, is thriving today right across Asia. It is also the very best and most enduring guide for community and social infrastructure. The Hong Kong experience is not unusual in Asia. Characteristics such as low inflation, low unemployment, modest government debt, minimal unfunded benefits and entitlements, and significant growth are powering a whole range of emerging markets and developing an Asian middle class that will grow to some two and a half billion people by 2030. The sense of government entitlement in these countries is low. You get what you work for. Your tax payments are not excessive and there is an enormous incentive to work harder and earn more if you want to. By western standards this highly constrained public safety net may, at times, seem brutal. But it works and it is financially sustainable. Contrast this with what we find in Europe, the UK and the USA. All of them have enormous entitlement systems spanning education, health, income support, retirement benefits, unemployment benefits and so on. Some countries are more generous than others and in many instances the recipients of the largest amount of unfunded entitlements are former employees of the Government. In all these areas people are enjoying benefits which are not paid for by them, but paid for by someone else – either the taxes of those who are working and producing income, or future generations who are going to be left to pay the debt used to pay for these services. Despite tax rates much higher than in Hong Kong, government revenue in these economies still falls well short of meeting current government spending initiatives. The difference is made up by the public sector borrowing money. And more often than not we are borrowing money from people such as the citizens of Hong Kong. You would have to say that this is a flawed formula. For western democracies the party is over. Our most deeply exposed western economies can no longer continue to accumulate debt without constraint. The ongoing credit crisis in Europe seems a very long way from resolution. Ultimately, spending on entitlements becomes a structural problem for fiscal policy. In the United States for example, the excess of government expenditure over receipts is enormous. The Government has $15 trillion of Federal gross debt and it’s going up by $1.5 trillion a year because expenditure is $6.2 trillion a year and receipts $4.8 trillion. Obviously with interest rates at near zero levels the cost of debt is limited but sooner or later it must end in tears. So why is it that western nations are so deeply indebted and so tragically unfunded when it comes to meeting their future obligations in the face of an ageing demographic and longer life expectancies? Both sides of the western political spectrum are to blame. As the electoral pendulum has swung between socialist and conservative sides of politics, the socialist governments, often winning electoral success thanks to the funding from unions, have created a huge array of entitlements for selected classes of individuals, particularly and ironically employees of government and members of unions. These entitlements have now begun to hang like a millstone around the neck of governments, mortgaging the economic future of many Western nations and their enterprises for generations to come. I will give you a classic example. In Boston USA, there’s a certain former police captain who retired aged 55 some 20 years ago after a 32 year career on the force. During that period he managed to contribute some $73,000 to his defined benefit pension plan, a plan which gives you a percentage of your salary for life when you retire. On retirement he started receiving 100% of his retirement salary, namely $55,000. He is now 75, which means he has collected some $1.1 million in benefits. And it looks like he’ll live until he’s at least 90 or even older, so that’s almost another $1.0 million over 15 years. It’s more than he earned in 32 years and he contributed just $73,000 to help pay for it. Either taxpayers pay the bill or the government has to borrow to pay for the entitlement. When the electoral pendulum swings, conservative governments have come in promising to fix the problem but in most instances have just trimmed around the edges without addressing the real problem of the growing entitlement burden. And the greatest Catch 22 of modern democratic politics is that socialist governments are blindly wedded to increases in expenditure while conservative governments are blindly wedded to not increasing taxes. So once the cycle of economic growth comes to its inevitable end, the problem is exacerbated. Perhaps the real problem is the exuberant excesses of politicians who do not seem to understand or care about the fact that like a household, a nation needs to balance its budget over time and needs to make sure it can cover its future commitments. This has already reached dangerous levels with some OECD countries like France spending close to 30% of their GDP on public social expenditure. Other countries get by with much less. Korea only spends 10% of GDP on public social expenditure with Australia at 16% of GDP, the USA at 20% and the United Kingdom at 23%. The bottom line is that our communities need to make a tough decision. We cannot choose both higher entitlements and lower taxes. We must make a decision one way or the other. We can take more and more of our citizen’s money and spend it for them, or we can take less of it and rationalise government services. But it is a decision that must be made ...and soon. This challenge is compounding in scale as an ageing population in many industrialised countries is making even further demands on the entitlement system. Europe for example, has the highest proportion of over 60s of any region in the world. And while 22% of the population in Europe is currently over 60, this number is forecast to rise to 35% by 2050. Plans for the future of Europe have assumed strong economic growth, but it is highly uncertain how growth will be achieved as the fiscal burden associated with rising health and aged care costs, as well as a generous pension scheme, continues to grow. According to a study commissioned by the European Central Bank, 19 EU countries had almost 30 trillion Euros of unfunded entitlement obligations for their existing populations. Of this 30 trillion Euros, France has liabilities of 6.7 trillion and Germany 7.6 trillion. These liabilities will continue to grow without significant reform. And, by the way, I don’t see how a debate in France about lowering the retirement age from 62 to 60 will help address these challenges. A lower level of entitlement means countries are free to allow business and individuals to be successful. It reduces taxation, meaning individuals spend less of their time working for the state, and more of their time working for themselves and their family. An economy that impedes individual ambition – whether through higher taxation, the lack of opportunity in employment, or restricted social mobility – is one that enforces the barriers of class, rather than reduces them. Governments should ensure that the actions they take will leave their citizens better off because, naturally, that will reduce the desire for ‘entitlements’. The role of government must be to help people to the starting line, while accepting that some will then run faster than others. Everyone should know that they grow up in a country where it is possible, through hard work and diligence, to achieve their dreams. Naturally the Americans call this the American Dream, but it is similarly played out across the globe, including in emerging economies in Asia. --The Australian Experience: As the child of a father who came to Australia in 1948 as a refugee from Palestine and built himself into a successful businessman, I know that being successful in Australia is not the product of belonging to rich and prosperous families, but rather is the result of hard work and diligence. In fact those stories are most often repeated in countries without extreme interventionist governments. For example, over 80 per cent of the millionaires in the United States are the first generation in their family to be millionaires. But Australia has had its fair share of irresponsible governments. In 1996 the incoming conservative government inherited a budget in a weakened state. The previous Labor administration had racked up a succession of budget deficits and $96bn of net debt, about 17% of GDP. (I know that figure is not large by the current experience of most countries in Europe, but trust me, the repayment task was a challenge.) It took nine years of budget surpluses and asset sales to repay the debt. That is three election cycles in Australia. It took another two years of hard fiscal rectitude to build up a stock of net assets equivalent to 4% of GDP. In total that is a long period of sustained fiscal austerity. Australia has not completely avoided the problems of other western democracies because it still has a lot of spending by government which many voters see as their entitlement. However, over the years there have been a number of key decisions to reduce spending to manageable levels. Australia has sought to reduce the burden on government of providing aged pensions through a compulsory system of savings for retirement. Retirees must rely first on the benefits they have accumulated rather than on government income support. And retirement benefits to government employees and politicians are no longer provided on a defined benefit basis but on a contributions basis so they only get back the principal and earnings on what they have put in. The government is also gradually raising the age at which government benefits can be accessed, from 60 to 67 for women and from 65 to 67 for men from 1 July 2023. Most importantly, the net government assets of $45 billion arduously built up by the previous conservative government were set aside into a Future Fund. The funds cannot be touched by the government for everyday expenditure. Rather, the fund can only be accessed to pay for the previously unfunded entitlements of federal public servants so as to reduce the burden on taxpayers. That was an initiative of great foresight. It is, if you like, Australia’s sovereign wealth fund with the explicit purpose of boosting the sustainability of the budget through time. --The Road Back: So where do we go from here? There is really only one solution in the long term, and that is for countries to live within their means. We must rebuild fiscal discipline. Budget surpluses must be restored, ideally until the debt is repaid. This can only be achieved by cutting spending or by raising taxes. And given the general acceptance that the increased drag from higher taxes would compromise economic growth, the clear mandate is to lower expenditure. This is lovely rhetoric but to actually do it needs some very harsh political and social decisions. To be bold, I have some suggestions. The first is that people need to work longer before they access retirement benefits. When the age pension was introduced in Australia at age 65, life expectancy was 55. Today life expectancy is in the 80’s. So you can understand how I was shocked to hear that one of the policy promises of one of the main French Presidential Election candidates, François Hollande, is to bring the official retirement age back down to 60 from 62. Second, there have to be universal compulsory retirement schemes into which employees and employers must contribute so that after a man or woman has worked for 40 or more years they have set aside an amount that can provide them with a reasonable income for a further 15-20 years at least. Defined benefit schemes need to be phased out worldwide, including in Australia, whether they are for public servants or private sector employees. In addition, all government funded pensions and other such payments must be means tested so that people who do not need them do not get them. Third, there needs to be clear thinking about which services should be provided by governments and whether government funded services should be entirely free or have some affordable co payment. Many will argue that certain government services should be free and universal but the problem with any free good is that it will be overconsumed and underappreciated. For example, in Australia, health services are partly funded through compulsory levies, paid either to the government or to private health insurers. Across the Western world we have saddled our nations and our children with a debt burden that is simply unsustainable. It is time for strong political and economic leadership to clean up this mess properly, not with a series of band aids and political spin but with genuine economic and social reform. The age of unlimited and unfunded entitlement to government services and income support is over. It’s as over in Greece as it is in Italy, in Spain, and in the USA. There also needs to be a rethinking of government borrowing. Some might argue that some low level of debt is not a bad thing. I believe that is a dangerous proposition. Once some level of debt is accepted it becomes too tempting to opt for just a little more. Pretty soon a little debt becomes a big problem. Also, there is a significant cost to servicing debt. Even in Australia, where net debt as a percentage of GDP is lower than in Europe, interest costs on net debt are approaching $7 billion a year. That is enough to build 7 new teaching hospitals every year. The message is that every dollar of debt has an opportunity cost. Another aspect of the problem is that credit is no longer easily accessible for the private sector or the public sector. And the credit market no longer automatically favours the public sector. Ironically more and more sovereigns are seen as a greater credit risk than many international companies. I would think the experience of the past few years has been something of a reality check. Lenders now know that even today advanced western economies can default on their debts. In today’s global financial system it is the financial markets, both domestic and international, which impose fiscal discipline on countries. A country which is viewed as approaching its safe limit for debt will find it increasingly difficult to borrow additional funds at an affordable rate. Eventually the capital markets will close. We are now in an era where lenders are much more wary about credit risk. I view this as a healthy development. Lenders have a more active role to play in policing public policy and ensuring that countries do not exceed their capacity to service and repay debt. This is playing out most dramatically in Europe where the European Commission and the European Central Bank are either directly or indirectly heavily influencing public policy in Greece, Italy, Spain and Portugal to name a few. It is also worth noting that the system of regulation of banks and other deposit taking institutions is artificially boosting demand for sovereign credits with mandated liquidity requirements generally emphasising a prominent role for government securities. Governments have been too prepared to exploit the resultant lower borrowing costs. And whilst securities issued by sovereigns have traditionally been viewed as the safest and most liquid assets, I am not sure that it is still the view of investors in Europe today. --Concluding Comments: The road back to fiscal sustainability will not be easy. It will involve reducing the provision of so called ‘free’ government services to those who feel they are entitled to receive them. It will involve reducing government spending to be lower than government revenue for a long time. It is likely to result in a lowering of the standard of living for whole societies as they learn to live within their means. The political challenge will be to convince the electorate of the need for fiscal pain and to ensure that the burden is equally shared. Already in the UK and parts of Europe we have seen the social unrest that can result when fiscal austerity bites. But the alternative is unthinkable. The Western world cannot continue on its current path of borrowing to fund its excessive lifestyle. The problem of fiscal sustainability will only get worse. Eventually lenders will cry enough is enough and turn off the credit tap. And when that happens the economic, financial, social and political dislocations are likely to be catastrophic. The Western world is at the most important economic cross road in its history – Governments must accept their responsibilities to fiscal discipline and the prudent use of their citizens hard earned monies, or they need to accept that the demise of western economies will be forced upon them in a dramatic, unpredictable and possibly violent way. Adam Smith’s free hand is perfectly capable of forming a fist to punish nations who ignore the fundamental rules. Unfortunately I think Adam’s down at the gym right now and in training for one almighty whack. Restoring fiscal credibility will be hard. But it is essential we learn to live within our means. The Age of Entitlement should never have been allowed to become a fiscal nightmare. But now that it has, Governments around the world must reign in their excesses and learn to live within their means. All of our futures depend on it." - Joe Hockey
(1965 - ), banking and finance lawyer, Australian Liberal Party politician, Australian Shadow Treasurer. Quote from his speech notes for an address to the Institute of Economic Affairs, London, 17 April, 2012, entitled ‘The End of the Age of Entitlement’.
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[Quote No.41238] Need Area: Money > Tax
"The tax-free middle class [Australian middle class welfare and the entitlement mentality]: Here’s a tax trivia question that should focus the policy minds, and moral compasses, of Kevin Rudd [Australian Labor Party] and Malcolm Turnbull [Australian Liberal Party]: how many families receive more in handouts from the federal Government than they pay in income tax? The answer - 42.2 per cent - should shock because it covers every family on the bottom four rungs of the nation's income ladder and a fair portion of those on the fifth. A carefully targeted tax and handout system, in theory, should reduce welfare dependency as affluence spreads. Australia, however, operates on the reverse principle. The ranks of the income tax-free club had been steady for most of the 1990s. Paul Keating's Labor government left the figure at about 38 per cent in 1996 and John Howard [of the Australian Liberal Party] kept it there for the first two terms of the Coalition government. The tax-free club began to welcome new members only after the China-led resources boom, and the virtuous circle of lower unemployment, began to bless the budget with windfall revenue. That is, the Coalition and then Labor made a conscious decision to extend the welfare net during a boom. The dividing line between net income taxpayer and net recipient has been sneaking up with each budget, and each election campaign, since 2004, even though wages and private wealth soared and unemployment tumbled in that period. The tax-free club contained 39.3 per cent of all families in January 2004; by 2006-07 the share had risen to 41.6 per cent. Now it is a record 42.2 per cent. On present trends, we may cross 50 per cent by the Prime Minister's self-appointed date with destiny for reforms, 2020. If that occurs, middle-class welfare will come to mean [lower and] middle Australia paying no net tax. Surely there is a smarter way to run the country? Inquirer has undertaken a detailed analysis of the tax and handout system, using data commissioned from the Melbourne Institute of Applied Economic and Social Research, to help set the reform hurdles for the tax debate. Our tables have been cross-checked in Canberra and go much further than the discussion paper issued by the Treasury last month because they tell a political story as well as an economic one. The number that stunned those who did the modelling is the size of the tax-free club (excluding GST, excise and state taxes). An extra 276,000 families moved from the position of net income taxpayers to net beneficiaries during the past four years. Almost half this rise (132,000) is explained by the household most able to look after itself: a couple with dependent children. Yet, although many families are better off than they were an election or two ago, [tax] bracket creep remains an insidious problem and leads to a form of double churn. The first churn is the one couples with children are already familiar with. The main breadwinner - usually dad - pays tax, which comes back to the household as a family payment, usually in mum's name. The second churn emerged on [Australian Labor Party member and Australian Treasurer] Wayne Swan's watch. Full-time working fathers lost ground to bracket creep, which was returned as a personal tax cut for part-time working mothers. Labor's opening budget saw taxpayers moving in both directions. Lower-income and part-time workers dropped from the 30c to the 15c tax band, while upper-middle earners crossed from the 30c to the 40c rate. Fancy that; we can still identify losers despite all the money thrown at the electorate. Tax reform poses a different set of challenges to the previous episodes when governments were looking to plug holes in the revenue base. This time, there is more than enough cash to play with. It is the policy choices Labor and Coalition [of the Australian Liberal Party and the National Party of Australia] make on how the surplus is to be spent that will determine whether the tax and handout system remains viable into the next decade: when, remember, the economy will start to run out of workers [as more people come to retirement age 65], and the budget will surely run out of new taxpayers to milk. Drill beneath the headline and you can see the tax-free club is carrying too many members. The definition of family is a deliberately wide one. It covers every conceivable income unit, namely couples with dependent children, single parents, singles and childless couples and the elderly. Single parents are the likeliest to be tax free. Four in five (79.7 per cent) receive more in handouts than they pay in income tax. It is hard to argue against such as result because these are among the most vulnerable families in Australia today. Almost half (44 per cent) of all singles and couples without dependent children are also income tax free. This group includes the aged and the unemployed. Again, no controversy. It is the couple family with dependent children that looks out of place in the tax-free club. Take a step back and recall what happened to the politically ubiquitous working family during the past decade. The proportion with both parents employed increased from 54.5 per cent in 1997 to 59.9 per cent last year. The proportion of jobless families - where both parents were out of work - fell from 8.6 per cent to 4.8 per cent during the same period. Oh, and the home ownership rate also rose, despite talk of an affordability crisis, from 78.3 per cent in 1996 to 79.6 per cent in 2006. Against these undoubted boosts to living standards, governments, both Coalition and Labor, decided it wasn't nearly enough. The proportion of couples with dependent children who are tax free jumped from one in five (20.1 per cent) in 2004 to one in four (26.3per cent) in the present financial year. Do the maths: there are more working families in work and with mortgages, but the share that became tax free increased by more. Politicians have gambled, foolishly, on a never-ending boom by distributing the spoils to the winners. The debate on tax reform that Rudd and Turnbull seem eager to have must confront the gorilla in the room. Money that could have been better spent on [productive]public infrastructure or reducing the personal tax burden has been wasted on handouts to people too far up the income ladder. No matter which benchmark you apply, couples with dependent children do not leap off the page as the families most in need of assistance. But they have been first in the handout queue. Now that the prosperity party appears to be over, the challenge for the Rudd [Labor] Government and the Turnbull [Liberal National coalition] Opposition is to readjust the public's expectations down. Australia may be better placed to weather the ‘global financial crisis’, as Rudd calls it, because our banking system is not as dodgy as the US's and our budget is in surplus. Yet we suffer the same delusion that brought the US economy to its knees. Our companies and our citizens have been sent phony price signals by government: that low interest rates are a measure of national vitality, that debt is the birthright of businessmen and battlers alike, and that voters are encouraged to ask for more each year [from government without increasing taxes on all but the so called ‘very rich’ or ‘business’]. Today, the tax and handout system is more complex than punitive. It collects more revenue than it needs to, and both sides have preferred to return the surplus to those who don't need it, in part because they fear the alternative: telling working families the best way to look after them is to make sure the budget still works for the economy a decade from now. Churn is, on one level, a necessary price to pay to make the tax and handout systems fit together. Taxes are levied on individuals; handouts are delivered to families. But the rise of middle-class welfare, and the piecemeal nature of the previous government's tax cuts, conditioned the electorate to discount the cheques that were written for them. There was always someone who missed out. Not because they got nothing but because their bribe wasn't as big as their neighbour's. [Australian Liberal Party member and ex-Australian Treasurer] Peter Costello's memoir contains an intriguing chapter titled Bringing Home the Bacon. While he complains at the margin that [Australian Liberal Party leader and Australian Prime Minister John] Howard wouldn't let him cut tax by a greater amount, he is clearly pleased with the Coalition's legacy. The former treasurer recites the value of his tax cuts like an old rock star totting up the smash hits. ‘The four-year cost of the tax cuts announced in the 2003 budget amounted to $10.7 billion; in 2004, $14.7 billion; in 2005, $21.7 billion; in 2006, $36.7 billion; and in 2007, $31.5 billion,’ Costello writes. There was another tax cut offered in the 2007 election ($34 billion over three years), but voters bought Labor's slimmed-down version ($30.8 billion) instead. ‘It is all very well to say in 2003 we had $100 billion available for tax cuts over the period to 2011,’ Costello explains. ‘In 2003 we did not. No one knew where things would be five, six, seven or eight years later.’ Reading between the lines, the frustration is obvious. Despite the $100 billion handed back, voters proved impossible to please. More telling, the tax cuts, big though they seemed, weren't enough to deliver a permanent step down in the personal tax burden. Costello effectively abolished the top rate. In 2003-04, 16.6 per cent of taxpayers had been caught on the top rate, paying 47c in every dollar they earned above $62,500. Another 10.3 per cent were in the 42c marginal band. The tax system was broken then because workers on average earnings of about $50,000 were being pushed from 30c to 42c, and those on a little above average earnings were confronting a top rate of 47c. Today, only 1.5 per cent of taxpayers face the top rate of 45c on every dollar above $180,000. Translated into real people, that's almost 1.5 million taxpayers who were pulled down from the top rate to the 40c or 30c bands. But that pushed bracket creep to the lower half of the income ladder as part-time and lower-income workers were forced from the bottom rate of 15c to the 30c rate meant for average earners. Costello didn't get around to addressing that particular issue until 2006, when he borrowed from Labor's tax-cutting manual to favour the bottom end. The Melbourne Institute found almost one million people were liberated from the 30c band to 15c band between 2006-07 and 2008-09, a reform of which Costello and Swan can claim joint authorship. Yet bracket creep has popped out again, this time between the 30c and 40c marginal tax rates. The number who were forced to 40c is relatively small, at a little more than 100,000 since 2006-07. But on present trends it will swell towards 300,000 or possibly more by the next election. These people vote, of course, and a Labor regime won't want to let them down. In this simple transaction, the problem of the tax and handout system becomes clear. Judging by recent history, the threshold for the 30c rate will be the next Band-Aid to be applied. Labor can continue betting the surplus will still be there, as the former government did, and deal with the aggrieved one bloc at a time, or aim for a breakthrough reform that ends the annual handout contest between voters. The paradox, given the state of the world economy, is that Rudd and Swan [of the Australian Labor Party, respectively Australian Prime Minister and Treasurer] may need to devote most, if not all, of the surplus to the reform task. A more rational tax and handout system that reduces churn and its associated deadweight cost in red tape, unfortunately, has to be bought with bribes. Voters won't accept less take-home pay in the name of simplicity. Bear in mind, this is only a fraction of the challenge. Labor has on its tax-reform plate components such as emissions trading, federal-state relations, including property taxes, company and capital taxes and superannuation. Each one must connect to a bigger story about the future." - George Megalogenis
Journalist. Quote from ‘The Australian’ newspaper, September 20, 2008. [http://www.theaustralian.com.au/news/features/the-tax-free-middle-class/story-e6frg6z6-1111117533336 ]
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[Quote No.41249] Need Area: Money > Tax
"The funds that a government spends for whatever purposes are levied by taxation. And taxes are paid because the taxpayers are afraid of offering resistance to the tax gatherers. They know that any disobedience or resistance is hopeless. As long as this is the state of affairs, the government is able to collect the money that it wants to spend. Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees... Those who are asking for more government interference [and therefore more taxes] are asking ultimately for more compulsion and less freedom." - Ludwig von Mises
Economist. From his book, 'Human Action', 1949.
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[Quote No.41305] Need Area: Money > Tax
"At the start of the 1900's government at all levels [Federal, state, local, etc] in America claimed about 5 percent of personal income. A hundred years later it takes more than 40 percent — up by a factor of eight." - Lawrence W. Reed
President of the Foundation for Economic Education. Quote from the article, 'An Open Letter to Statists Everywhere', in the 'Freeman' magazine, December 2000. [http://www.thefreemanonline.org/columns/ideas-and-consequences/an-open-letter-to-statists-everywhere-2/ ]
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[Quote No.41317] Need Area: Money > Tax
"The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant or pine for something they can’t get, and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is a sort of advance auction sale of stolen goods." - H.L. Mencken

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[Quote No.41319] Need Area: Money > Tax
"The most absurd public opinion polls are those on taxes. Now, if there is one thing we know about taxes, it is that people do not want to pay them. If they wanted to pay them, there would be no need for taxes. People would gladly figure out how much of their money the government deserves and send it in. And yet we routinely hear about opinion polls that reveal that the public likes the tax level as it is and might even like it higher. Next they will tell us that the public thinks the crime rate is too low, or that the American people would really like to be in more auto accidents." - Lew Rockwell
Quote from his book, 'Speaking of Liberty', p. 281.
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[Quote No.41371] Need Area: Money > Tax
"[Thinking through taxation and its purposes is challenging. Some think it is right. Some don’t. Some think it is not high enough – at least for others, hardly ever for themselves – and they are always free to give the government more than ‘requested’ if they wanted it higher. Some think it is too high. Some think progressive rates are fair. Others think flat rates would be fairer. Some like the author quoted below consider a large portion of it, because it is not a free choice, like theft but by the government, which then redistributes what is left over, after its own take for wages and other expenses, to the people the government wants to keep happy, in a similar way to the illegal actions of a gang ‘offering protection’ to people and businesses in a neighbourhood. In the interests of allowing the reader, with unalienable freedom, to weigh the merits of the points this author makes and so to at least start to give the issues around taxation and its purposes greater thought and debate, which must surely be a good thing, the following long quote is presented.] ... ---To steal or not to steal: As a means of specifically verifying my impression about the basic, intuitive morality of persons, I would pose this test of three questions: --1. Would you steal your neighbor’s cow to provide for your present needs? Would you steal it for any need reasonably within your expectation or comprehension? It should be remembered that, instead of stealing his cow, you may explore with your neighbor the possible solution to your case of need; you might arrange to do some sort of work for him, or to borrow from him for later repayment, or perhaps even plead with him for an outright gift. --2. Would you steal your neighbor’s cow to provide for a known case of another neighbor’s need? --3. Would you try to induce a third party to do the stealing of the cow, to be given to this needy neighbor? And do you believe that you would likely succeed in inducing him to engage in the theft? I believe that the almost universal answer to all these questions would be: ‘No.’ Yet the facts of the case are that all of us are participating in theft every day. How? By supporting the actions of the collective agent which does the stealing as part of the welfare state program, already far advanced in the United States. By this device, Peter is robbed to ‘benefit’ Paul, with the acquiescence if not the active support of all of us as taxpayers and citizens. We not only participate in the stealing — and share in the division of the loot — but as its victims we also meekly submit to the thievery. Isn’t it a strange thing that if you select any three fundamentally moral persons and combine them into a collective for the doing of good, they are liable at once to become three immoral persons in their collective activities? The moral principles with which they seem to be intuitively endowed are somehow lost in the confusing processes of the collective. None of the three would steal the cow from one of his fellow members as an individual, but collectively they all steal cows from each other. The reason is, I believe, that the welfare state — a confusing collective device which is believed by many to be moral and righteous — has been falsely labeled. This false label has caused the belief that the welfare state can do no wrong, that it cannot commit immoral acts, especially if those acts are approved or tolerated by more than half of the people, ‘democratically.’ This sidetracking of moral conduct is like the belief of an earlier day: The king can do no wrong. In its place we have now substituted this belief: The majority can do no wrong. It is as though one were to assert that a sheep which has been killed by a pack of wolves is not really dead, provided that more than half of the wolves have participated in the killing. All these excuses for immoral conduct are, of course, nonsense… Thievery is thievery, whether done by one person alone or by many in a pack — or by one who has been selected by the members of the pack as their agent. ---‘Thou shalt not steal, except ...’ It seems that wherever the welfare state is involved, the moral precept ‘Thou shalt not steal’ becomes altered to say: ‘Thou shalt not steal, except for what thou deemest to be a worthy cause, where thou thinkest that thou canst use the loot for a better purpose than would the victim of the theft.’ And the precept about covetousness, under the administration of the welfare state, seems to become: ‘Thou shalt not covet, except what thou wouldst have from thy neighbor who owns it.’ … ---In a hurry to do good: Herein lies the principal moral and economic danger facing us in these critical times: Many of us, albeit with good intentions but in a hurry to do good because of the urgency of the occasion, have become victims of moral schizophrenia. While we are good and righteous persons in our conduct in our home community and in our basic moral code, we have become thieves and coveters in the collective activities of the welfare state in which we participate and which many of us extol. Typical of our times is what usually happens when there is a major catastrophe, destroying private property or injuring many persons. The news circulates, and generates widespread sympathy for the victims. So what is done about it? Through the mechanisms of the collective, the good intentions take the form of reaching into the other fellow’s pocket for the money with which to make a gift…[True morality would say]… ‘Reach into your own pocket — not into your neighbor’s pocket — to finance your acts of compassion; good cannot be done with the loot that comes from theft.’ The pickpocket, in other words, is a thief even though he puts the proceeds in the collection box on Sunday, or uses it to buy bread for the poor. Being an involuntary Good Samaritan is a contradiction in terms. When thievery is resorted to for the means with which to do good, compassion is killed. Those who would do good with the loot then lose their capacity for self-reliance, the same as a thief’s self-reliance atrophies rapidly when he subsists on food that is stolen. And those who are repeatedly robbed of their property simultaneously lose their capacity for compassion. The chronic victims of robbery are under great temptation to join the gang and share in the loot. They come to feel that the voluntary way of life will no longer suffice for needs; that to subsist, they must rob and be robbed. They abhor violence, of course, but approve of robbing by ‘peaceful means.’ It is this peculiar immoral distinction which many try to draw between the welfare state of Russia and that of Britain: The Russian brand of violence, they believe, is bad; that of Britain, good. This version of an altered Commandment would be: ‘Thou shalt not steal, except from non-resisting victims.’ Under the welfare state, this process of theft has spread from its use in alleviating catastrophe, to anticipating catastrophe, to conjuring up catastrophe, to the ‘need’ for luxuries for those who have them not… Forgotten, it seems, by many who so much admire Christ is the fact that he did not resort to theft [force, the threat of force or fraud] in acquiring the means of his material benefactions. Nor did he advocate theft for any purpose — even for those uses most dear to his beliefs. ---Progress of moral decay: …And what about the effectiveness of a crime investigation conducted under a welfare state government? We may question the presumed capability of such a government — as distinct from certain investigators who are admittedly moral individuals — to judge these moral issues. We may also question the wisdom of bothering to investigate the picayune amounts of private gambling, willingly engaged in by the participants with their own money, when untold billions are being taken from the people repeatedly by the investigating agent to finance its own immoral program. This is a certain loss, not even a gamble. Once a right to collective looting has been substituted for the right of each person to have whatever he has produced, it is not at all surprising to find the official dispensers deciding that it is right for them to loot the loot — for a ‘worthy’ purpose, of course. Then we have the loot used by the insiders to buy votes so that they may stay in power; we have political pork barrels and lobbying for the contents; we have political patronage for political loyalty — even for loyalty to immoral conduct; we have deep freezers and mink coats given to political or personal favorites, and bribes for the opportunity to do privileged business with those who hold and dispense the loot. Why not? If it is right to loot, it is also right to loot the loot. If the latter is wrong, so also is the former. If we are to accept Lord Acton’s axiom about the corrupting effect of power — and also the reasoning of Professor Hayek in his book ‘The Road to Serfdom’ about why the worst get to the top in a welfare state — then corruption and low moral standards in high political places should not be surprising. But when the citizens come more and more to laugh and joke about it, rather than to remove the crown of power and dismantle the throne, a nation is well on its way to moral rot, reminiscent of the fall of the Roman Empire and others. Nor should we be surprised that there is some juvenile delinquency where adult delinquency is so rampant, and where the absence of any basic moral code among adults precludes even the possibility of their effectively teaching a moral code that will prevent delinquency in the young. If, as adults, we practice collective thievery through the welfare state, and advocate it as right and good, how can we question the logic of the youths who likewise form gangs and rob the candy store? If demonstration is the best teacher, we adults must start with the practice of morality ourselves, rather than hiring some presumed specialist to study the causes of similar conduct among the youngsters; their conduct is the symptom, not the disease. Thievery and covetousness will persist and grow, and the basic morals of ourselves, our children, and our children’s children will continue to deteriorate unless we destroy the virus of immorality that is embedded in the concept of the welfare state; unless we come to understand how the moral code of individual conduct must apply also to collective conduct, because the collective is composed solely of individuals. Moral individual conduct cannot persist in the face of collective immorality under the welfare state program. One side or the other of the double standard of morals will have to be surrendered. ---APPENDIX: The Welfare State Idea: The concept of the welfare state appears in our everyday life in the form of a long list of labels and programs such as: Social Security; parity or fair prices; reasonable profits; the living wage; the TVA, MVA, CVA; federal aid to states, to education, to bankrupt corporations; and so on. But all these names and details of the welfare state program tend only to obscure its essential nature. They are well-sounding labels for a laudable objective — the relief of distressing need, prevention of starvation, and the like. But how best are starvation and distress to be prevented? It is well, too, that prices, profits, and wages be fair and equitable. But what is to be the test of fairness and equity? Laudable objectives alone do not assure the success of any program; a fair appraisal of the program must include an analysis of the means of its attainment. The welfare state is a name that has been substituted as a more acceptable one for communism-socialism wherever, as in the United States, these names are in general disrepute. The welfare state plan, viewed in full bloom of completeness [as in communism], is one where the state prohibits the individual from having any right of choice in the conditions and place of his work; it takes ownership of the product of his labor; it prohibits private property. All these are done ostensibly to help those whose rights have been taken over by the welfare state. But these characteristics of controlled employment and confiscation of income are not those used in promotion of the idea of the welfare state. What are usually advertised, instead, are the ‘benefits’ of the welfare state — the grants of food and housing and whatnot — which the state ‘gives’ to the people. But all these ‘benefits’ are merely the other side of the forfeited rights to choose one’s own occupation and to keep whatever one is able to produce. In the same sense that the welfare state grants benefits, the slave-master grants to his slaves certain allotments of food and other economic goods. In fact, slavery might be described as just another form of welfare state, because of its likeness in restrictions and ‘benefits.’ Yet the state, as such, produces nothing with which to supply these ‘benefits.’ Persons produce everything which the welfare state takes, before it gives some back as ‘benefits’; but in the process, the bureaucracy takes its cut. Only by thus confiscating what persons have produced can the welfare state ‘satisfy the needs of the people.’ So, the necessary and essential idea of the welfare state is to control the economic actions of the vassals of the state, to take from producers what they produce, and to prevent their ever being able to attain economic independence from the state and from their fellow men through ownership of property. To whatever extent an individual is still allowed freedom in any of these respects while living under a government like the present one in the United States, then to that extent the development of the program of the welfare state is as yet not fully completed. Or perhaps it is an instance of a temporary grant of freedom by the welfare state such as when a master allows his slave a day off from work to spend as he likes; but the person who is permitted some freedom by the welfare state is still a vassal of that state just as a slave is still a slave on his day off from work." - F.A. Harper
F.A. ‘Baldy’ Harper was the founder of the Institute for Humane Studies. This article originally appeared in volume 1 of Essays on Liberty, published in 1952 by The Foundation for Economic Education in Irvington-on-Hudson, New York. Reprinted December 2000 & January 2001 as ‘Morals and the Welfare State’, Part 3 & 4. [http://www.fff.org/freedom/1200f.asp & http://www.fff.org/freedom/0101g.asp ]
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[Quote No.41379] Need Area: Money > Tax
"In discussing the many issues around taxation, I have often been asked whether a modern society could even exist without taxation. There is at least one very good book that discusses what a society without taxation could look like. The book is called, ‘The Market for Liberty’, and it is written by Linda and Morris Tannehill. I found it on Amazon.com but it is available at many places on the internet. It can even be found free at some sites. So all that is required for those that are interested in the debate about taxation is a little effort to find it and then some time to read or listen to it and digest its ideas." - Ben O'Grady
Founder and Chief Executive Officer of www.imagi-natives.com [The book, ‘The Market For Liberty’, by Linda and Morris Tannehill, is available at http://www.amazon.com/The-Market-Liberty-Morris-Tannehill/dp/0930073088 and as a free podcast at http://www.podiobooks.com/title/the-market-for-liberty/feed ]
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[Quote No.41415] Need Area: Money > Tax
"[Government takes money, mostly as taxes, from society and then spends it. It is notoriously a very inefficient spender - usually involving more people and forms than necessary and costing more than comparably sized private service providers. Why is this?] Nobody spends somebody else's money as carefully as he spends his own. Nobody uses somebody else's resources as carefully as he uses his own." - Milton Friedman
Famous American economist, who in 1976 won the Nobel Prize for Economics.
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[Quote No.41416] Need Area: Money > Tax
"Theft is theft even when the government approves of the thievery. Turning a democracy into a kleptocracy does not enhance the stature of the thieves, it only diminishes the legitimacy of the government." - Justice Janice Rogers Brown

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[Quote No.41421] Need Area: Money > Tax
"Taxation of earnings from labor is on a par with forced labor. Seizing the results of someone's labor is equivalent to seizing hours from him and directing him to carry on various activities." - Robert Nozick
Harvard philosopher and author.
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[Quote No.41422] Need Area: Money > Tax
"I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle." - Winston Churchill

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[Quote No.41423] Need Area: Money > Tax
"Beating the Pinata: In Latin-American culture, the beating of a piñata began as a religious activity, but, today, it is more secular and generally takes place at celebrations. The general idea is that someone (usually a child) is blindfolded and given a stick, then spun around several times to disorient him. He then begins swinging the stick in the air, trying to locate the piñata, which is suspended overhead. Once he finds it, he beats it until it breaks open, spilling out goodies - sometimes candy, sometimes toys, coins, or food. In concept, this is much like taxation, with the rich being the piñata. --Taxation Seems Reasonable: Throughout the world today, governments pay for their existence mostly by way of taxation. On the surface of it, this isn't an especially unreasonable concept. Candidates are elected to take charge of the government, and they then need to be paid to do their jobs. Taxes are also intended to pay for the programmes that government representatives come up with. Unfortunately, a common trend in politics is that once someone has been elected to office, he wants to remain there, often for the remainder of his working life. Once someone has become a career politician, it is a logical step for him to realise that the more he can tax the population, the more goodies he can get for himself. After all, he is in a position to be able to increase his own salary and benefits. Additionally, he may be tempted to siphon off a portion of funds intended for government programmes as they pass through his control. The difficulty for politicians who increase taxes is that, if they increase taxes on the majority of the people, the people may not vote them back in. Consequently, politicians find that they are more likely to be re-elected if they create or increase taxes that only apply to a minority of the electorate. Whenever the middle- to lower- income taxpayers outnumber the more wealthy (which is, of course, most often the case), politicians tend to propose higher taxes on 'the rich'. The reason this is a safe bet is that the rich are in the minority and therefore do not have the power (on their own) to vote such politicians out of office. Hence, most developed countries not only tax the rich more heavily than others, but also create and maintain a 'tax the rich' mentality amongst the electorate. Today, most every country that regards itself as a democracy has a 'tax the rich' consciousness, and those who are not 'rich' generally support the concept. As George Bernard Shaw said, 'A government that robs Peter to pay Paul can always depend upon the support of Paul.' --But Excessive Taxation of the Rich is Not Necessarily Reasonable: And why not tax the rich? After all, the rich have more, so why shouldn't they give more? Well, there are two reasons why not. The first is that the concept is inherently unjust. As Thomas Jefferson is said to have argued, 'A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.' The second reason why the rich should not automatically pay more is that they may possibly be taxed to the point that they choose to opt out of the system. As Maggie Thatcher said, 'The trouble with socialism is that, eventually, you run out of other people's money.' Of course, who 'the rich' are has never been accurately defined. Is it the top 5% of earners? The top 10%? Politicians avoid such questions; they prefer to keep it vague. After all, if they got specific, many of them would qualify as being amongst 'the rich'. And of course, one of the best aspects of taxing the rich, from the politician's point of view, is that they can't really do anything about it. The rich are, by their very nature, generally speaking, very responsible citizens. They are easily tracked down and will generally prefer to pay a higher tax than to be imprisoned. Consequently, there is much to gain and little to lose for a politician if he proposes further taxes on the rich. --The rich are much like a piñata: -Those who are gathered around the piñata know that it contains goodies and they would like to get some share of those goodies. -They are unconcerned as to whether the piñata is destroyed, as long as the goodies are forthcoming soon. -Someone is elected, who beats the piñata repeatedly, knocking the goodies out. -This person wears a blindfold, so, although he knows what his objective is, he cannot actually see the results of his actions. -The more he beats the piñata, the more goodies fall out. But, beyond this point, public opinion would diverge as to the comparison of the piñata and the rich. Those who wish to be receivers of the government largesse would argue that the process is endless, as the rich will always have plenty of money. But those who are more productive and choose to sustain themselves through their own efforts will take a different view. ...The fact is, the rich do, in most cases, have an ability to opt out. Historically, this does not take place through violent means, such as revolution. Rather, it is by quiet means - by exiting the jurisdiction if it becomes too oppressive... [and then the society enters a slow death as the over-taxed move themselves, their businesses and capital elsewhere. Employment, along with the taxation revenue of government, falls and before long everyone that is left is paying much higher taxes and receiving much less government services and living standards fall. It is therefore always a danger to 'bleed' the 'Golden Geese' too much so that they feel it is worthwhile to fly away and take their golden eggs with them. It is something all politicians and voters should consider carefully as many other countries want the productive business know-how, employment opportunities and wealth these people have and they continually offer them sweetheart deals to entice them to move.]" - Jeff Thomas
Published April 30, 2012, in 'International Man Daily Communique'. [www.internationalman.com ]
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Imagi-Natives'
Self-Defence
& Fitness Training

because
Everyone deserves
to be
Healthy and Safe!
Ideal for Anyone's Personal Protection Needs
Simple, Fast, Effective!
Maximum Safety - Minimum Force
No Punches, Kicks, Chokes, Pressure Points or Weapons Used
Based on Shaolin Chin-Na Seize and Control Methods
Comprehensively Covers Over 130 Types of Attack
Lavishly Illustrated With Over 1300 illustrations
Accredited Training for Australian Security Qualifications
National Quality Council Approved