Thursday, April 15, 2010

Tax Day: How much of our blood, sweat, and tears do they want?

From Practical Economics

In 2007, according to the Tax Foundation, the total of income being paid out by Americans
in all areas of taxation was 32.7%. That means approximately 33 cents out of every dollar you earn
goes to a government source. The following is a list of some other revenue generating sources
people do not always think of as being taxes.

· Capital gains tax: tax on profit from investing your capital.
· Automobile/boat registration fees: property tax on vehicles.
· Real estate fees: tax on property transactions/sale of a home.
· License fees: tax on a privilege-taxi cab driver or a beautician.
· Document fees: tax on contracts.
· Tolls: user tax on bridges/roads.
· Parking fees: tax to use public property.
· Gas tax: tax on drivers.
· Cigarettes tax: sin tax on an inelastic addictive good.
· Alcohol tax: sin tax on beer, wine, spirits.
· User fees: recreation tax-parks, boat ramps.
· Impact fees: tax on property to develop land.
· Tourist/bed taxes: tax on hotel guests or airport passengers.
· Utilities taxes: tax on power and water use.
· State lottery: tax on gamblers pathology.
· Inflation: the money you own loses value over time.

Two outcomes are a result of the government collection of vast sums of taxpayer dollars.
Number one, legislators can become consumed with the power gained by spending other peoples
money and thus be hungry for more. Two, the pool of this money has to go somewhere and this
creates huge incentives for people to act in ways outside of market forces to get a piece of the
government pie. The greed found in both of these cases is greed for power which is dangerous to

Frederic Bastiat, the French classical liberal economic theorist, had some insightful
thoughts in regard to the relationship between the taxpayer and the tax collector. “Everyone wants
to live at the expense of the state. They forget that the state wants to live at the expense of

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