October 12, 2007

Read my lips: Stop raising taxes

The last few days have not brought good news for greedy, tax-haters like me. On Wednesday, Chicago Mayor Richard Daley proposed a $293-million tax increase, one of the highest in the city’s history. Meanwhile, Democrats in the House of Representatives are set to introduce a $1-trillion tax bill.

The case for high (or at least higher) taxes is simple, and you see it made every day. The argument is that more government programs—programs that help people, help the environment, or do any number of wonderful things—are good. The implied, though rarely explicit, argument is that the government knows how to spend money better than the people who earn it.

The case for low taxes is also simple: greed.

Well, that’s how the argument is portrayed in the media, at least by Democrats. Some people (read: liberals) seem to believe that the only objection to taxes is that the money-grubbing rich should be able to keep more of their already extravagant income. This is simultaneously true and not true. Yes, those of us who support small government and low taxes do so because we like people to keep more of what they earn—freedom for its own sake is important—but it’s not that simple either.

Taxes are a necessary evil, some argue, and I would agree. But the real question, I suppose, is: How necessary and how evil must they be? Taxes should be as low as possible because of their unintended consequences and because they, by definition, detract from liberty. Among these unintended consequences is the fact that the higher the taxes, the less people are motivated to work. This might not be intuitive at first, but think about it this way: Would you work more during the school year being paid $8 an hour or $10 an hour? Most people would say $10, just because they’re getting, if you pardon me, more buck for their bang. And that’s what taxes do, quite simply: lower the ratio of how much you get paid compared to how much you work.

Well, someone might say, lessening Americans’ workload isn’t a bad thing—we work too much anyway! There’s obviously not a perfect way to determine whether we work too much, but I would submit that happiness is one measure. If Americans aren’t happy, maybe overwork contributes to this. This hypothesis, however, does not hold up under scrutiny. According to the 2002 International Social Survey Programme, 56 percent of Americans reported being “completely happy” or “very happy” with their lives; on the other hand, only 44 percent of Danes, 35 percent of the French, and 31 percent of Germans felt similarly. Europeans work far less than Americans, so these differences might be surprising to those who think work and despair go hand in hand. Certainly, there are other, non-work–related, factors that might make Americans happy; it’s possible that we’re satisfied with our lives in spite of our work, not because of it. But this possibility is unlikely to be the case, especially considering that in 2002, of American adults who worked 10 or more hours a week, the General Social Survey reported that 89 percent claimed to be very or somewhat satisfied with their jobs.

Now that we’ve dismissed the nonexistent downside of hard work (sadness), let’s look at its upside. First and foremost, there’s the obvious benefit of a good economy, which hard work breeds. Hard work also means technological advances for society. It probably even means increased happiness because people have a better sense of purpose in life.

No one wants to cut his favorite government program, or the program for starving children, or for curing AIDS in Africa. And certainly some government programs are important for society. But each state bureaucracy comes with higher taxes, and with higher taxes come unintended consequences and, worse yet, a loss of freedom.