[Gathnet] Important general principle

[Stuart D. Gathman]

There is a very simple economic principle that applies to any taxing authority:

 	If you tax something, you get less of it;
 	if you subsidize something, you get more of it.

This is not just a free market principle, it applies unavoidably whenever
there is any choice involved on the part of the taxed (i.e. any degree
of socialism less than abject slavery).

Why is it important?

Well, suppose a politician proposes to "tax the rich".  If implemented, this
policy will mean fewer "rich" people (however "rich" is defined according to
the tax law in question).  I suppose this could be a good thing if your goal is
for everyone to be poor.

Suppose the policy is to subsidize illegitimate children (US Federal welfare
programs).  Voila, illegitimacy among the (predominantly black) target
population for Federal welfare has skyrocketed since the subsidy began,
resulting in an overall increase in black illegitimacy from 15% to 70%.
[http://www.lewrockwell.com/williams-w/w-williams44.html]  I suppose
this could be a good thing if you regard traditional marriage as an evil tool
of patriarchal oppression.

Our politicians understand this perfectly well.  We enacted taxes on
tobacco for the express purpose of reducing smoking (of course, it
was stupid to expect the tobacco tax revenue to do anything but go
down).

So keep this principle in mind whenever taxes are discussed.

-- 
 	      Stuart D. Gathman <stuart at bmsi.com>
Business Management Systems Inc.  Phone: 703 591-0911 Fax: 703 591-6154
"Confutatis maledictis, flamis acribus addictis" - background song for
a Microsoft sponsored "Where do you want to go from here?" commercial.