Sunday, January 11, 2015

Income Taxes: If Auberon Only Knew The Half Of It...

"Each system of taxation has its own peculiar group of evils. To take but one example: Income taxes necessitate inquisition and odious interferences; they create a system of government spies; lead to action being taken very improperly and upon questionable guesses by officials whose one view is likely to be to increase their takings; under every imaginable system must be unequal in their incidence; cannot from their nature be decided in cases of dispute either in an open court or in a secret court without much annoyance to the taxpayer; strike all visible property more severely than the less visible forms, lead to much evasion and untruthfulness: become complicated to the last degree owing to the innumerable methods of earning income in modern life; involve metaphysical questions which recall the dialectics of the middle ages; tend to drive capital into risky employments outside the country; whenever much raised, are likely to cause the corruption of officials on whom the returns depend; are a standing menace, [owing to the ease—a mere stroke of the pen—with which they can be increased] to traders and owners of property; are infinitely hurtful to the small men, but tend to be unremunerative, as Leroy Beaulieu has so well shown, except when they are applied to the mass of small properties, since the larger properties, when singled out for attack, even if they do not disappear, are comparatively unfruitful as a field for taxation (thus defeating by a natural check the unwisdom and injustice of trying to make any special class supply the common compulsory fund); destroy the advantage of free trade, even in a country which allows imports to enter freely, since they raise the price of articles produced in an almost excessive degree, owing to the fact that each class of producers necessarily adds his own rate of profit to the tax that he himself pays, and to the tax paid by all those who have preceded him as manufacturers of the same article in the earlier stages of its manufacture—with the consequence that each product of the market that passes through the hands of several producers and distributors, pays the tax several times over before it becomes a finished article, as well as in each case the special rate of profit added to the tax by each producer and each distributor; are therefore unfair to traders who themselves pay income tax and may have to compete with traders in other countries not burdened with income tax (though, it should be said, probably burdened in other ways); and commit the capital crime of making property less desirable, and of weakening the public desire to save and invest." —Auberon Herbert

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