Taxation – Dark Side of Economics #2

This post contains the second video in my economics dark side video series. The video focuses on taxation. The video explains what taxes are and why they are deemed necessary by the Government. The video looks at who benefits from taxes and if taxation is fair.

Here is a quick clip from the video

https://www.facebook.com/SpectrumEconomics/videos/1501705719876324/

Taxation is something that is accepted as part of life. Benjamin Franklin is quoted as saying “In this world nothing can be said to be certain, except death and taxes”.

It is this mentality that has allowed Governments to impose tax at will with minimal resistance from the people. Tax money is taken from the people without consent and used without permission. It could be considered a legalised form of theft. HighImpactFlix has many videos discussing and explaining the exploitative use of the tax system.

Taxation has the claimed benefit of providing essential funding for much needed infrastructure such as roads, hospitals, schools, dams, power plants. Build solutions are very popular with most Governments. Unfortunately, infrastructure build solutions are very expensive and often only provide temporary solutions whilst creating other problems. Build solutions are also profitable for the private sector. Consultants earn large sums of money from engineering, financial, environmental, and economic services. Construction companies make even more money constructing the projects.

Income tax is claimed to be essential for redistribution of wealth from the higher income earners to the low income or non-income earners through ‘Progressive taxation’. In reality, the highest income earners generally pay a lower percentage of tax than middle income earners and there are still many low and non-income earners without homes or basic necessities. This tax money is clearly not helping them.

Cost benefit analysis (CBA) is typically used to support and justify Government expenditure. CBA can be a useful tool but it is often incomplete and assumptions are skewed in favour of the project and often in favour of the highest cost option. Negative impacts and externalities are rarely analysed or discussed in detail.

So how do the Government convince us not to resist paying tax? As mentioned earlier, tax is treated as a way of life. Government also uses tactics such as fear mongering. Claiming money is needed to defend the country from deemed hostile countries. Claiming money is needed for more police, more prisons, and more surveillance. Government like to present the idea that they are giving their money (tax dollars) almost like a gift to the people. Spending more money is advertised as a type of generosity.

So who ultimately benefits from taxation? Large corporations earn significant profits from Government investment. Governments acquire greater spending power and influence with the help of tax dollars. Unfortunately, the people (average tax payers) have less money to spend, need to work longer hours to make ends meet, encounter and need to endure problems created by the Government from the spending of tax money. On a positive note, some of the tax money does go to improving the quality of life for some people but normally at a much higher cost than is necessary.

I hope you enjoyed this post and video. The dark side of economics series will continue with more posts and videos relating to topics such as economics of health, economics of war, manipulation of money supply by central banks.

The full video is available at: