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May 18, 2009

How People Come to Accept Higher Taxes


Recently in New York Times Magazine, Russell Shorto discussed his first months as an American in Holland:


“For the first few months I was haunted by a number: 52. (It) represents the rate at which the income I earn, as a writer and as the director of an institute, is to be taxed. To be plain: More than half of my modest haul, I learned on arrival, was to be swallowed by the Dutch welfare state.”


He went on to explain how he started getting over it:


“And yet as the months rolled along, I found the defiant anger softening by intervals, thanks to a succession of little events and awarenesses. (…) Logging into my bank account, I noted with fleeting but pleasant confusion the arrival of two mysterious payments of 316 Euros (about $410) each. The remarks line said ‘accommodation schoolbooks.’ (…) Every quarter, the SVB quietly drops $665 into my account with the one-word explanation kinderbijslag, or child benefit. As the SVB’s web site cheerily informed me when I went there in bewilderment after the first deposit: ‘Babies are expensive. Nappies, clothes, the pram . . . all these things cost money. The Dutch government provides for child benefit to help you with the costs of bringing up your child.’”


But that’s not all:


“In late May of last year an unexpected $4,265 arrived in my account: Vakantiegeld. Vacation money. This money materializes in the bank accounts of virtually everyone in the country just before the summer holidays; you get from your employer an amount totaling 8 percent of your annual salary, which is meant to cover plane tickets, surfing lessons, tapas: Vacations. (…) For that matter, even if you are unemployed you still receive a base amount of vakantiegeld from the government, the reasoning being that if you can’t go on vacation, you’ll get depressed and despondent and you’ll never get a job.”


In other words, you have to cringe only once a year when you see 52 percent of your income go to state coffers. In exchange, every time you look at your bank account, you see money deposited by the nanny state. Every year you enjoy Mojitos on the beach, courtesy of the compassionate government. The evidence of the politicians’ benevolence is everywhere, all the time. It sounds like a fantastic deal, doesn’t it?


We see individuals succumbing to this false sense of security in our own United States. When the first, “small” “stimulus” of this recession kicked in during the waning months of the Bush presidency, I criticized it, and a good, taxpaying friend who doesn’t know much about politics or economics responded: “Why not, it’s great, I get more money.” It does seem wonderful, doesn’t it?


Unfortunately, to most, it does. They do not realize that the government is simply not capable of creating wealth – the government is only capable of redistributing it. They do not realize that for the average person, the amount of money taken by the government is by definition greater than the amount given back.


Indeed, the genius of big government experiments that appear to give people money is that they make it seem like the socialists are the true fiscal conservatives, because their policies allow individuals to “get more money” in their pockets. Suddenly, the conservatives sound like the ones who are evil and want the government to keep the money.


The average Joe simply doesn’t understand that, on average, every dollar individuals “get” from the government comes directly from more than one dollar that individuals were forced to give to the government in the first place. When Joe sees a $600 “stimulus” check in the mail, he completely forgets that it comes from $1,000 he was or will be forced to give to the government, which spends it on bureaucracy, interest, etc. before it comes back to him in its diminished form. This is to skip a lengthy discussion about the misallocation of money and the destruction of incentives for innovation and growth, not to mention the sociological side effects of the welfare state and its copious opportunities for corruption.


So why do people accept this empirically proven destruction of wealth and egregious taking by government? Why do they not pursue a low-tax, small-government agenda?


There are several reasons. Primarily, they have not taken the time to become as knowledgeable about government programs as they are about Paris Hilton’s sexual escapades. Many are on the receiving end of wealth transfers, and pay little or no taxes. A very few understand that they might be incurring a net loss, yet accept this reality for it excuses them from giving more to charity. (In fact, studies show that liberals give significantly less to charity than conservatives). Others still defy their rational instincts by succumbing to the immediate, emotional gratification of receiving a check in the mail.


It is a sad, unfortunate reality. And it is not encouraging for those with positive wishes for a sustainable, liberty-protecting system of government. But for now, the way to fight this ignorance is for the knowledgeable to explain things to the unknowledgeable. And that’s where you come in.

© 2009 North Star Writers Group. May not be republished without permission.


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