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Introduction: Taxation: Less Is More
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18817 |
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Section : |
MODERN THOUGHT
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| Issue
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12 / 1991 |
247 Words |
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What is an acceptable level of taxation? Answer: It's whatever level you'll accept. Most people apart from complete anarchists or extreme libertarians concede that some government is necessary and that some form of revenue raising--taxation--is needed for any government to accomplish its mission.
The argument, then, are about what forms of taxation and how much. In the 1970s a group of American economists and economic journalists, such as Robert Mundell and Jude Wanniski, began arguing that taxation beyond a certain level actually decreases total government revenues because the effect of such taxation is to stifle overall economic activity. According to this view, lower levels of taxation serve to stimulate economic activity, thereby raising the gross national product. Thus, the total receipts from taxation even at a lower tax level will be at least as great as before.
Our abbreviated theme this month presents two representatives of this view. Robert Keleher gives a brief history of the income tax in America. He argues that the income tax, as it has evolved, violates the principle of liberty and retards economic development. In a sidebar, he examines the Social Security payroll tax, showing that it is now the most burdensome tax for many taxpayers. Alan Reynolds examines taxation from an international perspective, showing that bad tax policy has discouraged economic growth in many countries. He documents instances in Europe, Asia Africa, North America, and South America where a national change in tax policy--the lowering of tax rates--has resulted in great economic
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