That tax is innately a
drag on the economy was pointed out not by some rabid right wing libertarian
flat taxer but by Lord Keynes.
Yet if taxes are
inevitable and necessary – an “if” we might do well to question from time to
time – then those taxes should be structured in a way that encourages what is
desirable and discourages what is undesirable.
In particular, as
Matthew Boulton, the father of the Industrial Revolution, pointed out it is
less undesirable – although still not desirable – to tax wealth than to tax the
means of increasing wealth.
Yet most tax systems
tax industry more than consumption – despite the fact that it is generally
agreed that labouring to improve one’s lot is morally superior to consuming.
It is also generally
agreed that investment, job creation, and exports are economically desirable –
yet some tax systems penalise them instead of encouraging them.
A wide raft of taxes –
including higher rate income taxes, “windfall taxes”, inadequate capital
allowances, and Gordon Brown’s tax on pension funds – act as a positive block
to the investment of surplus wealth in new business.
That is dumb.
Even dumber is the way
politicians whose only interest in the economy is job creation actually
discourage employment by imposing payroll taxes.
Yet dumbest of all is
surely a tax on exports, like Argentina’s positively insane tax on its prime
export – no pun intended – beef. Exports are as important to a nation as sales
are to a business, and no business would make itself uncompetitive by
increasing its prices arbitrarily.
If there must be
taxes, let them be designed by businessmen.