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Quotation of the Day…

… is from page 573 of Book IV, Chapter vii of the 1981 Liberty Fund edition of Adam Smith’s 1776 masterpiece, An Inquiry Into the Nature and Causes of the Wealth of Nations:

Thirdly, the labour of the English colonists is not only likely to afford a greater and more valuable produce, but, in consequence of the moderation of their taxes, a greater proportion of this produce belongs to themselves, which they may store up and employ in putting into motion a still greater quantity of labour.

DBx: Although this year in the United States the Greedy Reaper’s deadline for receiving his booty isn’t until April 17th, April 15th remains the traditional tax-collection deadline. And so on this occasion I offer the above plain yet important insight from Adam Smith about the high and growing prosperity of Britain’s American colonies just as the American Revolution was getting underway.  Our forebears then complained about their tax burden, but that burden wasn’t nearly as high in 1776 as is the tax burden that we bear in 2018.

I am, of course, aware that the tax burden borne in 2018 by Americans isn’t at historical highs.  I’m aware also that the tax burden that we Americans bear isn’t as high as is the tax burden suffered by the people of many other countries.  These two facts, however, are no good standards against which to compare our current tax burden.

Taxes – never forget – are forced extractions.  Contrary to some descriptions, taxes are not prices.  Prices are arrived at voluntarily.  No buyer is forced to buy at any price; no seller is force to sell at any price.  But even in the most ideal democracy, people are forced to pay taxes.  (If you doubt me, try telling the IRS that, after considering their offer, you’ve decided not to pay your taxes.)  And with genuine prices, each buyer in every case receives something in return that he or she individually judges to be worth more than the money that he or she pays for that something.  Not so with taxes: if you are in a losing political coalition, not only must you pay whatever taxes the winning coalition demands that you pay, you individually might not receive a damn thing in return.

And by its practical nature, under constitutionally unconstrained majoritarian democracy, those in a winning coalition – those who, through little more than their might in numbers – simply grab some of your property as taxes, do not much care that you are made worse off by this fiscal ‘exchange.’  Indeed, many people today hold that one important – or even the most important – function of taxation is to reduce the wealth of those whose whose earnings are relatively high simply because their earnings are relatively high.  It’s a barbaric sentiment, but when costumed in the social-engineering garb of “reducing inequality,” this antediluvian sentiment regrettably becomes accepted by many people as legitimate.