We pay taxes to our government to get services from that government.
We are forced to transfer our wealth to others via wealth transfer programs, e.g., welfare and the like. These are not services.
I want a strong military; I am willing to pay taxes for that. I want the law to be enforced; I’m willing to pay taxes for that. I want public schools, libraries, and other services of that sort; I am willing to pay taxes for that.
Regardless of what services or wealth transfers you like or dislike, taxes are how we pay for them.
Our history is filled with stories of the state collecting taxes. Why did Joseph and Mary travel to Bethlehem? Why was Robin Hood stealing? Why is there a battle over moonshine? The answer is taxes.
In Europe they have an insidious tax called a Value Added Tax (VAT). This imposes a tax every time the value of an item is increased. If you buy a piece of leather for a pound, add some leather dye, cut some holes in it, and put some pretty stampings on it, it is still a piece of leather, but as a belt it has a higher value. When you sell your belt to a distributor or retailer, you pay for the increase in value as a tax.
Tariffs are in the news. These are taxes that importers pay on goods imported into the country. One of the big things in the founding was the idea that the states could not put tariffs on interstate commerce. Part of the commerce clause of the Constitution.
Those taxes go to funding services and wealth transfers.
There can be existence taxes. If you are alive, you have to pay some amount in taxes. Or you have to pay a tax for owning your car or boat. Sometimes those taxes are hidden as “registration fees”.
There are transfer taxes. When you transfer ownership of an item to an end user, that will often have a sales tax or transfer tax.
Homeowners are well aware of the evil that is property taxes. We pay almost twice as much in property taxes as we do on our actual mortgage. People that rent are also paying property taxes; they just don’t know it. In other words, if the cost to the landlord was less, the landlord could charge less and not lose money.
There are capital gains taxes. When you sell something and make a profit on the sale, you get taxed on the profits. There are limits to the things you can sell this way. I learned the beauty of this when I wrote a check for $75K to the IRS for selling my domain name.
Income tax is the one that most people know about. Unfortunately, most people don’t understand how taxes work. Just ask the average American about filing taxes. They are thrilled when the government gives them money. They fail to realize that this is money that they loaned to the government, interest-free.
It is their money they are getting, not the government’s. The incentive structures are so perverse that there are people that are getting more money from the government in tax “refunds” than they paid to the government. This is an example of wealth transfer.
Down in Florida, the Governor is working on getting rid of property taxes.
This is a great thing for homeowners and, indirectly, renters. I would love to see my monthly payments drop by two-thirds.
The problem is that the cost of running my local schools and my town services isn’t going to drop by two-thirds. The cost of the school system will continue to go up.
What will change is my power over the local budget. My town has voted down budget increases for the schools two or three times since I moved here. We can speak out and be heard.
If property taxes were to be eliminated, other taxes would increase to match the loss in revenue. We would just be paying a different tax.
Worse, that tax money would flow, not to the local government, but to the state government. The state government would decide where the money is best spent.
Do you truly believe the state is going to prioritize the school system of Athol, MA, or do you think Boston will get the priority.
All I need to do is look at how highway funds are spent. MA 32 coming north out of MA used to be a horrible mess. If you could go 25 MPH on the road, you were pushing it. When you reached the NH line, it became a beautiful road again.
At a time when locals were beating their cars to death on the MA32, the roads of Boston were getting repaved for the third or fourth time. I, personally, observed parts of I-95 and MA-2 near Boston get repaved twice while no work was performed on MA-32.
The NH people used their local budget, financed by property taxes, to pay for road maintenance. They got some funds from the state because it was a state road. The locals of NH had much more control than the locals of MA.
This was explained to me by my town office years ago, after I purchased my home. Our assessed value was about 2.5 times what we paid for the house. I wanted them to change our assessment.
The town clerk explained that assessments were done every year for a part of the town. If our home were to be assessed at the selling price and the value of our neighbors homes was also increased, the total assessed value of all the taxable property would drop.
If that happened, they would need to raise the rates. They wouldn’t be cutting town costs, they would be changing the dial they twisted to get the money they felt they needed.