Inefficient Taxes

Not all taxes are created equal.

Most economies are constrained by a ball and chain of their own creation. The way we collect taxes actually costs money – the costs are known as ‘marginal excess burdens’ (or deadweight costs). 

Filling out quarterly GST statements detracts from a business owners’ time – a deadweight cost. Income taxes are a deterrence to hard work. If you want to take on a second job but it could push you into a higher tax bracket, it might not be worthwhile. Company taxes and payroll taxes could dissuade a small business from hiring new employees. The GST is a regressive tax, hitting the poorest hardest.

This Treasury graph shows excess burdens that various taxes place on an economy

Land taxes, and taxes on other “natural monopolies”, are the only taxes that add to the economy. In the above graph, we see that municipal rates and land taxes are the only taxes that add to GDP. This is because they cannot be passed on, are easy to pay and are virtually impossible to evade. They also capture income from foreign investors. 

We all know that life was meant to be easier. When you study the benefits of taxing monopoly interests over hard work, you will understand the counterweight society lives under. 

We are kept busy by a tax system that forces us to chase our tails. Prosper looks forward to a future where we can afford to slow down and smell the roses. 

Please donate to our research institute to build bridges towards a more sensible tax system.

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