Taxes and the Proper Role of Government

Thoughts on a Free Market Economy…
“Taxes and the Proper Role of Government”
By Phyllis Hunsinger
February 1, 2020

The time between celebrating the New Year and Easter is the tax season. For income earners, this considerable effort involves compiling the paperwork, complying with the tax codes and laws, computing the amount owed, and finally paying the taxes.

Taxation is necessary to fund the proper role of government, which the Declaration of Independence and the U.S. Constitution describe as defending citizens against enemies both foreign and domestic and protecting individual property rights. As citizens are in the middle of tax season, it might be beneficial to examine what the taxes actually do fund. The Center on Budget and Policy Priorities reported in 2017, federal government taxes funded:
Defense and international security assistance – 15%
Social Security – 24%
Medicare, Medicaid, CHIP, marketplace subsidies – 26%
Safety Net programs – 9%
Interest on the National Debt – 7%
Benefits for federal retirees and veterans – 8%
Transportation Infrastructure – 2%
Education – 3%
Science and Medical Research – 2%
Non-security International – 1%
Other – 3%

Frederic Bastiat, a staunch defender of capitalism in France during the 19th century, wrote The Law, in which he explained the role of government as to secure persons, liberties, and properties, and to maintain each in its right, so as to cause justice to reign over all.

Comparing the stated role of government with the list above showing where tax dollars are actually spent, the conclusion must be that the current government structure is way beyond its intended role. In fact, the fingers of government seem to be in every aspect of a citizen’s life.

Individuals are not the only ones affected by taxes. The influence on the economy is significant. Every dollar paid in taxes is a dollar that is not spent for goods or services that would benefit the individual or be saved by the individual for a later expenditure. Every dollar paid in taxes represents money the individual earned but is unable to choose how that money is spent.

Businesses take risks every year and recognize the real possibility that the business may lose money. In the event the business shows a profit, approximately 48% of that profit will be paid in cumulative taxes. Then the business owner may question why they risk capital and effort for a return of 52 cents on the dollar. When the risk of investment far outweighs the rewards of success, which happens as a result of high taxation, every single facet of the economy suffers.

Some taxation is necessary, but taxation outside the proper role of government negatively impacts individuals, businesses, and the country as a whole., Phyllis Hunsinger © 2020 All Rights Reserved

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