no third solution

Blogging about liberty, anarchy, economics and politics

How Do Taxes Destroy Productivity?

November 5th, 2008

Mark Cuban continually asserts that taxes have no effect on entrepreneurship, essentially spitting in the face of just about every economist from every school of economic thought, who has ever lived. Also, by framing it as a “taxes dont’ matter” argument, Cuban has conveniently avoided the real problem: taxation is theft, plain and simple.

While I prefer lower taxes, I can tell you that no entrepreneur or CEO worth a damn in this country gives up or works less because of a change in tax policy. .

There is an outside possibility that ├╝bermenschen CEOs and entrepreneurs aren’t affected by tax policy. I doubt it, but it’s not worth arguing that point. Since the world is not made up of capitalist-entrepreneurs, or CEO’s worth-a-damn, we can’t look solely at a handful of already rich sons-of-bitches who don’t lose their job when the economic SHTF, we need to look at the countless others who are affected by tax policy.

A real life example, you ask?

Government can’t create jobs, but it sure as hell can destroy them.

The imposition of a luxury tax on yachts all but destroyed the centuries-old shipbuilding industry in New Jersey. Making matters worse for the government, tax revenues diminished, because the feds were dumb enough to assume a perfectly inelastic demand for luxury yachts.

And the vig in this case was only about an additional 10%.

Ocean Yachts in Weekstown trimmed its workforce from 350 to 50. Egg Harbor Yachts entered Chapter Eleven bankruptcy, going from 200 employees to five. Viking Yachts dropped from 1,400 to 300 employees. According to a Congressional Joint Economic Committee Study, the boat industry nationwide lost 7,600 employees within one year.

The CEO’s of most of those New Jersey shipbuilders probably kept their jobs. They kept working hard.

But tax policy decimated the industry, and put thousands of others out of work.

The bottom line is that although taxes may not impact how any particular individual works, it simply is not debatable that taxes impact which individuals will be working at any given time.

no third solution

Blogging about liberty, anarchy, economics and politics