no third solution

Blogging about liberty, anarchy, economics and politics

$200 Billion

January 14th, 2009

The amount of economic waste caused by complying with the nation’s tax code. Mind you: this is just the explicit cost of compliance. This figure is not inclusive of all the negative effects of onerous taxation.

A friend of mine, notorious for playing the “Devil’s Advocate”, once quipped about a mutual friend studying for his CPA, “What about so-and-so? What would happen to all the people who work in that industry? Should they just lose their jobs?”

Well, d’uh!

Accountants can do more than just complete tax paperwork. Perhaps the most valuable functions they perform are third-party, independent audits. To the extent that their income depends on tax, one might expect their remuneration to decrease. Some of them might lose their jobs, in which case they’d have to find employment in another, productive sector of the economy, viz. a sector of the economy that is not $200 Billion of dead-weight loss.

If you found out that one of your employees had been drawing an annual salary to shovel $100 bills into the furnace, what would you do?

Comments

5 Comments

RSS

no third solution

Blogging about liberty, anarchy, economics and politics