Thursday, April 15, 2010

How Tax Day Became Payday

Passing the point at which less than half of all tax filers pay income taxes is dangerous because beyond that threshold, approximately a majority of voters could vote themselves an increasing share of government benefits at no cost to themselves. In fact, when the U.S. passes that point, a shrinking minority of tax filers will be financing almost all government spending. In this situation, politicians have even less incentive to restrain government spending because more votes could be won by increasing spending than lost by increasing the tax burden. That is a deadly recipe for never-ending increases in government spending that will inevitably lead to a fiscal implosion when there are no longer enough productive taxpayers to pay the bill for the expanding welfare state.

The families receiving cash from refundable credits are growing dependent on the government for an increasing share of their income each year. Growing dependence reduces individual initiative to achieve for those that receive cash payments and at the same time decreases the incentive for top performers to work harder and earn more. These effects will stifle the economy and ultimately lead to a lower standard of living, should these conditions persist. 

Posted via email from The Blue Pelican

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