So what’s new…

Not so fast. There is more to it than the classic complaints – that high taxes discourage the working people while government hand-outs, made possible by those taxes, encourage the lazy to stay home.
If taxes are collected evenly – from all those that should pay them – and distributed sparingly – only to those who really need those hand-outs – nobody feels cheated so no disincentive is felt.

There is a more malignant phenomenon at work here. If taxes are really high – as a percentage – then being able to not pay them becomes a huge competitive advantage.

Not paying becomes attractive only after you are due a certain amount of money – you have to hire a tax consultant, pay some fees and commissions, etc. – but once you belong in that league not paying becomes a huge advantage over your competition. For instance over your competitors that are smaller and who won’t gain as much, or anything at all, by doing the same thing as you do.

And this is why the market becomes so polarized, why some of the really big brass do not push, in earnest, towards fiscal discipline and how the middle class gets squeezed out.

Advertisements