High taxes are necessary for an effective state
Taxes are the basis of a basic give and take between the state and its people. The people provide the state with money and the state in return gives them security. Originally this only meant security against enemies but since from the 19th century security has also meant security against disease, poverty, crime and other things we consider bad for society. And so as a result more taxes were needed to fund this social safety net. Conversely states that have low taxes do not have a state that helps its people as much. The state may be as oppressive or even more so but it is of less use to its people. Do higher taxes mean a more effective state or simply a more authoritative state as would be argued in the US?
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Direct tax leads to democracy
As people can see that they are contributing to the public wealth, they become more interested in how that money is spent. Being more interested in it, means they are more likely to want a say in it. This leads to democracy. The public wanting to have a say in how their money is spent. It is for this reason that we can see in Middle Eastern countries where there is dictatorship not democracy taxes are derived in a more discrete manner, indirect taxes hidden in the price of good. Hidden in such a way people are not confronted with how much they are actually contributing to society and therefore they do not want a say so much in how it is spent. It is for this reason that the higher the taxes, the better the democracy and the better the state.
This is presuming of course that democracy is in fact better for the state. It is presuming also that countries that charge extortionate taxes directly are actually giving the public the accountability they long for. How can it be said that a democracy, rule of the people by the people, is effected by one vote every four years for parties we have not chosen which collaborate together to come up with policies? How can we say that this one vote makes an effective state?
People willing to pay taxes shows that a state is effective
People would not be willing to pay taxes for a state which they do not agree with or do not want to be a part of. Therefore the higher the taxes that the public are paying without revolt or force means that the citizens are happy with how the state is run. Especially with the European Union, if people were not happy they could easily move elsewhere. By people staying in a country with high taxes, the Government is showing that they are effective and they are keeping their people happy.
This argument formulates what high tax rates show us. But the reality is that this makes two fundamental mistakes.
For one, the question is not ‘do taxes show us that society is effective’ but ‘do high taxes make a society effective’. This is an altogether different question. In addition, how can it be said that people are not paying taxes out of force? Maybe not physical force, but emotional. People are tied to where they live. If they have jobs, families, their language. Just because people stay it does not show that they are happy.
An effective state looks after the poor.
The higher the rate of taxes that a Government imposes the more money that Government has to look after the people who live in that society. This is what an effective society does, it looks after the weaker members, those who need help in looking after themselves. Less effective states will instead try and diminish the weak in their society. But this simply does not cohere with modern advanced society morals. Therefore, the higher the taxes, the better able the state is to look after the weak and the more effective the society is.
Just because more money is being paid into the Government's pocket via taxes, it does not necessarily mean that the money is being put into the welfare system. Between 1980 and 2005, Sweden raised the tax rate, and yet the consensus in Sweden is that the welfare system has not improved.
In 2005, a survey was released into taxation and welfare. Sweden had the 12th best welfare system out of 23 industrialised countries. However, Sweden came last in how percentage of tax related to the level of welfare. [[The Swedish Association of Local Authorities and Regions; http://www.thelocal.se/19648/20090525/%5D%5D
An effective state needs a good infrastructure
In order for a state to be considered as effective, the society needs to function economically. In order to a society to function economically, people need to get to work and there needs to be effective transport in order to get materials to factories and materials to warehouses. Businesses are unwilling to start their business where these facilities are not in place. Therefore, the state needs to pay for these facilities not only in starting them up but in maintaining them. The only way the state is able to pay for this is through taxes. The more taxes, the better the transport, the more business, the more effective the society.
Higher taxes encourage tax avoidance
High taxes means that people try and source ways of avoiding paying the taxes. This means that people try and evade the system. This can be seen in Sweden. Here they have a wealth tax. Thy discovered that if they ;lowered the taxes slightly, they would actually gain more revenue from the tax as less people would try to evade it. [[http://www.thelocal.se/19648/20090525/]]. In addition, as people evade taxes and the state tries to enforce payment, funds are being wasted by the state. This is not the way of an effective state.
The Government primarily look after their own.
We place a lot of trust in the Government when we pay them high taxes. We assume that the money we pay them in taxes will go on what is effective for society. These things include the health care system, the welfare benefits and the education system; public services. However, does the Government actually spend the money in the most effective way possible? In Sweden, where taxes can reach up to 60% when all the taxes are calculated, it has been shown that increased taxes actually results in more bureaucracy, not better public services. The money gets spent on hiring more people to work for the Government as administrators, in order so that the Government have to do less work instead of being spent on important officials like police men, doctors or educators.
Higher welfare means more people rely on benefits
The problem with being so generous is that people are encouraged not to work. People know that if they do not work, if they sit on their backside, their living costs will be catered for well by the state. This means that there are people in the state who can work but do not. They do not contribute to their skills to that society. This is not an effective state. In an effective state everyone needs to contribute what they can to the society and their economy.
Higher welfare mean more immigration problems.
The problem is that when a country is known for having high taxes, and known for having high levels of welfare, people want to enter the country from other less catered for countries. This means that there will be more people taking from the welfare state who are not willing to work to pay the high taxes. A state cannot be effective economically if there are many people who do not contribute but are more than willing to take.
High taxes stifles business and reduces the incentive for entrepeneurs
High taxes act as a disincentive to entrepreneurs it separates people from the fruits of their labour. Often new ventures are started at great financial risk by the founder and excessive taxation can skew the risk/reward ratio to the point where the enterprise is no longer worth the bother.
In the business case, companies need to accumulate capital in order to expand their operations or break in to new markets and maintain working capital to cover the expenses of their day-to-day business activities. Forcing a business to go into or maintain a debt due to tax incurs a cost to the business and ultimately results in a less stable and/or competitive business.
History has shown repeatedly that private enterprise is a more efficient allocator of assets than the government, as private enterprise takes in to account the relative cost of any action, reduced down to monetary terms (the profit motive). This is not to say that taxes and government are unnecessary, as non-revenue generating infrastructure is required to be built and maintained in order to facilitate modern life. But when the burden of taxation begins to affect and retard economic enterprise, society as a whole loses out.
What do you think?