The Effect of Government

Without dispute, government must act to have any effect. Government must assess a tax in order to act, for she cannot finance her operations without money or resources; unless, in some way, she manages to motivate enough people to freely contribute both their time and resources.

When a tax is assessed, the economy is always hurt. The tax assessment hurts the individuals against whom it is levied, all those who do business with him, and those who do business with them, and so on. Tax increases weaken the economy. Increasing government actions translates to both a weaker economy and a more powerful government. A more powerful government is more easily inclined to increase her taxes on a weakened economy, being less able to resist tax increase initiatives.

An income tax decreases a person's desire to work by reducing the rewards for his labors. The results are higher unemployment, and fewer people accepting jobs with increased responsibilities. This leaves much less capital available for spending, and thus weakens the economy.

A sales tax decreases a person's desire to spend. Less spending weakens the economy, but the result here differs from the first case in that people have higher wage jobs and more money saved for difficult times. The wages for increased responsibility are not diminished and therefore people are more likely to rise to their full potential, producing their finest work at their best wages. Unemployment is much lower because people are more inclined to work when the wages are undiminished by taxation. People will tend to save more because the penalty for purchasing goods is higher. During difficult times, people continue working through them because their savings carry them through it. Therefore depressions are much lighter and shorter with sales tax versus the income tax. Taxation still weakens the economy by slowing the business side, but the working part of the economy continues with as efficiently as possible given the economic state.

The decision of whether government should do something rests with the consideration of the cost on the individuals taxed. Reversing the popular quote, "No representation without taxation," because those who are taxed understand best the cost on themselves and on those with whom they do business. All must be taxed equally for all to be represented equally, and that taxation must be applied as a sales tax for the motivation to work to remain strong and keep everyone producing their best for the economy and receiving the best wages for their work.