Taxes: burden or investment?

Yahoo! Finance often has articles about high tax states and low tax states: either in general or for retirees.  But this treats taxes as something extracted from the public for the benefit of a king rather than something people invest in for their quality of life.

I hope sometime I come across an article or two comparing taxes on value received.

For example, does a high-tax state spend more on education and turn out more skilled workers and more involved citizens than a low-tax state.  Does a high-tax state have more responsive public employees than a low-tax state, a state that might have rampant corruption.  Does a high-tax state have better roads than a low-tax state; the poorer roads causing more need for car repairs?

There is so much that we take for granted that governments provide that we rarely think about how it is payed for.  We grouse about taxes, but would we really want to live in a society with no taxes?

I like the quote attributed to Justice Oliver Wendell Holmes: “I like taxes; they buy me civilization.”

A surreal apologia for "free enterprise"

Saturday's Duluth News Tribune had one of its Pro/Con pairings of opinion; they were titled "Can free enterprise boost the nation's economy?"  I would have liked to have read them then but I didn't want to do it on my wife's cell phone, our fastest web access at the cabin.

Today I did, and oh, boy!  The pro was an unbelievable, non-critical, paean to "free enterprise" that I just have to comment on.  It was written by Steve Van Andel, co-CEO of Amway and chairman of the U.S. Chamber of Commerce Board of Directors.  The con was a standard piece about the government needing to do more to regulate the economy through stimulus and other measures.  The latter was written by Mark Weisbrot of the Center for Economic and Policy Research.

I found so many clichés in Van Andel's piece passing off as received wisdom that I have a hard time picking a few of the most egregious.

"When employers and entrepreneurs are successful, they indirectly share that wealth by expanding opportunities and creating jobs for others."  Success has too often been measured by stock price, and stock price often means cutting jobs rather than creating jobs.

"Businesses wanting to remain successful always strive to do better."  Too many successful businesses ignore their customers.  Just look at the support boards of Apple, Microsoft, Google, CenturyLink, and many others.  Users complain about the same problems for years and they don't seem to be fixed or responded to.

"The truth is that government doesn’t create opportunity, equality or success — the private sector does."  Let's see!  Federal government purchases of computers led to further development of computers; for example, the first UNIVAC was sold to the Census Bureau.  ARPAnet led to the Internet; ARPA was Advanced Research Project Agency, a part of the government.  An NSF grant led to the creation of Google.  How many private weather forecasters depend on the Federal Government for their raw data?

"When our leaders attempt to reach deeper into the affairs of businesses and individuals — through overregulation and higher taxes — they breed uncertainty and stifle growth."  Just what is "over-regulation" - requiring proper labeling on food, reducing power plant emissions, requiring easy-to-understand contracts?  What are "higher taxes" - taxes sufficient to enforce the laws, taxes sufficient to rebuild our infra-structure, taxes sufficient to have a "strong" military?

Van Andel's article is copyrighted by the U.S. Chamber of Commerce and has been reprinted in several newspapers besides the Duluth News Tribune.  The links that I found include

The original article was published by McClatchy – http://www.mcclatchydc.com/2013/07/03/195685/more-economic-independence-will.html

Others include

Centre Daily Times – http://www.centredaily.com/2013/07/07/3680519/column-more-economic-independence.html
Arizona Daily Star – http://azstarnet.com/news/opinion/can-free-enterprise-boost-the-economy/article_7236fff9-82d0-5f0a-8c3a-0a6adada2c53.html
Deseret News – http://www.deseretnews.com/user/comments/765633503/More-fiscal-independence-will-push-the-economy-to-new-heights.html

The comments to all of these are mostly critical of Van Andel's view.

A good critical letter appeared South Coast Today, but a search of South Coast Today for "Van Andel" did not turn up the original opinion piece.

High and low tax states: All things considered, which is better?

Yahoo Finance often has articles about the taxation as a gauge of where to live, whether a place to work or a place to retire to. The latest was "The Most and Least Taxing States to Live and Retire In", Joel Stonington, Bloomberg, 2011-10-09.
http://finance.yahoo.com/retirement/article/113611/most-least-taxing-states-bloomberg

Many early commenters said they'd much rather live in the high tax states than the low tax states because the quality of life was better.

Articles like these never tout up the benefits received, better educated work force, better roads, better fire service, better police, better courts,… In other words, you get what you pay for.

Would you choose a hotel strictly on price? Gosh, for $10/night, you can get a tiny room with bedbugs, dirty sheets, broken springs, noisy neighbors, and no heat or air-conditioning. Or for $100/night you could get a spacious room with clean sheets, quiet neighbors, heat or air conditioning, and a "free" all-you-can eat breakfast.

Taxes are not the only consideration for picking a retirement destination

Or picking any other place to move to.

Yahoo Finance republished a Kiplinger article, "5 Tax Factors to Consider When Picking a Retirement Destination", Mary Beth Franklin, 2010-10-06.

I added the following comment to the article.

Beware of isolating tax factors from all other considerations.  Maybe you'll pay less taxes in the State of Bliss but less taxes could mean slower response times by fire departments.  Slower response times may mean higher insurance costs.  Less taxes could mean less road repair.  Less road repair could mean more auto repair costs.  Less taxes could mean less regulatory oversight.  Less regulatory oversight could mean higher electricity costs.  This could mean you pay more for air-conditioning in your retirement home than you paid for heating in your previous home.

Tax factors are only one part of the two really important considerations: the cost of living and the quality of life.  Look at the big picture.

I wish I had written that about taxes

Myles Spicer had a good op-ed piece about taxes in today's Star Tribune, see http://www.startribune.com/opinion/commentary/81999627.html

He dispels many of the myths about high taxes including businesses moving because of taxes, the relative rate of U.S. taxes to other countries and of Minnesota taxes to other states, the efficiency of government, and the effect on economic growth.

Although he too doesn't like taxes, he appreciates the things that taxes provide.

I'm paying "high taxes" again!

I brought my truck into a Ford dealer because it has been squeaking on the right front. Tuesday I could push down on the bumper and the truck sounded like a whimpering puppy. Today I pushed down and heard nothing. On my trip to the dealer, I heard nothing.

The service representative just told me there was something, expensive somethings. A boot on the in the suspension was torn. When it was cold and dry it squeaked. Today it is warm with standing water on the roads. The boot is lubricated with water and doesn't squeak.

Additionally a tie rod is loose and has to be replaced. And, of course, the front end has to be realigned when all the repairs are made.

As of this writing, I don't know the full cost, but it will be over six hundred dollars, eight wouldn't surprise me.

How do front ends get damaged? From potholes. Why are there potholes? Because we won't pay enough taxes to build roads that will stand up to harsh weather, and we won't even pay enough taxes to repair the roads we have in a timely fashion.

So, we have to pay for the condition of our roads in another way. Either way, we are being taxed. Interestingly, this repair will be more than we pay to the City of Duluth in real estate taxes each year.

High taxes or appropriate taxes?

Republicans make a big thing of charging Democrats with creating high taxes, and to many Republicans, this also means no taxes are preferred.

Unfortunately, it is nearly impossible to run a successful business in a society without taxes. A taxless society has too many uncertainties. Uncertainties can be reduced with a civil society that sets and enforces rules. The price of a civil society is taxes. How much tax are we prepared to pay for what kind of civil society.

The question really should be do we have appropriate taxes for the society we want. If businesses needs skilled workers they will pay for them either with their own training programs, which cost money or with taxes for publicly supported schools. Otherwise, they will hope enough potential workers will pay for their own education.