[Market Economy in Your Pocket] Rising Taxes Ruin the National Economy

How many days do people work in a year just to pay taxes? The day calculated as the point when they begin working for their own income is called Tax Freedom Day. In 2005, Tax Freedom Day fell on March 22. Out of 365 days, 80 are spent working to pay taxes.

Taxes should also be collected at an appropriate level, in line with the basic role government is supposed to play. Proper taxation that does not burden the economy can help the economy, but once it exceeds a certain level, it has harmful effects. What country would not want to collect more taxes from the wealthy and expand welfare for the poor?

Countries such as the United States and Japan, which collect relatively low taxes while making use of the private market economy, rank first and second in the world economically and lead the global economy. By contrast, welfare states in Europe such as Canada, Sweden, and the United Kingdom, which sought to build welfare systems through taxation, experienced national decline amid prolonged stagnation.

At a time when our economy’s growth rate is falling and people’s incomes are not increasing, it is destructive to the economy to recklessly try to collect more taxes while promising to expand welfare spending to the level of advanced countries. It means following the same path taken by countries that, decades ago, recklessly increased welfare spending for ordinary citizens and brought on economic stagnation.

In our society, anti-capitalist sentiment is widespread, along with the belief that imposing more taxes on the rich is always a good thing. The government stirs up hostility toward Gangnam, the chaebol, and the wealthy, and uses this as a pretext to raise taxes whenever it wants. A society in which taxation is turned into a means of punishing disliked groups is never a healthy one, nor is it likely to prosper.

The simpler taxes are, the better. Taxes that are so complex and arbitrary that even experts struggle to understand them only create corruption and demand submission to government power. A tax administration that sets standards so strict they cannot realistically be followed, only to grant reductions as if bestowing favors, is itself paving the way for national corruption and poverty.

Original title: [주머니 속의 시장경제] 늘어나는 세금이 나라경제 망친다

Author: Center for Free Enterprise (CFE)

Date: 2005-08-01

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=22&idx=10652