Tuesday, August 30, 2016

Taxation destroys capital

Taxation destroys capital.  The government wants cash, not stocks, bonds, factories, or land.  Owners of assets have to come up with cash to pay their taxes.  If they are cash poor they have to sell assets.  If they have the cash they cannot invest it productively.

Government spending is inefficient.  The more taxes and capital destruction or prevention that the government turns into consumption the worse the economic growth.

The increase in tax collections creates its own destruction as inefficiency and the destruction of capital for consumption ends the business cycle.

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