Tuesday, December 7, 2010

Transaction Costs: The Best Argument Against High Taxation

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Vigorish, as readers will recall, is a term famously used by the Mafia to describe the seizure (skimming) of the profits of a business under the threat of force. [1]  Percentage varies according to the mob's need for cash and calculations about what the market will bear.  Our tax system is nearly analogous.

Persons (outside government) who favor increasing taxation seem unaware of the losses in the tax system, arguing -- and wrongly assuming -- that collected revenues will go, more-or-less dollar for dollar to support various projects and causes they favor.  One wonders if they would remain sanguine knowing the amount of monies diverted from tax purposes.