Thomas Sowell is a brilliant, articulate thinker who can also write powerfully for those of us who are not economically sophisticated. This article is fantastically clear and straightforward. Excerpts:
“The power to tax is the power to destroy.”
It is not the money that is taxed away that is destroyed. What is destroyed is the wealth that does not get produced in the first place, because high taxes make its production not worthwhile.
Economists have trouble determining how many people are affected by a tax increase because those affected extend far beyond those who write the checks to pay the government.
Taxes on businesses can get passed along to consumers, in whole or in part, even though it is only the business that writes the check to the government.
Payroll taxes or government-mandated employee benefits may be paid for directly by the employer, but these costs reduce the value of an employee to the employer. If these costs add up to $10,000, for example, employers bidding for labor may bid $10,000 less in salary than they would have otherwise.
As in other cases, who writes the checks does not tell you who really pays the costs, since the worker is now $10,000 worse off.