23

How and How Not to Desocialize

Everyone in Eastern Europe and the Soviet Union is seemingly anxious to desocialize, to institute free markets and privatization. Plans proliferate, and innumerable Western economists are being consulted on how to go about this daunting task. It is generally acknowledged that bureaucrats are obstructing the process, but confusion abounds among free-market proponents themselves.

Section Four

Taxation

24

The Myth of Neutral Taxation

A neutral mode of taxation is conceivable that would not divert the operation of the market from the lines in which it would develop in the absence of any taxation.

Ludwig von Mises, Human Action (1949)

25

The Myth of Tax “Reform”

Everyone will agree that the American tax system is a mess. Taxes are far too high, and the patchwork system is so complicated that even IRS officials don’t understand it. Hence the evident need for some sort of dramatic, even drastic, reform. As often happens, a group of dedicated and determined reformers has arisen to satisfy that need. But before we embrace this new gospel, we should heed the old maxim about jumping from the frying pan into the fire, and also remember the warning of the great H.L.

26

The Consumption Tax: A Critique

THE ALLEGED SUPERIORITY OF THE INCOME TAX

Orthodox neoclassical economics has long maintained that, from the point of view of the taxed themselves, an income tax is “better than” an excise tax on a particular form of consumption, since, in addition to the total revenue extracted, which is assumed to be the same in both cases, the excise tax weights the levy heavily against a particular consumer good.

27

The Case Against the Flat Tax

“SPECIAL INTERESTS”: GOOD OR BAD?

The flat tax draws virtually unanimous support from the right-thinking intellectuals in our society, including academics, writers, and media pundits. By “right-thinking” I mean all people who have managed successfully to identify their own views, whatever they may be, with the general welfare. By this time, however, the cautious should be on the alert: any policy that draws unanimous support from these people can’t be all good. There must be a catch somewhere.

28

The Uneasy Case for Degressive Taxation: A Critique of

29

The Single Tax: Economic and Moral Implications

Seventy-five years ago, Henry George spelled out his “single tax” program Progress and Poverty, one of the best-selling economic works of all time. According to E.R. Pease, socialist historian and long-time Secretary of the Fabian Society, this volume “beyond all question had more to do with the socialist revival of that period in England than any other book.”

30

The Value-Added Tax is Not the Answer

One of the great and striking facts of recent months is the growing resistance to further taxes on the part of the long-suffering American public. Every individual, business, or organization in American society acquires its revenue by the peaceful and voluntary sale of productive goods and services to the consumer, or by voluntary donations from people who wish to further whatever the group or organization is doing. Only government acquires its income by the coercive imposition of taxes.

31

A Reply to Georgist Criticisms

Overall, it seems that one of the main Georgist fallacies is a confusion of economic and moral arguments for their program. Both types of arguments have their place, we can all agree, but the Georgists persist in using moral arguments in places where technical economic arguments are called for. In the strictly economic sense, land is not a unique asset in two main ways: (1) in the nature of “rent” and (2) in its being capitalized on the market.