Taxing and spending

November 21, 2009

Worse Than Taxes: The Spending

I came to this conclusion back when Reagan was president. If taxes are low but spending is high, that means the government is borrowing money or inflating the currency (or both) which are just as bad. The major benefit of low taxes is that it puts pressure on legislatures to spend less.

Government spending means economic resources are being allocated according to political priorities rather than to individual priorities or economic growth. While their are some political priorities that justify that, it needs to be kept to a minimum. Also, the more government spending there is, the more opportunities arise for corruption.

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3 Responses to “Taxing and spending”

  1. Tim Says:

    I don’t think the legislature feels any pressure to spend less due to lower taxes any more, so that is no longer a benefit, let alone a Major benefit, to lower taxes.

    The Major benefit to lower taxes is that more resources are allocated according to individual priorities, which leads to economic growth, which is good for everyone. (Thus the lower tax rate generates more tax revenue in the end.)

    • curtispew Says:

      But if taxes are low and the spending is still high resources are still not allocated according to individual priorities; it’s just that it’s hidden in inflation or reduced availability of capital. I’m not trying to say that low taxes aren’t beneficial, but high spending is still a problem even when taxes are low.

  2. Rachelle Says:

    Yes, it such the spend generation no one wants to live on a budget anymore esp the government.


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