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Taxing times

8th February 2010

Did you know that in Texas, no-one pays any personal income tax?  Instead, the state revenues required to pay for minimal government are generated through indirect taxation such as sales tax.  Interestingly, using this system has resulted in Texas being one of the most fiscally secure states in the US, while states which impose heavy rates of personal taxation, such as California, are in so much debt they are in danger of going bankrupt as their inhabitants relocate elsewhere, taking their money with them.

We can look at this situation in broader terms:  indirect taxation through levies on purchases, housing, fuel, for example, enables people to choose how they want to spend their money, what size house to live, what car to drive, what lifestyle to adopt, and the choice applies equally to everybody in that community.   People can choose for themselves what to do with the money they have.

Direct taxation, on the other hand, is an imposition which is a form of power and control, often unfair and penalising the poorest in society while discouraging creativity, innovation and ambition - and independence.  It can be a disincentive also to philanthropy, sharing what we have generously with those in our community who are in need.  

It is predicted that it will be a long time before the UK and other heavily indebted countries in the western world (and there are more than is generally known) are free from their financial burdens, and that personal taxation will have to become heavier to help deal with them.   It is my belief, however, that there will be a global financial implosion so shocking and yet cathartic that the traditional ways will be blown away forever, and the resulting chaos will be so great that the claiming of any taxes will be impossible.  Borrowing and indebtedness, personal, corporate and national, similarly will be curtailed as new ways of exchange develop naturally.  It will be the new age of enlightenment, in every sense.

 

>> Victoria |
Monday, 8th February 2010 09:50
My country has come close to bankruptcy and to a great extent the reasons for it are the mismanagement and wasting of public money and, unfortunately, widespread corruption. Many cases of these are now coming out in the open and there is a realization among people that this has got to change, that everyone must do their best to contribute, that trust among people themselves and between people and state must be restored. One interesting issue that comes up with heavy personal taxation and compounds with corruption in a vicious circle is tax evasion. Tax evasion is of course illegal and unethical, but it is often painful for people to think that their hard-won money may end up wasted by the state or even converted to swimming pools for some corrupt officials, so they are tempted to hide their true income whenever they can. Personally, it was very helpful for me when I realized that the money from my personal tax is an energy given to my country for the highest good of all in it. So, even if I may not know where the banknotes would end up, I do know that by being honest with my taxes, my energy commitment will go and help the country where it is meant to. To get out of traps such as these, we may need to change the way we see money altogether.