Sunday, July 18, 2010

Ronald Kitching: About Tax and the Economic Progress of a Nation

All a free people need a government for, is the protect their person and their assets from internal and external thugs. As the government has a monopoly of coercion, that means that a police force and a judiciary has to be introduced and paid for, to monitor and administer the law. And suitable defence forces to protect our boundaries.

This means the inhabitants of a nation need to pay a tax. However it is collected, an ideal tax, which minimises economic and personal damage, seems to be in the vicinity of 10 percent to 15 percent of GDP.

It is historical fact that the lower the tax, the more entrepreneurial economic activity is generated.

But it has been noted that anything lower than 10 percent tends to introduce anarchist and or criminal elements that tend to disrupt unlawful economic and personal activity.

Keeping in mind that all politicians are elected bureaucrats, anything more than 15 percent tends to support the unlawful economic and criminal activity of the bureaucracy itself. The bureaucracy must be kept small, as it produces nothing. It is a leach upon the economic activity of all.

As far as income tax is concerned, an ‘ideal’ income tax of 15 percent has in the past, been demonstrated over a long period, in Hong Kong. This level of personal tax, provided there are no other taxation impediments in force, seemed to avert the dangers and destructive economic futility of big government.

No comments: