Taxes and their true owners: A look behind the scenes of public finances

Demands for increased taxes usually come from politicians, a group within society that rarely actually acts productively – often it was not even before their political career – and no net taxes paid. how? No taxes? Many will now object, politicians will even protest and pay for their payroll and the ones thereindicate the shown wage tax deduction. However, the explanation for this is very simple: Politicians in government, in parliaments, as well as civil servants and public employees are all taxpayers. Your salaries are financed from these funds.

Thought experiment: What if there were no taxes?

Let’s do a thought experiment that makes the connections even clearer: Where would the net income of politicians be if there were no taxes? Right, from scratch. Anyone who draws their income from tax funds is therefore a pure net tax consumer. That means he benefits from taxes without ever paying taxes himself. So who exclusively from theTax money lives is ultimately a net tax recipient, while those who pay taxes are net taxpayers.

Politicians and tax increases: A paradoxical pursuit of more revenue

For this reason, politicians – both at national and local level – are always striving for higher tax revenues. They have a strong self-interest in directing more tax money into the state coffers in order to secure their own expenses and strengthen their power base. Supporters of this policy are found in the population, especially those who also netDo not pay taxes or benefit from taxes without being productive. Many of these people are unproductive and live off the tax payments of others – a community that is looking for additional tax funds to enforce their respective interests.

Unproductive greed and tax competition: The problem of greed for taxpayers’ money

While a hunting tenant in his territory cares for, nurtures and protects the game, there is an insatiable greed in the hunt for taxes. It is a kind of tax competition that only stands in the way of the need for more income and therefore has to be eliminated. Only the individual himself knows the meaning of his own goals and the means at his disposal to achieve them.Only he has knowledge of his personal time frame and has exclusive knowledge that no other person can have. Everyone knows best how to use their income and wealth in the best possible way – a realization that leads to higher prosperity and increased productivity in interaction with other market participants.

The illusion of tax revenue: why lower taxes are better

Every euro that is taken from citizens by taxes is lacking as a means to achieve their own goals. Instead, this amount goes to the health insurance funds and the bureaucratic apparatus, which usually do not know these funds or are difficult to use efficiently. In fact, taxes could hardly be low enough. The lower the tax rates, theBetter for the economy. Every euro that remains citizens helps to increase society’s prosperity because it flows into private investment, innovation and consumption. Tax competition is therefore an important driving force for higher prosperity, as it lowers tax rates.

The benefits of the competition: More prosperity through lower taxes

The advantages of the competition are not limited to the tax area. This also applies to regulations and interventions in people’s lives. Smaller political units and communities promote more intense competition because they offer more neighbors and thus closer alternatives. This makes the exit from a region or municipality – for example through moving away – clearmore cost-effective and puts the powerful under pressure to be more reserved when accessing citizens’ money and creating better framework conditions.

Family comparison: limits of control and choices

This is where the comparison with the small unit “Family” can help: Could a family man force his adult children to give him 50 percent of their income? Could he tell you that you don’t drink alcohol at home, pay for overpriced wind power or use inefficient heating technologies? Most children would probably move out immediately because they preserve their freedomwant. Likewise, a mayor would hardly be able to ban alcohol consumption or enforce a municipal tax on meat consumption of 100 percent. In addition, if the residents defend themselves against the interventions, he would have to reckon with massive immigration of people from other cultures.

Vote with your feet: The importance of changing your place of residence

At the regional level, tuning with your feet – i.e. a change of residence – is a realistic way of defending yourself against state attacks. If a region is losing more and more through high taxes, poor infrastructure or unfair treatment of citizens, people will pull away in droves. This is an effective signal against excessive intervention.

Economic freedom in monetary system: why competition is also important here

Institutional competition is also a decisive advantage in the monetary system. A family member can hardly be made to keep his savings in a currency he has issued, constantly losing value. It would quickly exchange them for more stable alternatives that can also be used outside of the house. The situation is similar with cities andStates: They can hardly impose a currency on their citizens that loses value faster than the alternatives outside their borders. Citizens would keep their savings in a more stable currency, for example, in the currency of a neighboring town, and buy or sell goods there.

The success of the currency competition: example of Hamburg and the euro zone

This principle also explains the success of the Hamburger Mark Banco, which, thanks to its relative value stability, became a symbol of the solidity of the Hamburg merchant. The larger the national territory and the fewer political units exist, the more the institutional competition in the monetary system is restricted. Citizens are increasingly facing no alternatives. Since the introduction of the euroIn Europe, currency competition within the euro zone is largely eliminated. Citizens of traditional high inflation countries in the Mediterranean or Eastern Europe can no longer keep their savings in Deutschmarks or other stable currencies. Previously, they were able to sell their weak domestic currencies and trade them for D-Mark – an important mechanism to make irresponsibleto sanction monetary policy. Today, this currency competition has largely been eliminated within Europe, which centralizes monetary policy and strengthens the power of national central banks.

The value of competition for the economy

The more political units there are, the more competition, the greater the economic freedom and prosperity. This also applies to the money system: only real competition can prevent politicians and central banks from treating citizens’ money irresponsibly. The abolition of this competition – as with the euro – has control overless central players and significantly restricted the scope for irresponsible monetary policy. Only when competition is restored do citizens have the chance to preserve and strengthen their savings and economic freedom.