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Friday, August 17, 2012

When Do Producers “Go Galt?”

What is a proper share of income that should go to government? The answer to that question depends on who is answering it. Small L libertarians will argue for amounts in the range of 5 – 10% Strict libertarians make a case for virtually no taxes, arguing that most everything government does can be done better by the private sector. Services provided by government should be funded by user fees and not taxes.

At the other extreme, progressives argue that high percentages of private income should go to government because of income redistribution schemes. They also trust government to spend money better than citizens might do. As a result welfare states command large shares of income in the form of high taxes.

There is no correct theoretical answer to the question. Empirically, we know that government will take and spend whatever they can get away with.
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