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TAxes do manipulate people
Indeed, taxes are used to control behavior. There are not any reasons in the Constitution for a government to raise taxes one being for the proper administration of government and the other for national defense.
However, modern government has conceived a thousand and one reasons to tax.
Taxes do discourage or encourage behavior. By taxing corporations, they move out of town or overseas. By not taxing those with lower or no income, they remain poor with no incentive to produce. We punish those who produce and reward those who don’t produce.
In example, welfare recipients already have a 100 percent tax cut and won’t care much how high income taxes are raised. And same welfare beneficiaries will vote for the candidate promising the most benefits and couldn’t care less how it affect taxes since they already have a 100 percent tax cut and pay no taxes.
Collateral Damage
It is not just the target industries that are affected by these tax incentives and penalties. Every time an economic decision is distorted by tax policy, the economy as a whole becomes a little bit less efficient. The general standard of living of a county is dependent, more than anything else, on the overall efficiency of its economy.
So, the more we try to accomplish "public good" by coercing behavior through the tax code, the poorer, as a whole, the country becomes.
This effect is not as directly measurable as the intended effect, but they invisibly add up. It is easy to see the fuel extending benefit of ethanol subsidies, but adding ethanol lowers fuel economy, requiring us to buy more fuel than we would with pure gasoline, and food became more expensive as agricultural resources were diverted to chase the subsidies. Multiply this by the thousands of tax incentives and...
Punative Taxation
The idea of taxation to fund the ACTUAL duties of government fell by the wayside long ago. Raising taxes as a means of government control over personal behavior has now become the norm.
But who is lobbying for all of these increased taxes on behavior? None other than so-called non-profit groups that benefit from the tax increases in the form of larger government grants or taxpayer subsidies.
The next time you see a push for an incrase in alcohol or tobacco or twinkie tax, take a look at who is pushing for it and then look at their income source. Dollars to donuts much of it will be from that tax increase.