The Unseen: Taxation

At the heart of all economic analysis should be the understanding that humans act purposefully: when presented with options, individuals choose those they believe most likely to achieve their goals. Obstacles and incentives inform all individual choices. This is consistent across all supposed levels of economic activity, be it described as micro or macro, as well as across all levels of wealth or social standing. The wealthiest in Connecticut, for example, are proving that sufficiently burdensome taxation will lead individuals to opt for change.

Proponents of government often overlook the response to policy. They tout the benefits of tax revenue, for example, via the policies and programs funded. This is the seen. What is usually unseen is the response to these policies and programs. In the case of taxpayers, they are given an incentive to flee states where taxes become onerous. As the editorial mentions, many fled Connecticut for New York. For those people, taxes would not be lower but other elements like social mobility, culture, and proximity to business in New York likely offset the tax burden.

Another unseen factor of taxation results from the programs themselves: as opportunities to participate in taxpayer funded programs increase, so does the incentive for people to take advantage of such programs. As a result, programs become underfunded by virtue of additional participation, creating the need to increase spending and, consequently, taxation. In the case of Connecticut, taxpayer flight will further diminish the funds available, making for some difficult times ahead.

More of that which is Seen and that which is Unseen
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