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Comment by mynameishere | Hacker News Reader

A lot of strawmanism going on. It's not that taxation prevents entry-level entrepreneurs from starting businesses. Rather, taxation represents a misallocation of capital. If a company or person loses an extra million dollars to the government, I promise you that the money will be converted into dust [1], or handed out to failed businesses [2], or spent directly on tyrannical activity [3], or redistributed to pressure groups, or any company or foreign nation with a good lobbying firm or PAC, instead of being allocated responsibly.

[1] Literally, via TNT. [2] AIG, Goldman, Fannie, GM, Ford, etc [3] The TSA, the FCC, the CIA.

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That's interesting (and partly true), but it's nowhere close to the argument being made in the context of political debate about what capital gains taxes should be. After all, you've presented an argument against all taxes (or at least, all taxes beyond what's necessary to maintain a minimal government). That's quite frankly a much different (and more fundamental) debate than whether capital gains taxes should be fifteen or twenty five percent.

The debate in Washington and in the political media largely centers around whether or not a higher capital gains tax will discourage innovation, which is the argument that Matt is addressing.

I think you have a perfectly valid and consistent view, but the original article was most definitely not "strawmanism". It might have been strawmanism if he was writing the article as a reply to you, but he wasn't.

How about the Laffer curve? Historically, whenever the capital gains tax rate has been decreased, revenue has increased due to secondary effects. That sounds like a pretty good argument to me.

Umm, yeah, and unfettered capitalism does such a wonderful job of allocating resources. Government is terribly inefficient, but what other entity is going to maintain infrastructure, a social safety net, schools, and other basic services from which society benefits? I hate that so much money goes to DOD, TSA, farm subsidies, and the like, but reducing government revenues doesn't force the government to make tough choices, it simply causes it to run an even more unsustainable deficit.

By the way, if you lower taxes (and thus government revenue), it's not defense and corporate subsidies that suffer--they always get their piece--it's infrastructure and social programs. The "starve the beast" concept simply creates more suffering for those who can't afford things like private schools, expensive out-of-pocket health care, and jet time-shares.

federal government does not provide schools. propoerty taxes (state) provides schools. federal government does not provide infrastructure. gas tax provides roads, state funds and tolls go towards bridges and the like.

as for a social safety net? i'd be fine with it if it wasn't so obviously rotten. it needs to be gutted before any good can come of it.

look at yourtaxes sometime and see what percentage goes towards state vs. federal. ponder how state government can accomplish so much more with so much less.

> it needs to be gutted before any good can come of it.

http://www.joelonsoftware.com/articles/fog0000000069.html

> Umm, yeah, and unfettered capitalism does such a wonderful job of allocating resources.

True.

Read:

http://www.econlib.org/library/Essays/hykKnw1.html

Sure governments make mistakes, but most first world countries do a pretty good job of converting taxes to public services and a generally good framework for supporting the citizens.

I don't know which country you live in, but most of my tax money goes towards killing brown people and paying for other people's healthcare. I pay most of my taxes to the Federal Government and receive the most services from my state and local governments.

Wow -- downvoted to troll status? Maybe I should clarify my argument. The parent PROMISED us that our money would turn to dust. I think it's safe to say that generally taxes get turned into 'good' things, even if some misappropriation does occur. I think to say that any extra taxed money goes to waste is a little extreme.

it's not safe to say at all. it's one of the most dangerous misunderstandings of our time.

I think the very existence of organized governments with stable economies along with generally healthy and happy populations means not all taxes are going to 'dust'.

so....without taxes it would be impossible to have a stable economy or happy populations? I don't follow.

Don't change the argument. I never inferred, let alone stated "it is impossible to have a stable economy or happy populations without government". I am saying that empirically you can see that governments in first world countries generally aren't screwing things up so much you can say taxes are completely wasted.

You can also feel free to infer that I don't think the free market would do a better job, but that wasn't ever my argument.

they ARE screwing things up. bad government is the number one killer of the 20th and 21st centuries. it's not even a contest.

Perhaps 90% of the money will be wasted on stupid shit like that, but at some point, someone has to fix the roads and service our national debt.

fixing the roads comes from gas tax. infrastructure in general comes from state sales tax.

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