Deadweight, and Dead Weight

An elected official (a Republican, no less) told me yesterday he doesn’t mind paying taxes because it is “the price of freedom.” His doe-eyed statement was wrong on a great many levels, practical and philosophical. First and foremost, freedom’s price has been paid — again and again — by the blood of patriots on battlefields near and far, not collected by revenue agents.
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You need water to survive, but too much can destroy your home, and even take your life. Government isn’t much different; civil government is necessary to preserve freedom, so taxes are inevitable. But, economically speaking, we’re drowning in a torrent of government spending and activity.
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An excellent article in Investor’s Business Daily (read it here) makes for enlightening, if perhaps depressing, reading on the tax-side of the equation. The authors contend that in addition to what is taken from the productive economy in the form of taxes, there is a dollar-for-dollar reduction in wealth ever created – because of that burden.
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So if the tax burden is $5, the true weight on the economy is $10. That’s $5 in what we paid, and another $5 in what we never earned.
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If only it was just $5. In 2007, federal taxes alone cost us $2.5 trillion (yes, that is a “t”), which means the cost to each one of us is actually $5 trillion (yes, that is a “t”).
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The authors note, “When measured in the vital human terms of lower incomes, fewer jobs and reduced standards of living, the high cost of taxes is simply beyond all reason compared to the low level of benefit from government spending — once the basics have been provided and the needy cared for.”
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While the cost of taxes, and the deadweight burden they exert on the economy, are pretty easy to see — after a fashion — there is an even more insidious cost to our daily pursuit of happiness associated with government.
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A second article, published by the American Conservative Union Foundation (read it here), finds that the cost of federal regulations is $1.14 trillion (again, yes, that is a “t”). Since 1995, there have been 48,000 new rules and regulations promulgated by the federal government alone. Those regulations represent a real cost to you, in the the products you buy, the services you utilize, even the wages you are paid.Â
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(To paraphrase my friend Gene Healy of the Cato Institute in his fantastic book “Go Directly To Jail,” the massive number of laws, rules and regulations effectively means that at every moment of the day, you are very likely doing something at least technically illegal.)
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The cost of navigating the maze of federal rules and regulations is compounded by a confusing interaction with state and local rules and regulations.
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As I’ve said before, we don’t have tax problems; taxes are emblematic of spending problems. And with the growing legions of bureaucracies, comes the need for those well-meaning bureaucrats to justify their continued existence with more and more rules and regulations.
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Until we pull in the rate of spending, the burden of taxes (and the propensity bureaucrats to regulate), will continue to create deadweight-loss threatening our future productivity, prosperity and, eventually, our liberty.

Michael Quinn Sullivan

Michael Quinn Sullivan is the publisher of Texas Scorecard. He is a native Texan, a graduate of Texas A&M, and an Eagle Scout. Previously, he has worked as a newspaper reporter, magazine contributor, Capitol Hill staffer, and think tank vice president. Michael and his wife have three adult children, a son-in-law, and a dog. Michael is the author of three books, including "Reflections on Life and Liberty."