Taxes/Tax Structure

Would you prefer to pay more or less in taxes? If you’re like most reasonable people, you’d prefer less. But, like most reasonable people, you also balance that preference with an understanding that some level of taxes is necessary to support basic government services such as police protection, road construction and public education.

Of course, defining that level of taxes for individuals, families and businesses is the source of much debate, and rightly so. After all, tax dollars belong to taxpayers, not government.

One guideline for good tax policy – especially for general taxes like state income tax, state sales taxes, property taxes – is that the tax should include as many people as reasonably possible (often referred to as “broadening the tax base”). As the number of people subject to a tax grows, the lower the tax rate can be for everyone in order to produce the desired amount of funding. Further, this is just common sense: Everyone should pay some amount toward things that everyone benefits from, such as law enforcement and road maintenance.

Another important guideline for tax policy is that it should reflect and encourage principles of human happiness and freedom – such as limited government, personal responsibility, and family as the fundamental social unit. Though some would disregard this as “social engineering,” if we take the words of the Declaration of Independence seriously – that governments (and hence public policy) are instituted to secure “unalienable Rights” including “Life, Liberty and the pursuit of Happiness” – then tax policy cannot be simply be exempted from the requirement to secure the “pursuit of Happiness.”

This is why we impose reasonable taxes on specific things that rob people of their freedom and ability to pursue happiness, such as tobacco and alcohol. It is also why it makes sense to want a tax structure that reflects the social benefits of certain behavior – such as a tax deduction for charitable donations, or for families that take full responsibility for their child’s education rather than giving some of that responsibility to their local public school.

A good tax structure follows these guidelines – and must sometimes strike a balance between them when they are at odds. When tax policy does this, it can promote economic prosperity, freedom and human happiness.

So what?

An excessive tax burden means less freedom, fewer economic opportunities, and generally more difficult lives for Utahns. What does this mean in practice?

• Less money for Utahns to support their families, improve their lives, or save for the future
• Fewer job opportunities and lower family incomes, due to the economic inefficiency of government relative to the free market
• Bigger government programs that try (usually without success) to replace the roles that families, churches, charities and community organizations play in Utahns’ lives

Dig deeper:

Blog: J. Reuben Clark and Limited Government

Video: Tax Freedom Day in Utah

Policy Paper: Rethinking Tax Reform

Blog: Parents as a supply of “revenue enhancements”

Blog: Don’t chop tax breaks for charitable donations

Policy Paper: Saving Education and Ourselves 2011: The Moral Case for Self-Reliance in Education

Policy Paper: The Universal Tuition Tax Credit: Advancing Excellence Through Parental Choice and Empowerment

Video: The Progressive Income Tax: A Tale of Three Brothers 

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