There’s a good article in the Melbourne Age discussing the argument that lower taxes don’t lead to better economic performance. It also discusses how lower taxes have higher social costs. Here’s hoping that a few people in Treasury take note of the points made.
The article also has a succinct summary of why Adam Smith was a great social thinker; but also one with limited relevance to today’s debates. Here’s the relevant extract:
Tax is at best a necessary evil. [This is]… a view with a long pedigree. Back in 1776, Adam Smith, founder of economics, famously declared: "Little else is required to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice." Many believe him, but was he right? Smith had no experience of the modern world; government to him was corrupt, incompetent officials in 18th century Britain. He could not imagine governments providing universal education, a comprehensive public hospitals system, subsidised health care, and comprehensive income support for the aged and the poor. Nor could he imagine governments managing industrial development so well that its output doubled every few years, as happened in Japan, South Korea, Taiwan, China and Ireland. Mozart's music may be eternal, but social ideas must evolve.
Hat Tip (and thanks): Tim