Best Arguments for Low Taxes

Two Strong Reasons for Reduced Taxation:  
Personal Liberty and Economic Performance

Taxes interfere in a profound and dramatic way with the personal freedom of the individual. Many people have no other personal assets than their lives. To all these people the degree of taxation is of crucial importance to their lives and general well being.

Although taxes in general aim to finance a mandatory public welfare system, they still represent an interference with the private life of the individual, which in some cases might be positive, but in others is negative or even detrimental. This is particularly true in cases where the taxes induce such a high mark-up on the price that the commodity or service cannot be traded at all, but it goes for all cases where the individual wishes another direction in his personal life than what has been politically decided.

Taxation at European levels does in some respects represent a declaration of incapacity of the citizens. Many politicians think they have a superior understanding of the needs of people than the people themselves. They also seem to believe that government is a better producer of goods and services than private companies.  

These views are of course incorrect, and consequently we want the political sphere to be reduced to some elementary tasks as well as provide for a social security for those who are incapable of taking care of themselves.

Taxes disturb or destroy the economy

Taxes disturb or damage the economy. High taxes destroy an economy, or render economic transactions virtually impossible. That is why the whole economy and the living standard of the people benefit from low taxes.

Studies carried out in 2000 by Sweden's National Price and Competition Office show that price levels in Sweden are the highest in the European Union (EU) -- 20% higher than the average EU level. According to this Governmental authority, half the difference is due to taxes, wages and the currency and the rest is due to the lack of competition.

Taxes function in the same way as customs duties in older days. The higher the duties, the less trade. In certain countries during the 19^th century, duties were so high that hardly any trade at all took place. As duties were reduced, trading improved. The lower the duties became, the higher the levels of trading, which resulted in increased living standards. And today large duty-free areas are created in order to benefit trade and industry, all for the good of the people.

Taxes should be reduced for the same reasons that duties were reduced - to foster enterprise, encourage trade and generate more employment.

We react against countries where the state intrudes into an economic agreement between two parties simply to take the major part of the costs of the goods or services being sold. To avoid such greedy and ruthless  exploitation in the name of the state, constitutional restrictions ought to be established that would make excessive taxation of the individual impossible.

High taxes -- weak economic growth. Low taxes -- high economic growth

Several scientific studies have indicated a clear relationship between high taxes and low economic growth. Case studies confirm this direct connection; high taxation - weak economic growth; low taxation - high economic growth.

Richard Vedder, Professor of Economics, University of Ohio, has demonstrated such a connection within states of the U.S.A. During the period 1965-1992, the twenty-five states with the lowest tax pressure had an economic growth rate per capita that was one third higher than the rest of the states.

Sweden, with a very large public sector and a tax burden that is higher than any other country in the world, is perhaps the best example of the direct relationship between taxation pressure and economic growth.

The most recent contribution in this area is from the end of year 2000, and from the university town of Lund. In her doctoral thesis "Limits of Tax Policy", economist Åsa Hansson shows a clear correlation between the size of a country's public sector and that country’s economic growth. The larger the public sector, the lower  the economic growth. 1% more of Gross National Product to the public sector means 0.23% less economic growth, according to doctor Hansson.

Sweden, with the world's highest tax burden is probably the best example of the connection between taxation pressure and economic growth

During the period 1870 to 1970 Sweden -- next to Japan -- benefit by  the most rapid welfare increase in the world. Meanwhile the fiscal pressure was not notably higher than in other countries.

However, since 1970 Sweden have increased taxes considerable -from 40 % of GDP in 1970 to 53 % in 1998 - and is today the only OECD-country with a total tax pressure including social security contributions above 50 %.

Since 1970 the Swedish gross 2001. (See Statistics at the end of our Home page). The economic prosperity has gone down. Or as Professor Alvin Rabushka at Sanford University in California says:

These figures really show howe the very high taxes in Sweden impead economic growth.  

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World Taxpayers Associations
Secretary General Mr. Bjorn Tarras-Wahlberg
E-mail: BTW@worldtaxpayers.org
Mobile: +46 70 325 00 11

Taxpayers Associations in Eastern Europe and Central Asia