by Peter Brock Ii

Created on: October 16, 2008   Last Updated: November 23, 2010

The American Heritage 4th Edition dictionary gives three definitions for health. The first is irrelevant but the second two are "Soundness especially of body or mind [and] A condition of well-being." Based on this, lower taxes are absolutely beneficial to the health of an economy.

When people have more of their own money to spend, there is a greater sense of freedom and more of a likelihood for spending. For the common folk, this means buying the simplest of goods such as food, basic clothing, the nicer book bag for school for the kids, to the difficult items such as houses, cars, and vacations. For the big business owner, this means hiring more people, purchasing a better health care plan for their employees, and investing in innovation for their companies. The point is, with all this purchasing power, companies big and small, will be selling more and making more. This is a positive cycle that should constantly be pursued.

The numbers are hard to dispute. There have been times in history when higher taxes have seemed to help. As high as taxes were after WWII the growth of our economy cannot be atttributed soley to this. Indeed, our involvement in the rest of the world and the trade that came with it greatly helped our economy. Moreover, trade, when free and not heavily taxed will generate more business and thus contribute to that positive business cycle. When taxes are low there is a soundness of mind when it comes to purchasing and investing.

What is the point of raising taxes? Obviously, to generate money for the government to spend. The government however will not spend an economy into prosperity. Indeed, some spending will aid individuals prosperity, but it will not create it. Even if you give people money there is nothing that says they will spend it wisely. Even if you subsidize a new highway there's nothing that says a multitude of businesses will emerge along it. However, if the government doesn't heavily tax, people can be more confident in investing in companies that want to embark on these kinds of tasks. People will be more inclined to invest in a business along a highway, or spend their money on the goods they deem most necessary. Generally speaking, everyone will have a better ability to use their money how they choose. This will create a "condition of well-being."

If the government raises taxes it is far from certain it will spend it efficiently. This is also true of individuals. The difference is, when the government is doing it everyone's money is wasted. When indivduals do, only that person's money is wasted. I'm confident people will have more of a "soundness of mind" if their money hasn't been wasted by someone else.

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