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We had a well liked business close temporarily because of an unpaid accrued sales tax liability.  I discussed this with an acquaintance who commented that the business owner had “stolen” the unpaid sales taxes.

On first blush, frankly I agreed with the comment, but after reflection, I’m not so sure.  Are sales taxes theft by government from the business owner?

In a completely free market, a business owner would be at the mercy of customer demand and would be required to adequately respond to market conditions in order to maintain profitability and remain in business.  Sales taxes place the business owner at odds with government too, but in a way that isn’t so easy to overcome.

It can be argued that there is a maximum price that the market will bear for any particular product.  On a level playing field, businesses use innovation and efficiencies in order to sort through the winners and losers.  Government interference, however, skews the playing field AWAY from the entrepreneur and increasingly results in small businesses evaporating.

I have seen several hardware stores and local department stores close when Home Depot or Wal-Mart come to town.  Typically, locals will blame cheap China imports for the demise of their beloved local store.  This common attitude, gives the local governments a complete pass.  If local market conditions provide for a maximum price of $10 for a hammer, then both businesses have to accommodate the cost of the hammer and the expenses to sell the hammer (to include taxes) when establishing the actual price in the store.

Markets do not suddenly experience a magic re-pricing of the theoretical maximum price when state and local governments institute a sales tax (or the Feds a federal sales tax).  Consequently, if prices are already at the maximum, then the business must absorb the burden of the tax.  Large international companies are able to transfer those costs through economies of scale or avoidance, luxuries not afforded to local businesses, so, if those taxes result in inadequate revenues to cover expenses, then those businesses fail.  If government continues to increase taxes, even large business will lose the ability to cover the cost.

Supporters of large government falsely presume that most want the “benefits” derived from government.  I submit that most merely tolerate the cost and are generally disinterested in the vast majority of these so-called benefits.  Furthermore, a critical analysis of the true effects of taxation are more likely to reveal that these taxes steal from one group in order to give to another group.

Citizens in the civil society desire to obey the law, but when the government becomes destructive, then there is increasing pressures towards civil disobedience.  Should the tyranny continue, then revolution takes place.  Some media outlet surmise that we are in this situation today.  I disagree; we have pressures today to cut wasteful spending, and those cuts have angered the recipient class.

True revolution begins when the contributors start to reject the notion that they should pay merely so others can benefit.  We don’t object to taxes when we see real benefit to US for those taxes.  Redistributive taxes are inherently detestable, and will be the first targets when contributors must choose between feeding their own families or providing a cell phone for a second generation welfare recipient.