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Negative effects of US taxation

Javier Portillo (Joseph A. Butt, S.J. College of Business, Loyola University New Orleans, New Orleans, Los Angeles, USA)
Walter E. Block (Joseph A. Butt, S.J. College of Business, Loyola University New Orleans, New Orleans, Los Angeles, USA)

Studies in Economics and Finance

ISSN: 1086-7376

Article publication date: 1 June 2012




The purpose of this paper is to criticize the current US tax system and explain in what ways taxation harms the economy. Taxes are coercive. Taxpayers are forced to pay individual income taxes. If the taxpayer refuses, several adverse consequences will unfold against him even including jail‐time. Taxes diminish taxpayer's disposable income and leave consumer's wants unattended. The money they could have used to fulfil their wants goes instead to the government in the form of taxes.


Taxation is analyzed from an economic point of view.


Progressive taxation is harmful to the economy because it punishes successful individuals. The more they earn (a reflection of the productive value they bring to the market), the more they have to pay. Meanwhile less productive citizens paying little or no tax are receiving “benefits” derived from the investment of more successful taxpayers. These are inefficient since they reduce incentives. Taking money from Peter and giving it to Paul decreases the incentive, both have to earn an income and be productive. Finally, the paper exposes the influence government has over taxpayer's decisions.


We live at a time in the US when President Obama is calling for greater taxation for the rich, and the Republicans are rejecting this initiative on the ground that it is “class war.” A study of taxation at this point cannot help but shed light on this controversy.



Portillo, J. and Block, W.E. (2012), "Negative effects of US taxation", Studies in Economics and Finance, Vol. 29 No. 2, pp. 76-88.



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Copyright © 2012, Emerald Group Publishing Limited

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