This Code was enacted in and was derived, in part, from the former Political Code statutes relating to revenue in Sincemajor provisions of the Revenue and Taxation Code have been repealed and re-enacted and new topics added either by legislative enactment or the general electorate through propositions. Each section listed below is a link to a PDF document that sets forth the enactment history for that section.
This represents a praxeological analysis of taxation and as such should not be expected to go much beyond what has already been said by other economists.
To say there is nothing new to be stated regarding the economic effects of taxation is not to say that what there is would not be news to many.
In fact, after surveying several popular economics textbooks it would seem that what I have to say is news to most of today's economists and students of economics.
Insofar as these texts deal with the economic effects of taxation at all, beyond a purely Taxation sections presentation of various tax-schemes and their historical development,  they are almost completely silent on the question of what the general effects of taxation are.
Moreover, what in their discussion of the problem of tax-incidence these texts then say about the economic effects of specific forms of taxation is invariably flawed.
However, this state of affairs merely reflects a process of intellectual degeneration. As early as years ago almost everything that should be understood today about the economics of taxation had been correctly and convincingly stated by such a prominent figure in the history of economics as Jean Baptiste Say in his Treatise on Political Economy.
In contrast to today's textbook writers, who assign the discussion of taxation to arbitrary places within the overall architectonic of their books, from the beginning Say correctly locates the phenomenon under the general heading "Of the Consumption of Wealth. It is a glaring absurdity to pretend, that taxation contributes to national wealth, by engrossing part of the national produce, and enriches the nation by consuming part of its wealth.
Whatever be the denomination it bears, whether tax, contribution, duty, excise, custom, aid, subsidy, grant, or free gift, it is virtually a burden Taxation sections upon individuals, either in a separate or corporate character, by the ruling power for the time being, for the purpose of supplying the consumption it may think proper to make at their expense; in short, an impost, in the literal sense.
In light of this general explanation, I will then demonstrate the fundamental Taxation sections fallacy in the standard textbook analysis of tax-incidence. That taxation — foremost and above all — is and must be understood as a means for the destruction of property and wealth-formation follows from a simple logical analysis of the meaning of taxation.
Experience cannot beat logic. Taxation is a coercive, non-contractual transfer of definite physical assets nowadays mostly, but not exclusively moneyand the value embodied in them, from a person or group of persons who first held these assets and who Taxation sections have derived an income from further holding them, to another, who now possesses them and now derives an income from so doing.
How did these assets come into the hands of their original owners? Ruling out that this was the outcome of another previous act of taxation, and noting that only those assets can be taxed that have not yet been consumed or whose value has not yet been exhausted through acts of consumption a tax-gatherer does not take away another man's garbage but rather his still valuable assets!
They come into one's possession either by one's having perceived certain nature-given goods as scarce and having actively brought them into one's possession before anyone else had seen and done so; by having produced them by means of one's labor out of such previously appropriated goods; or through voluntary, contractual acquisition from a previous appropriator or producer.
Only through these types of activities is one capable of acquiring and increasing valuable — and hence taxable — assets. Acts of original appropriation turn something which no one had previously perceived as a possible source of income into an income-providing asset; acts of production are by their very nature aimed at the transformation of a less valuable asset into a more valuable one; and every contractual exchange concerns the change and redirection of specific assets from the hands of those who value their possession less to those who value them more.
From this it follows that any form of taxation implies a reduction of income a person can expect to receive from original appropriation, from production, or from contracting. The marginal utility of appropriating, producing, and contracting is decreased, and the marginal utility of consumption and leisure increased.
Accordingly, there will be a tendency to shift out of the former roles and into the latter ones. Moreover, it reduces the present incentive for future production of valuable assets and thereby also lowers future income and the future level of available consumption.
Taxation is not just a punishment of consumption without any effect on productive efforts; it is also an assault on production as the only means of providing for and possibly increasing future income and consumption expenditure.
By lowering the present value associated with future-directed, value-productive efforts, taxation raises the effective rate of time preference, i.
Just increase taxation enough, and you will have mankind reduced to the level of barbaric animal beasts. For instance, from the side of economists who falsely conceive of economics as an empirical science that produces nothing but hypothetical explanations which invariably must be tested against empirical evidence in order to be validated analogous to the situation in the natural sciencesthe following argument is frequently heard: Empirically, it has been observed repeatedly that a rise in the level of taxation was actually accompanied by a rise not a fall in GNP or other measures of productive output; hence, the above reasoning, however plausible, must be considered empirically invalid.
In fact, some empiricists of this sort go even further and make the stronger claim that taxation actually helps increase the standard of living as evidenced by the fact that some countries with once low standards of living and low levels of taxation now enjoy a much greater wealth with much higher taxes.
Both objections are simply confused. Experience cannot beat logic, and interpretations of observational evidence which are not in line with the laws of logical reasoning are no refutation of these but the sign of a muddled mind or would one accept someone's observational report that he had seen a bird that was red and non-red all over at the same time as a refutation of the law of contradiction rather than the pronouncement of an idiot?
As regards the stronger thesis, it is nothing but a beautiful illustration of the ever so attractive post hoc ergo propter hoc fallacy. From the fact that the correlated events of high taxation and wealth were to be observed later than those of low taxation and wealth it is inferred that increased taxation increases wealth.
Yet to reason in this way is about as convincing as the argument — justly ridiculed by Say — that one can observe rich men consuming more than poor ones; therefore, their high level of consumption must be responsible for the fact that they are rich.
The weaker thesis — that experience would at least disprove any claim of a relationship between taxation and productive output that was negative by necessity — is also off the mark. The praxeological reasoning presented above does not at all rule out what empiricist economists falsely interpret as a refutation.
In this earlier discussion the conclusion had been reached that the effect of taxation is a relative reduction in the production of valuable assets — a reduction, that is, as compared with the level of output that would have been produced had there been no taxation at all or had the level of taxation not been raised.
Nothing was said or implied with respect to the absolute level of the output of valuable assets. Statistical studies here are entirely beside the point: As a matter of fact, absolute growth of GNP, for instance, is not only compatible with our earlier praxeological analysis, but can even be seen as a perfectly normal phenomenon to the extent that advances in productivity are possible and actually take place.
If it has become possible through improvements in the technology of production to produce a higher output with an identical input in terms of costor a physically identical output with a reduced input, then the coincidence of increased taxation and an increased output of valuable assets is anything but surprising.
However, this does not in the least affect the validity of what has been stated about relative impoverishment resulting from taxation. With a given state of technological knowledge, though it may change over time, and taxation being what it is a punishment of value-productive effortsthe level of productive output must be lower than the one that could have been attained with the same knowledge and no or lower taxation.Taxation Section.
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