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Comment by justinmk | Hacker News Reader

> Taxation could be used as natural pressure to correct market failures.

Taxation isn't natural.

By the way, I'd like to remind everyone: when the state taxes something, the state now depends on that thing for its budget.

> If retail company that has 30% market share pays 0.3% extra from its revenue compared to tiny company with just 10,000 customers, it would probably be enough to even out the field and limit barriers to entry.

If you are really interested in barriers to entry, you can do a thought-experiment (or a real experiment): try to start a business. See where the friction is. And then ask yourself what the barriers were.

Another thought-experiment: imagine if starting and running a business (which includes collecting revenue, paying employees, paying taxes, abiding by the law) were nearly zero-friction. If starting a business had very low artificial friction, then there would _actually_ be natural pressure against market incumbents.

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I run business in Finland and pay high taxes. Friction is not the taxes. If it were, I would have moved my business to Estonia long time ago, it's just few hours away. I could do it over internet in few hours and start within days.

There are different ways for countries compete as "business platforms". I'm not saying that some way is better than another, what I'm saying is that there are different strategies that can work.

High taxes in Nordic countries work as form of evolutionary pressure. They harm low-tech low education requirement jobs and businesses. They drive them to China and to the third world. They help high-tech companies and skilled workers, because taxes pay for great education, safety nets general well-being.

Within US different states have different strategies. High-tech hubs seem to tax more and provide more just like Nordic countries. Some states choose to compete with low regulation low pay jobs against Mexico, China and India. Good luck with that. https://en.wikipedia.org/wiki/State_tax_levels_in_the_United...

I think you've vastly confused cause and effect. Rich economies can afford high tax rates because they are rich, and poor economies have to compete for what businesses they can get.

Another obvious confounder is that richer states tend to be more urban, and urban places tend to be more liberal. Which vote for higher tax rates and social programs. Rural states are more conservative which favor smaller governments. This is just an effect of political demographics, not a cause of superior tax policies.

Many rich economies started poor.

Systematic investment to education and infrastructure have provided the tools to become a rich economy. Becoming rich country with low level taxation is possible only for countries with lots of natural resources, like oil.

Systematic investment to education provides new enrollees for MIT and Stanford and, subsequently, workforce for Apple and Google. Brain drain is a real problem for developing countries.

Governments in most rich countries today are vastly larger than a century ago. American in particular was basically an extreme libertarian system until relatively recent times. These countries were already rich, or well on their way to becoming so, when their governments bloated up. Rich societies cause big governments, not the other way around.

Additionally, things like education and infrastructure are a tiny fraction of government spending (although they tend to keep growing despite not getting any better.) Almost no one disagrees that the government should fund those things. That's not where the vast majority of your high taxes are going.

Chinese tax rates are not low. Only the base is lower, but taxes in china actually wind up being quite high.

Taxation may not be natural, but it is inherent in a society.

To explain, you give some of your kill to the tribe. You share with your family, to provide for them. In return, you get a tribe or family.

The independent person without obligation to return to the social good is largely a myth and, if done, would mean extinction.

Additionally, I don't mind paying my taxes. I do mind how my taxes are spent. They are the cost of living in society.

Taxes may be inherent to society, but so is crime. I believe we have a moral obligation to minimize both.

I kinda like the idea of a well-funded government. Maybe it's just me?

Note: This doesn't mean I agree with how they spend it.

I agree with a well funded government. I don't always agree with how government spends the money, but that is kind of the point. Governments should guarantee a minimum standard and equal starting conditions for everyone, capitalism raise the roof. Both are vital.

Also sex, sex is inherent to society. As is friendship, as are stable child rearing agreements (spartan or catholic - I'm not dictating, but you do need something to get babies to productivity).

Let's not minimize those, or poetry or theatre.

Your moral equivalence is not mine, perhaps other like you are a majority or even a significant minority, but perhaps not. In any case I think that for a functional society my equivalence has a higher utility.

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