Interestingly, some of you find this disturbing. Out of curiosity, if we work backwards from the percentage of annual income taken, what percentage of you does the government own?
My taxes to the government are more of an exchange of services. My government gives me roads to drive on, schools to send my kids to, police, fire department, parks, regulation of various industries, labor laws, military protection from hostile governments (among other things including the potential betterment and presumed increased safety of society).
To wit, my taxes are my end of a tacit social contract that I have made with my government. Because it is a social contract, the purpose of it is not profit, but instead the betterment of mankind in general.
When you compare the benefit received by paying taxes to the benefit of a lump sum payment (which could be had just as easily in the form of a loan), you realize how little you are getting from this investment plan.
But I think that my specific revulsion comes from having read plenty of literature (Shakespearian and pre) and knowing that usury is a sin.
Taxes are forced on us, not chosen. They do support some betterment of mankind, but the inefficiency is bad for mankind. Taxes are an order of magnitude higher, and the individual benefits are usually far less.
Loans are paid back plus interest on a fixed schedule. These aren't. Most investees will profit from the transaction even without TVOM.
Don't like lump sums? Just convert it to guaranteed monthly income for life by buying an annuity. Rates are low right now due to the economy, but you'll still get ~$2k/mo for a $400k lump sum.. and you can get things like inflation adjustment too.
"You'll never be poor" is usually worth more than "a few percent of your income" plus the right to buy it back.
Taxes are indeed forced upon us, but you benefit directly from the system that taxes support. If you do not want to pay taxes, you always have the option to leave the safety of the system (move to another country or declare war on the country taxing you).
Although it is likely infeasible and anti-social to declare war (however, it has been done many times), I don't doubt you could find a country with lower taxes. The issue, however, would then be being able to make the same amount of money as you would in a country with higher taxes. That is to say, you get what you pay for.
Essentially you are discounting (wholesale!) the benefits that you, the individual, derive from having a working system of government. Yes, the immediate and obvious benefits are small, but the benefits that you essentially take for granted, certainly are not small.
I think the quote that life would be "nasty, brutish, and short".
I did the math prior to posting and I do realize that (depending on the sum of money), it could be a very good deal for the investee.
It just seems to have elements of a Faustian bargain.
Yeah, not a great choice of words on my part. Using descriptions of taxes, loans, and usury in the explanation of what disturbed you about this investment deal seems at least close to the definition of analogy though.
The issue, however, would then be being able to make the same amount of money as you would in a country with higher taxes. That is to say, you get what you pay for.
That seems unlikely. I'd get the exact same benefits in this country if I'd paid <10% of the taxes I already have.