Economically, there are two kinds of people/households in this world:
- Those who pay more taxes than they consume.
- Those who consume more taxes than they pay.
It’s a fairly arbitrary line to draw, and I wouldn’t want to make any value judgments based on it. It’s tempting to call them ‘wealth-generators’ and ‘wealth-consumers’, for example, but that’s too simple. Most teachers fall into the second group, but without them, we’d have fewer people able to be in the first group.
Those in the first group are typically creating value by selling products or services that people want directly. Many of those in the second are doing the same thing, but we buy their products and services via a distributor known as ‘government’. That, to a large extent, is what taxes are.
But I just thought it was an interesting thought experiment, if nothing more. What’s your family budget deficit? How much are you dependent on government subsidy?
And if you don’t like the answer, comfort yourself with the thought that, thankfully, not everything revolves around taxation! How does your balance sheet look in other areas?
- Those who generate more happiness than they consume.
- Those who consume more happiness than they generate.
That’s much more important.