Saturday, March 6, 2010

Taxes - A Cost of Doing Business

No one likes to pay taxes. Taxes are perceived as a "black hole" (a waste) to the economy. This concept is consistently reinforced by politicians and others who incessantly speak in terms of the "government picking your pocket". Sure there are "bad" taxes and there are legitimate questions concerning what projects should be funded through tax dollars, the appropriate tax rate, and how (flat tax, income, sales, and user fees) taxes are collected.

The March/April 2010 issue of Science Illustrated contains an article titled "Fly Factory". This article profiles a "factory" in Mexico that provides sterile screwworm flies for purposes of eradicating screwworm flies. The Science Illustrated article notes that "Flesh-eating screwworm flies once caused ten of millions of dollars in damage to livestock annually in the southern U.S." The article goes on to say that: "Sterile males were introduced in Florida in 1957, and by 1996 the pests were eradicated in the U.S". By the year 2006, the screwworm fly had been eradicated from Central America. The Jamaican PDF handout notes that the screwworm fly eradication "... would improve livestock productivity and food self-sufficiency on the island. ... There will be a reduction in the import cost of chemicals for treating NWS and the toxic burden on the environment will be alleviated. The risk of chemical residues in milk and meat will also be reduced."

Clearly the livestock industry has benefited from this program. Society also benefits through better food production. While this is only one example of an industry benefiting through the use of tax dollars, it does highlight that taxes are a legitimate cost-of-business and that tax dollars are not simply a "black hole". Furthermore, that there are certain types of programs where the government is the appropriate solution since private industry would not be up to the challenge. So when you hear people lamely assert that taxes are always bad for business think of this program.

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