Want Happiness? Cut Taxes!!!

(With the recent lack of posts, I thought to keep you all occupied I’d repost this, originally published at Americans For Tax Reform)

Since the rising prosperity brought about by economic freedom, with increased growth, increased living standards, and more jobs around the world, didn’t exactly fit the left-wing narrative, some leftist commentators have changed track. Instead of talking about the economy, they talk about ‘happiness’. “Yes” they say “we might be more wealthy, but we’re unhappy“.

Well, we can now happily tell the left to worry no more – because if you want to make people happier, thencut taxes! The fact that high taxes make people unhappy isn’t exactly rocket science. I mean, if the government takes money away from someone who earned it, and gives it to someone who didn’t (taking 20% in bloated perks for itself in the process), the person who earned the money is bound to be annoyed. This is tax refugees are fleeing high-taxing states in droves.

But earlier this week, a new study as proven conclusivly what we have been saying all along – controlling forall other factors, living in a high taxing state makes you statistically significantly more unhappy than living in a low tax state.

Using data from the 2005-2008 Behavioral Risk Factor Surveillance System and a 2003 economics paper examining quality-of-life indicators, economists regressed the subjective measure of well-being (how people rate their satisfaction) against the objective measure (states’ quality-of-life rankings based on compensating differentials).

The findings as to why some people are happy, and some are unhappy?

High taxes seem to be a big reason—ostensibly an even bigger reason than weather given that California is one of the unhappiest states and inclement Louisiana is the happiest. Further, considering how much New York’s crime rate has dropped and schools have improved in the last decade, taxes seem to overwhelm even these two critical factors in the happiness equation. According to the Tax Foundation 2008 analysis, three of the top five unhappiest states—New York, Connecticut and New Jersey—have the highest state-local tax burdens. On the other hand, four of the top five happiest states—Louisiana, Florida, Tennessee and Arizona—are among the states with the lowest state-local tax burdens

As the article concludes, taxes may not be the root of all unhappiness, but they do result in some very sad citizens. So the way to happiness is precisely what we’ve been saying all along – CUT TAXES!

15 thoughts on “Want Happiness? Cut Taxes!!!

  1. I’ve been telling statists for years that taxes make me sad. However they don’t seem to care. They only seem to care about the happiness of worthy people.

  2. Or there is this point of view from Lynne Featherstone, a LibDem MP in the UK:

    http://www.lynnefeatherstone.org/2010/01/would-you-leave-this-country.htm

    “I then put the case that there comes a point in terms of earnings where the amount earned is enough for a really decent and even luxurious life – and that thereafter it is not such a terrible thing to pay 50% tax.”

    And:

    “And we, my hairdresser and I, agree that it is great to want a decent life and be able to afford what you want – but that that there is a need for the common good and the narrowing of the ever-widening gap between rich and poor. We collectively shake our heads sagely in comfortable agreement about the greed that drives people to move their estates off-shore, to become non doms to avoid tax – and all such devious moves to deny the Treasury its tax take.”

    I’m with commentator Ragnar Danneskjöld:

    “You know what – the State does not own me, or my labour. And I consider that asking me to pay over 50% of my earnings to the State under force of imprisonment is tantamount to slavery.”

  3. A focus on the need for spending cuts (as opposed to restraint in spending growth) can be somewhat politically counter productive in my view. Governments should cut taxes and then work to live within those means. Demanding spending cuts before tax cuts is somewhat politically suicidal. In reform terms governments should give (tax cuts) before they take (spending cuts). Excess fiscal conservatism just makes the socialist side of politics seem more appealing. In particular the surplus fetish of the Howard government was folly.

  4. Actually, happiness can be found by achieving a goal that you have set for yourself- then setting another goal, etc.
    People can also find happiness in sharing a common cause, such as transforming our mixed economy into a true capitalist/ free-enterprize society.
    Any takers?

  5. Terje: A socialist I was talking to justified the $900 handout on the basis that the government had been running surpluses for years.

  6. Tinos – once debt was repaid, and probably well before that point Howard should have been reducing tax rates. The fact that we didn’t suggests that we was much more a fiscal conservative than an economic liberal. When he did cut taxes he was almost ashamed of it. Fiscal conservatism is often used to defer tax cuts or even to argue for tax increases. I understand the economic argument for spending constraint but in political terms economic liberals should lead with tax cuts. And if they are struggling in the polls they should dole out more tax cuts. The Liberal party has a reputation for being stingy because they are all about spending constraint. They ought to be all about lower taxes. Let the Labor party inherit a choice between spending. Constraint and

  7. The impact of ‘starve the beast’ (ie cut taxes first) will soon be on full display in California. The State has cut taxes without reducing spending and is now fiscally screwed. Its silly ETS scheme is likely to be thrown out first, but there’s a lot of snouts in the trough that will squeal very loudly if they start missing out. Should be a good fight.

  8. California is an odd case. They have a lot of spending on autopilot and politicians can’t readily change this situation. Arnie tried and didn’t get very far. Their Citizen Initiated Referendums allow activist policy rather than merely being restrictive on government power. I don’t think it. Is a god model.

  9. “The fact that high taxes make people unhappy isn’t exactly rocket science. I mean, if the government takes money away from someone who earned it, and gives it to someone who didn’t (taking 20% in bloated perks for itself in the process), the person who earned the money is bound to be annoyed.”

    Blue States subsidize Red States

    Fits quite neatly, does it not?

  10. I agree that cutting taxes does make many people happier even if people may not explicitly realise it. However I also think some people would always be quite happy paying even more taxes.
    Most people believe that centrelink, state run hospitals and universities are a good thing for example and would not be happy if their government reliquished control of these services.

    Some people believe it is good and useful to pay taxes and think it is a good thing to do. In that sense, they are “happy” with paying taxes over and above not paying.
    In addition, most people are prepared to put up with a bit of suffering. ie: Having a welfare system would give them more “happiness” than not having it, even though it will make them personally poorer.

    Me on the other hand, I get very angry at tax time.
    Involuntary taxes are immoral and of course impractical. I get angry because I believe forced taxation by the government to be directly and significantly harming me and others compared to a free market and voluntary tax alternative.

    Emotions are the response to conscious or subconscious beliefs. eg/ If my football team wins, I’m happy but the opposition supporters are disappointed. Even though we both witnessed the exact same series of events we had opposite emotional responses.
    As an individuals emotion’s are highly dependent on their fundamental beliefs about themselves, their society, the world etc, I’m scepitcal of how useful happiness evaluations are. I think the study of philosophy or the study of brain chemistry and mechanisms by neuro scientists to be far more useful and important.
    I’m also very sceptical of how accurately average happiness can be determined in anybody by any means that I know of, including economic analyses and surveys such as in the WSJ article. Just as people who appear to be highly “confident” may actually have narcissistic or arrogant tendencies, outwardly happy people may not actually be that happy.
    In fact, I’m not even sure how a researcher would properly define happiness. I can see bias creeping in, in the same way as when we see biased studies claiming that Norway is the best place in the world to live because you have universal welfare systems (ie: The “best” country is defined as being one that has universal welfare before the study even begins).

    Happiness studies are incredibly complicated IMO and even if they weren’t, how useful are they?

    Many people such as Cato’s Will Wilkinson obviously do believe that happiness evaluations are useful. But he himself recognises the difficulties invovled. As he points out, the highest scorers on happiness surveys are the Mormons in Utah. Should we all be Mormons then?

    It’s true that many academics love to attempt to show that there is no correlation between wealth and happiness (something I think is false, I believe wealthier nations are generally happier).
    But this doesn’t mean that libertarian academics should accept the value of these surveys and focus on arguing the point with socialists. I’m not saying they shouldn’t either, I just don’t think they should spend too much time doing it if possible. (after all social sciences are generally pseudo science IMO).

    I also think the first article title’s wording; fleeing in “droves” is probably false. 3 million people from 10 US states over 10 years doesn’t seem like droves to me even if it is significant.

    However having said all that, people moving to low tax states is still definitely good news. It shows there are people in the community who care about getting the best deal for themselves. And that’s a good thing.

    I do believe (despite the vaguery of the term happiness) that its true that more people would be “happier” with paying less tax than people who wouldn’t.
    Afterall, you need material possesions (money) in order to stay alive and I’d certainly hope most people would be happy with more wealth considering the increased opportunity, comfort and longevity that this would give to their living.

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