The long-term ability of the criminal conspiracy which is our federal government to run amok, merrily murdering as they go, is mostly a function of the wealth they can extract from us in taxes. Sure, they can borrow money for a while, but the interest payments pile up. (Much of our federal tax money now goes to pay interest, which is doubtless one reason that the feds are so hot to loot the black gold of the Middle East.) They can inflate the currency, which both hides and postpones the costs of this subtle transfer of wealth to the politically well-connected, but they lose support if prices rise too fast, or the economic stagnation they've created persists.
A risk-free and patriotic way to deny them your money, and maybe get a little richer yourself, is to adopt a do-it-yourself lifestyle. Say there's a job around the house that will take a plumber 2 hours at $50 an hour. For middle class Americans, the real tax rate on marginal income including federal, FICA (social security), and state taxes is close to 50%. (Don't be fooled by the 7% FICA tax that your employer is forced to put in. It's coming out of your pocket.) So to pay the plumber his $100, you will need to earn about $200 before taxes. Because you're probably not as efficient as the plumber, the job might take you 3 hours, so if you do it yourself, that's like getting paid $67 an hour before taxes. If your regular pay is less than that, you come out ahead if you take the time off work without pay and do the job yourself. If you've got leisure time, you do even better. Even if you just break even, you've just denied government $100 in taxes, plus the plumber's smaller tax payments due to your lost custom!
Some years ago I did a project in Sweden. During my time there, one of the mid-level managers took his annual 6-week summer holiday. Like most Americans, I wondered at these coddled northern European workers in their socialist societies with long vacations. But when Hans returned to work, he was a wreck. It seems this middle-aged man had spent the time putting a new roof on his house and doing other strenuous projects. That's when I realized that these sabbaticals from employment aren't just vacations. They're used by the middle class to do projects that otherwise aren't financially viable because of the high tax rates necessitated by socialism, and that the incentive to do so is directly proportional to the tax rate on marginal income.
Since adopting a do-it-yourself philosophy, I'm happy when my consulting business keeps me only about 50% employed. I make enough money to get by, and I use the remainder of my time to do my own plumbing, wiring, flooring, gardening, and painting, instead of hiring people to do these things for me. I'm even working for myself as architect, engineer, and draftsman on a new house, much of which I'll be building myself over the next few years, and I still have a little time left over to write articles that might help make a better world.
Not only does it make the government just a little poorer, but it provides me with a more stimulating form of exercise than the mind-numbing tedium of jogging or pumping iron. I like to imagine that I've joined Ayn Rand's "men of the mind" in their strike against the parasite class in Atlas Shrugged, as I build my own little piece of Galt's Gulch. For me, there's an added attraction, because my customer's customer's customer is usually the US government itself (more common every day, I suspect), to which I get to deny my services.
For economists, this illustrates how taxes work to decrease productivity, as they provide a perverse incentive for people to work at jobs at which they're relatively inefficient. Taxes undermine the division of labor principle upon which advanced societies are built. Surely it's no coincidence that Home Depot and other do-it-yourself stores have grown tremendously as the marginal tax rate for middle class Americans has risen.
This is one of the subtle ways that the State and its taxes weaken civilization, which is built on trade and the division of labor. The general level of wealth suffers as people like me all over the world choose personal wealth over economic efficiency. But if it can save the life of just one Iraqi child from an American bomb, it's doubly worth doing.
The world of do-it-yourself is like the barter economy, both of which are invisible to government bean-counters. It's a way to undercut the State where it's most vulnerable: the pocketbook.
So tune in (to Hometime), turn on (the belt sander), and drop out (of the ranks of the exploited). There's work to be done.
January 23, 2003