Profits direct businesses to create wealth 7. Competition increases efficiency and innovation 8. Taxation and regulation discourage production and destroy wealth 9. Political decision-making favors plunder over production 10. How hard we are willing to work depends on how much we are offered in pay.
Taxes lower our incentive to work just like a reduction in pay, since that is exactly what they are.
If allowed to keep only half of every dollar we earn, alternatives to working for money begin to look more attractive. Businesses whose income is heavily taxed may withhold undertaking new ventures since the share of the profits they are allowed to keep doesn't justify the risks. All these choices illustrate that high taxation discourages productive activity, and thereby reduces the wealth that is created in society. Equally important for the general welfare is the fact that taxation diverts enormous amounts of time and resources into non-productive activities. These jobs in the tax industry create no wealth for society as a whole, rather they deprive us all of the valuable services these individuals could be producing for the market.