Taxation.

Went to a presentation at some conference I was at in Texas back in the 1990s about taxation. The guy laid out some great info that has stuck with me.

You can tax one of three things:

1. productivity

2. capital

3. consumption.

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• Income taxes are on productivity.

• Property taxes, capital gains or taxes on interest/dividend earnings is on capital (not on income).

• Sales and excise taxes are on consumption.

He emphasized a balance of the three (which are all way too high, of course). Whatever you tax, you will get less of it. If you tax productivity too high, you get less of productivity. If you tax capital too high, you get less of it (or it moves somewhere else, or is allocated to less productive uses), or people can't afford to buy or keep homes due to excessive property taxes.

If you tax consumption too high, you get less consumption and higher savings (which hurts the economy since businesses aren't selling as much consumption, which hurts employment, etc. etc.). Any of these are bad for the economy. He proposed a delicate balance that might have to constantly be tweaked to ensure economic health.

His overall point was that Texas needed to add a state income tax (which everyone roundly booed, of course, including me). But he said property taxes and sales taxes were way too high with no income tax and it was causing the economy to get out of balance. He had valid points.

Anyway, long story, but his talk has always stuck with me, even though I hate taxes in principle.