Taxes, Incentives, Booze, and Liberty

September 18, 2022 by Dan Mitchell

I celebrate when my friends on the left stumble into economic insights.

For instance, many of them sound like Milton Friedman when they pontificate in favor of higher tobacco taxes because they want people to smoke fewer cigarettes.

As a libertarian, I don’t think it’s government’s job to control our private lives, but I applaud when people understand that higher taxes on something will lead to less of that thing.

I get frustrated, of course, that they don’t apply that insight in other areas.

After all, if higher taxes on tobacco leads to less smoking, surely it is true that higher taxes on employment leads to less work.

Or less investment, less innovation, less entrepreneurship, etc, etc.

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My opposition is driven by three factors.

1. I don’t want politicians having more money to waste.
2. Sin taxes will encourage problematic black markets..
3. People should have the freedom to make dumb choices.

I’ll close by addressing a common counter-argument, which is that people who make dumb choices can impose costs on the rest of society.

But if people drive while drunk or stoned, focus on penalizing the people who make those bad choices so that they will have an incentive for more responsible behavior.

And if smokers and gluttons impose high costs on government health programs, maybe that’s yet another reason for restoring free markets in health care.

Simply stated, the answer almost always is less government rather than more government.

Source: Taxes, Incentives, Booze, and Liberty | International Liberty