Wednesday 20 March 2024

'Taxing profits is tantamount to taxing success in best serving the public'


“Capital does not ‘beget profit’ as Marx thought. The capital goods as such are dead things that in themselves do not accomplish anything. If they are utilised according to a good idea, profit results. If they are utilised according to a mistaken idea, no profit or losses result. It is the entrepreneurial decision that creates either profit or loss. It is mental acts, the mind of the entrepreneur, from which profits ultimately originate. Profit is a product of the mind, of success in anticipating the future state of the market. It is a spiritual and intellectual phenomenon. ...
    “Taxing profits is tantamount to taxing success in best serving the public. The only goal of all production activities is to employ the factors of production in such a way that they render the highest possible output. The smaller the input required for the production of an article becomes, the more of the scarce factors of production are left for the production of other articles. But the better an entrepreneur succeeds in this regard, the more is he vilified and the more is he soaked by taxation. Increasing costs per unit of output, that is, waste, is praised as a virtue.”
~ Ludwig von Mises, Profit and Loss (1951)


1 comment:

Duncan Bayne said...

In fact, Theory of Constraints says that inventory is a Bad Thing. It's only when it's sold that it generates value - so not only is Marx wrong here, but the taxation is applied directly to the point of value creation :/