There’s a lesson in a recent study published in the New England Journal of Medicine for those who continue to support higher taxes and expansionary government just in time for both tax day and Marathon Monday.
In the case of Boston runners, the culprit is too much water diluting
sodium in the blood; a condition called hyponatremia or water
intoxication. Slower runners suffer more often than elite runners as
they worry about not taking in enough water. Those who take in too much
water end up finishing slower, being hospitalized, or in extreme cases
dying.
Similarly, taxes hurt those with lower incomes more than the
much maligned “rich” who still have more options for lowering what they
owe (see Teresa Heinz Kerry).
States that impose high taxes also suffer as useful economic activity
gets diluted by tax-motivated activity. As one example, capital
structure matters under the Modigliani-Miller Theorem in part because of the tax-treatment of debt versus equity.
Regulation
is in the same category as foreign companies have chosen to delist and
domestic companies such as Sungard Data Systems have chosen to go
private instead of try to comply with Sarbanes-Oxley, which has created
a new industry.
