Higher taxes of any kind, direct or indirect, are bad economics and even worse politics. — Milton Friedman

Higher taxes of any kind, direct or indirect, are bad economics and even worse politics.

Author: Milton Friedman

Insight: There's a seductive logic to this claim: taxes feel like money taken from your pocket, so fewer taxes must be better. But the real story is messier, which is probably why Friedman's blanket statement keeps getting tested in the real world. The tension nobody wants to admit is that taxes fund things most of us actually want—roads that don't crumble, schools that exist, firefighters who show up. The political part of Friedman's quote lands harder than the economics part. People hate paying taxes in the abstract, but they hate losing their favorite public service even more. That's the puzzle: the politics of raising taxes is terrible, but so is the politics of cutting what those taxes actually pay for. You end up stuck. What's worth noticing is that Friedman was partly responding to a specific moment—mid-20th century tax rates that really were historically high. He was making a targeted argument that got simplified into universal truth. Today, the real debate isn't whether taxes are ever okay; it's which ones, on whom, and whether we're getting decent value. That's less catchy than "taxes are bad," but it's where actual choices get made.

Source: Friedman, Milton. There's No Such Thing as a Free Lunch. Open Court, 1975