<p>We need government, and that means taxes. But when we think about government spending, and the taxes needed to finance its spending, we should also think of the effects of taxation.</p>
<p>Suppose I hire you to repair my computer. The job is worth $200 to me, and doing the job is worth $200 to you. The transaction will occur because we have a meeting of the mind. Now suppose there's the imposition of a 30 percent income tax on you. That means you won't receive $200 but instead $140. You might say the heck with working for me ? spending the day with your family is worth more than $140.</p>