Not all taxes have this effect. A land value tax, a poll tax, a value added tax, or a wealth tax do nothing of the sort.<p>Income tax, corporate tax, capital gain taxes are some of the worst, most distortive taxation schemes. But taxation isn't just about raising revenue, it needs to have some popular support, and so it caters to a strange vision of fairness.<p>To get an idea of how distortive an income tax can be consider the following scenario.<p>You do your own housework and cooking, but while you're a great cook you suck at cleaning up. Your neighbor is the opposite, terrible cook, but great with a mop.<p>So you'd like to hire your neighbor as house cleaner, and they hire you as a cook, but now, both of you are paying taxes.<p>In this specific example, you could probably find an arrangement where money doesn't change hands, and the transaction would be small enough for the IRS not to really care. However, scale that up to an entire economy, and you see the gigantic friction that it introduces in exchanging labor.