This is a common myth, and it was addressed 150 years ago. http://www.econlib.org/library/Bastiat/basEss1.html http://www.econlib.org/library/Bastiat/basEss1.h

This is a common myth, and it was addressed 150 years ago. http://www.econlib.org/library/Bastiat/basEss1.html http://www.econlib.org/library/Bastiat/basEss1.html The economy is not a zero sum game. The inefficient production of widgets will be shut down, but the labor and capital used will be put towards a better end. They will not sit idle and rot. In sum, by shutting down the widget company, you avoid the tax on the populace as a whole and free the labor and resources used in widgets to be used towards a better end.