04-03-2003, 10:01 PM
Hi,
But I do have a lot of trouble with ". . . eliminate business taxes altogether and slowly transform our individual taxes to be based on consumption rather than income."
That is really combining a few concepts. The arguments for elimination of business taxes have some merit. Business taxes are typically handled as an expense and passed on to the consumer. Business taxes usually have a detrimental effect on expansion, and so hold the economy back. And business taxes can make a business less competitive against companies in nations that have no business tax (or even give business loans and then forgive them). OTOH, business taxes make it possible for the government to increase its control of business. By giving tax breaks for such things as R&D or plant modernization, the government can prod business in certain directions without directly passing laws/regulations to achieve the same objectives. Keeps the fiction of free enterprise in place while abetting socialism :) Whether that's good or bad depends, I guess, on whether you trust government or industry less.
However, changing the basis of individual taxes from income to consumption is a very dicey proposition. For one thing, the percentage of total income spent for goods and services goes down rapidly with income. Thus, the tax burden of a consumption based plan usually hits hardest those who can afford it the least. Another problem is the establishment and reinforcement of a wealth based aristocracy. Those with higher income would have more disposable income to invest, which in turn would raise their income.
Now, it is a fact that the present income tax laws have become too complex, with too many special dispensations for special interests. And, too often, the income tax laws have been used for social purposes (such as the deduction for home loans). However, I believe that the solution is a better income tax implementation rather than some other form of tax. In the extreme, if someone demands just one form of tax, then I believe that form should be an income tax. However, I think all single tax policies are too simple minded to achieve all that a tax policy should do (which is more than just generate revenue for the government).
--Pete
But I do have a lot of trouble with ". . . eliminate business taxes altogether and slowly transform our individual taxes to be based on consumption rather than income."
That is really combining a few concepts. The arguments for elimination of business taxes have some merit. Business taxes are typically handled as an expense and passed on to the consumer. Business taxes usually have a detrimental effect on expansion, and so hold the economy back. And business taxes can make a business less competitive against companies in nations that have no business tax (or even give business loans and then forgive them). OTOH, business taxes make it possible for the government to increase its control of business. By giving tax breaks for such things as R&D or plant modernization, the government can prod business in certain directions without directly passing laws/regulations to achieve the same objectives. Keeps the fiction of free enterprise in place while abetting socialism :) Whether that's good or bad depends, I guess, on whether you trust government or industry less.
However, changing the basis of individual taxes from income to consumption is a very dicey proposition. For one thing, the percentage of total income spent for goods and services goes down rapidly with income. Thus, the tax burden of a consumption based plan usually hits hardest those who can afford it the least. Another problem is the establishment and reinforcement of a wealth based aristocracy. Those with higher income would have more disposable income to invest, which in turn would raise their income.
Now, it is a fact that the present income tax laws have become too complex, with too many special dispensations for special interests. And, too often, the income tax laws have been used for social purposes (such as the deduction for home loans). However, I believe that the solution is a better income tax implementation rather than some other form of tax. In the extreme, if someone demands just one form of tax, then I believe that form should be an income tax. However, I think all single tax policies are too simple minded to achieve all that a tax policy should do (which is more than just generate revenue for the government).
--Pete
How big was the aquarium in Noah's ark?