Taxation is always harmful, period. But assume hypothetically for a moment that some form of taxation must exist. Which form of taxation would be least harmful?
Obviously, low taxes. But which taxes specifically?
Taxation is a burden, but it should be a burden borne equally if it is to exist. Income taxes burden the poor more than the rich, capital gains taxes burden the rich more than the poor, etc. What taxes would burden everyone equally, and therefore be the most impolitic?
I already say no to the fair tax. To me, it seems...well...unfair. I also feel that a universal sales tax will harm the poor and middle classes more than everyone else.
I came across something called the universal exchange tax, which seems like a better idea to me in that it is more equal in its distribution of the burden. But at the same time, I am skeptical of it, and critics have said it seems like another way of putting a VAT.
Property taxes seem like a poor solution too...for it would prevent people from living off their land. Also, the wealthy may have huge sums of money, but not much more property than everyone else, so they will have less burden.
The State rate tax is the least harmful tax. That's where the Federal government decides how much money each state owes based upon their population but the states decide the rates and the type of tax and they collect the monies and then submit them to the federal government.
Tariff revenues? This is a hard one.
What's this about "fairness?" You asked which was the least harmful, but then stipulated an arbitrary criterion that is otherwise irrelevant. The thing that is easiest on the little guy is certainly not going to be the most just, and probably not the least harmful either.
I vote for VAT or land use. VAT puts the costs of government on those who enter into the most transactions, however land use (while not equalizing the burden) drives land into the hands of the most efficient firms and entrepreneurs.
Whatever taxes the least.
Yes, I am a huge Dodgers fan.
Anti-state since I learned about the Cuban Revolution and why my dad had to flee the country.
Beer, Guns and Baseball My blog
http://mises.org/Community/forums/p/20479/373749.aspx#373749
I don't know how to link to individual posts, so here's a copy of mine:
Flat, wealth tax performed in the manner of a lottery. Basically, the government draws a bunch of names from a hat. Then, the government raids the properties of the hapless victims whose names it drew from the hat and takes X% of all the wealth they can find. No penalties for tax evasion, so it would be catch-as-catch-can.
Most citizens would not have to pay taxes most of the time. This would be a massive boost to the economy since the economic distortions created by taxation are probably more costly to the economy than the actual revenues lost. If the government starts getting too greedy, people will take more pains to hide their wealth better, reducing the government's effective revenues.
It's not a pretty system, but it's at least honest about what taxation is and it would manage to free most economic activity from taxation most of the time. Because of the random nature of taxation, there would be no systematic effect on the economy so being a victim of taxation would be more like suffering a natural disaster or random criminal violence than central-planning.
Clayton -
Thoughts of a layman.
A SUCCESSFUL TWENTY FIRST CENTURY REPUBLIC….
will not tax the people on the fruits of their labor i.e., income tax, instead it will tax the people on the wants and desires the fruits of their labor produce i.e., FairTax. Don’t tax my paycheck or capital; tax me when I keep up with the Joneses. The power to tax needs to be taken from the few and disbursed among all the people each according to their own free market decisions. The country is in no position to dilly dally around tinkering with the current system. A society that thinks of its self as capitalist should have a tax system that builds capital not destroys it. It needs to help all the people build capital and not just the few. Corporations don’t pay taxes you have to be a living being to pay taxes, but when you die they nail you one more time. Income Tax (communist) FairTax (capitalist)
Hate to burst your bubble but FairTax is not capitalist, it's statist just like every other tax. It's just a sales tax with a "promise" not to raise it in the future, which is laughable. The FairTax does not address the systemic "leaks" in the system - inflation, national debt and annual deficits - that permit the government to spend far more than it collects in taxes, anyway. So, even if FairTax really did everything it promises, it wouldn't affect out-of-control government spending. Taxing outgoing money instead of incoming money makes no difference except that it rewards those who are already wealthy and punishes those who must live paycheck-to-paycheck since the wealthy spend a smaller portion of their income on consumption and the poor spend basically 100% of their paycheck on consumption (cost-of-living). Lastly, defining what is consumption and what is investment is completely arbitrary - just as arbitrary as the current, capricious tax code.
It is the act of taxing itself that is immoral. The government taxes flows instead of stocks - as it once did - for pragmatic reasons... it's easier to correctly assess how much money you can extract from someone if you tax it as they earn it, save it and spend it than it is trying to just guess how much wealth they might be hiding and harassing them until they give it up or die. Consumption tax just shifts the emphasis from the income side of the equation to the expenditure side of the equation but it doesn't change the underlying reality that the government is doing everything within its power to take as much property from the productive class as it can possibly manage.
You got to start some where I would like a country with no taxes too; I’m no friend of the FED
WHO PAYS THE GOVERNMENTS
bills the tax payer. Who is the tax payer, the consumer of goods and services. Do they have a clue how much they pay? The Political Class wants it that way.
Put a ray of sunshine on your tax burden; FairTax Act
Why do the people continue to outsource the decision, of how and when to flog them selves with income taxes, to their agents? The FairTax Act lets the people decide when they need a flogging; that’s got to be good for self esteem; you pick the winners and losers.
FairTax frees the market place to make jobs. Income tax requires the market place to wait until the Political Class makes a decision on which jobs are good and which jobs are bad. Are they really that smart?
@brown: But the root problem is that the people trust the government. They have to trust the government to keep its word on a "FairTax" as well. So, nothing is really solved. The trust will continue to be abused because it's there and it can be abused.
Poll tax.
The people are starting to wise up to the trickery. The country is fighting the same monarchy backed by a fiat dollar. Two hundred plus years of indifference has brought us to this point. The double eagle has been tossed and is spinning in the air. The Sovereign People were given the power to grab it before it hits the deck. Let it hit the deck heads you get lucky, more of the same. Tails the people surrender their sovereignty to a World Central Bank. I don’t like the IRS, and FairTax drives a stake though it. It is not in the interest of mercantilists to support FairTax.
- Poll tax is one of the most destructive and merciless taxes ever devised. Failure to pay taxes is always severely punished and a large percentage of your productive population will find itself unable to pay, resulting in widespread destruction of the productive capacity of society.
- A world central bank is more complicated than it sounds. Only one power center will have hold of the controls - there's no such thing as "power sharing" in the real world. The Elites cannot agree who gets to hold onto the controls and, in fact, I surmise that this is part of the reason for the breakdown of the Copenhagen climate accord in Dec. 2009 which was supposed to have ushered in a global tax.
- The IRS isn't worried about FairTax... FairTax isn't the slightest threat to the status quo. FairTax is a lot of hype... any substantial simplification of the tax code would be an improvement over the status quo but, as you noted, the merchant class is vehemently opposed to this. The complexity of the tax code is a product of human design, it is not an accidental "rat's nest" brought about through neglect or dispute. It's only a loophole if the common man can comprehend how it benefits the Establishment at the expense of the masses. Make it complicated enough and they'll never figure it out.
- Some of the people are wising up to the trickery but this has been the case in every generation. But it really doesn't matter... most of those who comprise the power-base of the State are willfully blind to its chicanery because they directly benefit from it - even if only psychically. I'm very pessimistic about the short-run prospects of human liberty. We are definitely entering an eclipse of liberty. The Western Elites are hell-bent on world empire (run by themselves, of course). I do not believe the wars of the 20th century were merely the result of out-of-control nationalism (WWI) and populist vengeance based on collective punishment (WWII), even though those were key enabling factors. The purpose of the wars was to create the pretext for world empire. The League of Nations was the purpose of WWI. The Nuremberg Trials was the purpose of WWII. The Elites have spectacularly failed twice to bring about their vision of a world empire and the Copenhagen climate-change summit was the third failed attempt. They imagine themselves like God in Leviticus chapter 26. If we (the masses) do what they want (submit to their world empire), they will bless us with peace and prosperity but if we do not do what they want, they will afflict us with war, famine and pestilence.
Scrooge McDuck: Poll tax.
Voluntary taxation.