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I completely agree, but for totally different reasons. If a major function of government is to protect our property (land, savings, boats, cars, etc...), then

I completely agree, but for totally different reasons. If a major function of government is to protect our property (land, savings, boats, cars, etc...), then it could be said the more property we have the more we benefit from government protection and the more we should pay. Another function of government is to facilitate trade. For this service, ALL transactions should be taxed (including payroll). If you look at the totality of this, the actual tax rates would be nominal for every "normal" individual, thus it wouldn't necessarily be regressive. We're talking about a 1% tax rate on property and ALL transactions. To me this makes sense on so many levels. It captures money from everyone participating in the system and it captures it relative to the person's level of benefit from the system. The hardest part would be tracking. However, if the tax is nominal and the punishment for cheating is high, then it seems like it wouldn't need outrageously intrusive controls.

sokoloff 9y ago
Transaction taxes drive vertical integration (as this reduces the number of bites at the apple along the supply chain). I don't think that's always a bad thing, but it does violate a principle of fairness that I hold, which is that substance matters over form. If Starbucks owns coffee plantations, roasters, logistics, stores, the cup of coffee you get might be untaxed prior to you paying for it. If a competing coffee company performs the exact same steps, except uses third party farmers, logistics, roasters, and rents their storefront, that cup of coffee was taxed 5+ times before you bought it. I don't see the societal benefit to encourage vertical aggregation like that.
- IanDrake 9y ago
  I get what you're saying, but profit creates the same motivation for vertical integration. If there are two layers in my coffee bean acquisition I'm losing the profit made at every layer, so of course I would want to own those layers and capture that profit before we even add a 1% tax. But vertical integration comes at a risk, which is why only the biggest players will attempt it. Now, add a 1% transaction to those two layers. You're now losing 2.01%. But at each layer you're already losing 15% net profit made by your supplier. I'm not sure you would change your perspective on vertical integration for 2% when you're already leaving 15-20% on the table.
  - sokoloff 9y ago
    Agreed in large part, though it still incents high hurdles for new upstarts to compete with successful incumbents. I wonder if we wouldn't see a shift in grocery store form with the substance remaining as today. Rather than buying a bottle of Coke from Star Market, you might be buying a consigned bottle of Coke, with Star Market serving only as the marketplace (avoiding Star buying the bottle from Coke), and where Coke is paid directly by you as part of the transaction. Grocers operate on a terribly thin net margin as it is. They would have a lot of incentive to avoid additional transactions in the supply chain (and there's some societal benefit to keeping grocery prices low). I'm not so much arguing against [though I do oppose a transaction tax] as I am brainstorming how the implementation of such a tax would create different behaviors in the market to compensate or avoid the tax.

sokoloff 9y ago

Transaction taxes drive vertical integration (as this reduces the number of bites at the apple along the supply chain). I don't think that's always a bad thing, but it does violate a principle of fairness that I hold, which is that substance matters over form. If Starbucks owns coffee plantations, roasters, logistics, stores, the cup of coffee you get might be untaxed prior to you paying for it. If a competing coffee company performs the exact same steps, except uses third party farmers, logistics, roasters, and rents their storefront, that cup of coffee was taxed 5+ times before you bought it. I don't see the societal benefit to encourage vertical aggregation like that.

IanDrake 9y ago
I get what you're saying, but profit creates the same motivation for vertical integration. If there are two layers in my coffee bean acquisition I'm losing the profit made at every layer, so of course I would want to own those layers and capture that profit before we even add a 1% tax. But vertical integration comes at a risk, which is why only the biggest players will attempt it. Now, add a 1% transaction to those two layers. You're now losing 2.01%. But at each layer you're already losing 15% net profit made by your supplier. I'm not sure you would change your perspective on vertical integration for 2% when you're already leaving 15-20% on the table.
- sokoloff 9y ago
  Agreed in large part, though it still incents high hurdles for new upstarts to compete with successful incumbents. I wonder if we wouldn't see a shift in grocery store form with the substance remaining as today. Rather than buying a bottle of Coke from Star Market, you might be buying a consigned bottle of Coke, with Star Market serving only as the marketplace (avoiding Star buying the bottle from Coke), and where Coke is paid directly by you as part of the transaction. Grocers operate on a terribly thin net margin as it is. They would have a lot of incentive to avoid additional transactions in the supply chain (and there's some societal benefit to keeping grocery prices low). I'm not so much arguing against [though I do oppose a transaction tax] as I am brainstorming how the implementation of such a tax would create different behaviors in the market to compensate or avoid the tax.