6 ms·

There’s no effective taxation without centralized identity, so unless we move to a system of anarchy it won’t happen.

by Joeri 9y ago

AnthonyMouse 9y ago
VAT is collected entirely by businesses and doesn't require individuals to be identified at all. And it's possible to have de facto progressive taxation without having any income tax by combining VAT or similar with a universal basic income. Alternatively, it's possible to have a tax ID which is used only for taxes and prohibited by law from being used for anything else.
- moomin 9y ago
  I don’t think it is possible. The effective tax rate for billionaires under a scheme such as you propose would still be pretty much zero. The only way to make that a progressive tax scheme is to have zero or negative tax revenue.
  - AnthonyMouse 9y ago
    If they spend the money they would have to pay VAT. If they invest it in something then the invested in company spends it and they would have to pay VAT. The only way to avoid it is to stick the cash in a mattress, which nobody really does because it's more profitable to make $1 in profit at the cost of paying $.35 in VAT than to make no profit and pay no taxes. They could avoid local taxes by investing offshore, but they do that already.
    - moomin 9y ago
      I think you're misunderstanding me. I'm not denying you can raise income through VAT, I'm saying you can't do it in a progressive manner, basic income or no basic income. The reason for this is that the more you earn, the less you spend as a proportion of your income. Billionaires spend almost nothing compared to either their income or their wealth. The poorest in society spend everything, because some things are essential. Any progressive system would make it so that the less well off paid _at most_ as much as the 1%.* Income tax may not work very well, but it's one of the most progressive forms of taxation there is. *And yeah, as you point out, tax avoidance makes a mockery of this anyway.
      - AnthonyMouse 9y ago
        > The reason for this is that the more you earn, the less you spend as a proportion of your income. Billionaires spend almost nothing compared to either their income or their wealth. The poorest in society spend everything, because some things are essential. That's only true when you crib the definition of spending to mean only personal consumption. Donald Trump owns Trump Tower. It generates rental income. He is obviously not spending all of it on hamburgers and hair products for his own personal self. But it still gets spent, just not on himself. He doesn't put the cash in a mattress, he uses it to go out and build another tower somewhere. For that he has to buy steel and concrete and elevators and HVAC systems, which are all taxed in the usual way. Essentially all of the "unspent" income is spent doing things like this, because it's more profitable than holding cash that generates no returns. Most of the time there will be a corporation in the middle. Trump doesn't buy concrete, he buys shares in a newly formed corporation which uses the money to buy concrete. But that doesn't change the fact that the money is used to buy concrete and concrete is subject to VAT.
        moomin 9y ago
        Concrete is subject to VAT, but it's _reclaimable_ when you charge rents for rooms. The effective rate of VAT for successful businesses is zero. This is by design and is why it's so efficient: each part of the chain has an interest in making sure it's collected as opposed to a sales tax like India has. In short, Donald Trump's net VAT bill is pretty much exactly his VAT on personal consumption. (It could be lower, depending on how exactly his personal finances are laid out wrt his business's expenses, but it won't be higher.)
        AnthonyMouse 9y ago
        > Concrete is subject to VAT, but it's _reclaimable_ when you charge rents for rooms. That just prevents it from being charged twice. It's the same thing as saying that the tenant doesn't have to pay the VAT that the landlord has already paid. > The effective rate of VAT for successful businesses is zero. There is clearly some kind of fallacy happening if a transaction occurs, the government receives non-zero tax revenue, yet the effective rate is calculated as zero. Income taxes and consumption taxes are effectively the same thing. The seller's income is the buyer's consumption. The taxes always come out of the surplus between the seller's cost of production and the value to the buyer, and who really pays depends on who would otherwise have had the market power to claim that part of the surplus, not whether you call the tax an income tax or a consumption tax. In practice VAT is very similar to corporate income tax. The main difference (and benefit) is that VAT is paid to the jurisdiction where the end product is sold, rather than whatever arbitrary jurisdiction the company arranges for its profits to be declared in.
  - briandear 9y ago
    How many billionaires are there? Should we design a tax system around them? Seems foolish considering how little their overall impact would be.
    - moomin 9y ago
      Dunno, 1% of the world seem to hold 50% of the assets. That sounds like a pretty big impact to me. Obviously, I'm assuming for the moment that billionaires aren't chronic tax avoiders, which makes every system regressive. If you decide to only concentrate on the proportion of the population that pays their fair share, you'd still have problems, because the average person who earns $200k doesn't spend much more than the guy earning $150k. They'd also receive the same basic income, so the burden would be higher on the guy earning $150k.
      - AnthonyMouse 9y ago
        > Dunno, 1% of the world seem to hold 50% of the assets. That sounds like a pretty big impact to me. Billionares aren't the 1%, they're the <0.0002%. > the average person who earns $200k doesn't spend much more than the guy earning $150k Yes they do. Someone who makes $200 million doesn't have much more personal consumption than someone who makes $150 million, but that effect doesn't kick in until you're at the "don't know how to spend this much money" level. At $200K/year you haven't even sent all your kids to private school yet, much less bought a mansion with a heliport and a fleet of sports cars.
  - dredmorbius 9y ago
    Land Tax, Tobin Tax, Estate tax.
- r00fus 9y ago
  There's no way a VAT or flat tax would be progressive enough to fund the government without crippling vast portions of the taxpaying base.
  - AnthonyMouse 9y ago
    > There's no way a VAT or flat tax would be progressive enough to fund the government without crippling vast portions of the taxpaying base. That's what the UBI is for. You can have something like a 35% VAT with a $15K/year UBI and then the effective rate on someone at $60K/year is 10%, but at $100K/year it's 20% and it only goes up from there. This is very much in line with the existing effective rates, and you can make them whatever you want by adjusting the tax rate and the amount of the UBI. It also replaces a huge swath of social spending programs because you're then giving someone who makes $20,000 a year $8000 more than they pay in taxes.
blackbagboys 9y ago
Land taxes do not require centralized identity.
- moomin 9y ago
  They kind of do, because you need to know who to bill.
  - blackbagboys 9y ago
    You could easily bill an anonymous owner or property-holding LLC. The land isn't going anywhere so it's easy to confiscate if no one pays.
    - colejohnson66 9y ago
      But then couldn’t you look up who owns the company?
    - moomin 9y ago
      Possible, maybe Easy? Not really. You have problems of homelessness, problems of enforcement cost, problems of beneficial ownership. If a man is living in his ex-wife's house as part of a divorce settlement, and there's a 90% mortgage on the property, who should be paying? What's going to happen if it isn't paid to each party? Could a bad actor exploit this situation? In terms of sheer complexity, Land Law is probably second only to Tort Law.
      - dredmorbius 9y ago
        Several ofthose issues aare addressed through other dynamics of land taxation. See George and Ricardo.
        moomin 9y ago
        Bear in mind we're talking about these in the context of a no-identity scenario. This isn't about the practicalities of Land Taxation as it stands, but the practicalities of land taxation if you can't identify the owners or beneficial owners.
bmelton 9y ago
Some taxes are made difficult by the lack, but land taxes, wheel taxes, property taxes, sales taxes, VAT taxes, GET taxes, service taxes, recycling taxes, employment taxes, gas taxes, hotel taxes, ticket taxes, vice taxes, excise taxes, fishing/hunting/sport license taxes, food and beverage taxes, marriage license taxes, luxury taxes, parking taxes, stadium taxes, vehicle taxes, watercraft registration taxes, zoning permit taxes and tolls are all capable of being effected without a centralized identity.
- briandear 9y ago
  That’s a lot of taxes. Perhaps we should get rid of all of those and go to a flat tax.
briandear 9y ago
Consumption taxes. Let’s end income taxes completely and identity doesn’t matter for taxes.
- twobyfour 9y ago
  Consumption taxes (like sales taxes) are heavily regressive and result in the poor shouldering a much heavier share of the tax burdem than the wealthy, proportional to their share of income (let alone disposable income).
whyever 9y ago
It already happened in Germany. We use different IDs for social security, taxes and ID cards.
cmiles74 9y ago
Then perhaps tax processing should be the exception and use of the unique tax identifier for other puposea made illegal. IMHO, it would not be an impossible task to generate a unique tax identifier for each person that is kept private to the government and then print a unique identifier on tax forms sent to each person to use for filing (that changes every year). The identifier isn't great, but it's the pervasive use of this identifier that is the problem.

There’s no effective taxation without centralized identity, so unless we move to a system of anarchy it won’t happen.

by Joeri 9y ago

There’s no effective taxation without centralized identity, so unless we move to a system of anarchy it won’t happen.

VAT is collected entirely by businesses and doesn't require individuals to be identified at all. And it's possible to have de facto progressive taxation without having any income tax by combining VAT or similar with a universal basic income. Alternatively, it's possible to have a tax ID which is used only for taxes and prohibited by law from being used for anything else.

moomin 9y ago
I don’t think it is possible. The effective tax rate for billionaires under a scheme such as you propose would still be pretty much zero. The only way to make that a progressive tax scheme is to have zero or negative tax revenue.
- AnthonyMouse 9y ago
  If they spend the money they would have to pay VAT. If they invest it in something then the invested in company spends it and they would have to pay VAT. The only way to avoid it is to stick the cash in a mattress, which nobody really does because it's more profitable to make $1 in profit at the cost of paying $.35 in VAT than to make no profit and pay no taxes. They could avoid local taxes by investing offshore, but they do that already.
  - moomin 9y ago
    I think you're misunderstanding me. I'm not denying you can raise income through VAT, I'm saying you can't do it in a progressive manner, basic income or no basic income. The reason for this is that the more you earn, the less you spend as a proportion of your income. Billionaires spend almost nothing compared to either their income or their wealth. The poorest in society spend everything, because some things are essential. Any progressive system would make it so that the less well off paid _at most_ as much as the 1%.* Income tax may not work very well, but it's one of the most progressive forms of taxation there is. *And yeah, as you point out, tax avoidance makes a mockery of this anyway.
    - AnthonyMouse 9y ago
      > The reason for this is that the more you earn, the less you spend as a proportion of your income. Billionaires spend almost nothing compared to either their income or their wealth. The poorest in society spend everything, because some things are essential. That's only true when you crib the definition of spending to mean only personal consumption. Donald Trump owns Trump Tower. It generates rental income. He is obviously not spending all of it on hamburgers and hair products for his own personal self. But it still gets spent, just not on himself. He doesn't put the cash in a mattress, he uses it to go out and build another tower somewhere. For that he has to buy steel and concrete and elevators and HVAC systems, which are all taxed in the usual way. Essentially all of the "unspent" income is spent doing things like this, because it's more profitable than holding cash that generates no returns. Most of the time there will be a corporation in the middle. Trump doesn't buy concrete, he buys shares in a newly formed corporation which uses the money to buy concrete. But that doesn't change the fact that the money is used to buy concrete and concrete is subject to VAT.
      - moomin 9y ago
        Concrete is subject to VAT, but it's _reclaimable_ when you charge rents for rooms. The effective rate of VAT for successful businesses is zero. This is by design and is why it's so efficient: each part of the chain has an interest in making sure it's collected as opposed to a sales tax like India has. In short, Donald Trump's net VAT bill is pretty much exactly his VAT on personal consumption. (It could be lower, depending on how exactly his personal finances are laid out wrt his business's expenses, but it won't be higher.)
        AnthonyMouse 9y ago
        > Concrete is subject to VAT, but it's _reclaimable_ when you charge rents for rooms. That just prevents it from being charged twice. It's the same thing as saying that the tenant doesn't have to pay the VAT that the landlord has already paid. > The effective rate of VAT for successful businesses is zero. There is clearly some kind of fallacy happening if a transaction occurs, the government receives non-zero tax revenue, yet the effective rate is calculated as zero. Income taxes and consumption taxes are effectively the same thing. The seller's income is the buyer's consumption. The taxes always come out of the surplus between the seller's cost of production and the value to the buyer, and who really pays depends on who would otherwise have had the market power to claim that part of the surplus, not whether you call the tax an income tax or a consumption tax. In practice VAT is very similar to corporate income tax. The main difference (and benefit) is that VAT is paid to the jurisdiction where the end product is sold, rather than whatever arbitrary jurisdiction the company arranges for its profits to be declared in.
- briandear 9y ago
  How many billionaires are there? Should we design a tax system around them? Seems foolish considering how little their overall impact would be.
  - moomin 9y ago
    Dunno, 1% of the world seem to hold 50% of the assets. That sounds like a pretty big impact to me. Obviously, I'm assuming for the moment that billionaires aren't chronic tax avoiders, which makes every system regressive. If you decide to only concentrate on the proportion of the population that pays their fair share, you'd still have problems, because the average person who earns $200k doesn't spend much more than the guy earning $150k. They'd also receive the same basic income, so the burden would be higher on the guy earning $150k.
    - AnthonyMouse 9y ago
      > Dunno, 1% of the world seem to hold 50% of the assets. That sounds like a pretty big impact to me. Billionares aren't the 1%, they're the <0.0002%. > the average person who earns $200k doesn't spend much more than the guy earning $150k Yes they do. Someone who makes $200 million doesn't have much more personal consumption than someone who makes $150 million, but that effect doesn't kick in until you're at the "don't know how to spend this much money" level. At $200K/year you haven't even sent all your kids to private school yet, much less bought a mansion with a heliport and a fleet of sports cars.
- dredmorbius 9y ago
  Land Tax, Tobin Tax, Estate tax.
r00fus 9y ago
There's no way a VAT or flat tax would be progressive enough to fund the government without crippling vast portions of the taxpaying base.
- AnthonyMouse 9y ago
  > There's no way a VAT or flat tax would be progressive enough to fund the government without crippling vast portions of the taxpaying base. That's what the UBI is for. You can have something like a 35% VAT with a $15K/year UBI and then the effective rate on someone at $60K/year is 10%, but at $100K/year it's 20% and it only goes up from there. This is very much in line with the existing effective rates, and you can make them whatever you want by adjusting the tax rate and the amount of the UBI. It also replaces a huge swath of social spending programs because you're then giving someone who makes $20,000 a year $8000 more than they pay in taxes.

blackbagboys 9y ago

Land taxes do not require centralized identity.

moomin 9y ago
They kind of do, because you need to know who to bill.
- blackbagboys 9y ago
  You could easily bill an anonymous owner or property-holding LLC. The land isn't going anywhere so it's easy to confiscate if no one pays.
  - colejohnson66 9y ago
    But then couldn’t you look up who owns the company?
  - moomin 9y ago
    Possible, maybe Easy? Not really. You have problems of homelessness, problems of enforcement cost, problems of beneficial ownership. If a man is living in his ex-wife's house as part of a divorce settlement, and there's a 90% mortgage on the property, who should be paying? What's going to happen if it isn't paid to each party? Could a bad actor exploit this situation? In terms of sheer complexity, Land Law is probably second only to Tort Law.
    - dredmorbius 9y ago
      Several ofthose issues aare addressed through other dynamics of land taxation. See George and Ricardo.
      - moomin 9y ago
        Bear in mind we're talking about these in the context of a no-identity scenario. This isn't about the practicalities of Land Taxation as it stands, but the practicalities of land taxation if you can't identify the owners or beneficial owners.

bmelton 9y ago

Some taxes are made difficult by the lack, but land taxes, wheel taxes, property taxes, sales taxes, VAT taxes, GET taxes, service taxes, recycling taxes, employment taxes, gas taxes, hotel taxes, ticket taxes, vice taxes, excise taxes, fishing/hunting/sport license taxes, food and beverage taxes, marriage license taxes, luxury taxes, parking taxes, stadium taxes, vehicle taxes, watercraft registration taxes, zoning permit taxes and tolls are all capable of being effected without a centralized identity.

briandear 9y ago
That’s a lot of taxes. Perhaps we should get rid of all of those and go to a flat tax.

briandear 9y ago

Consumption taxes. Let’s end income taxes completely and identity doesn’t matter for taxes.

twobyfour 9y ago
Consumption taxes (like sales taxes) are heavily regressive and result in the poor shouldering a much heavier share of the tax burdem than the wealthy, proportional to their share of income (let alone disposable income).

whyever 9y ago

It already happened in Germany. We use different IDs for social security, taxes and ID cards.

cmiles74 9y ago

Then perhaps tax processing should be the exception and use of the unique tax identifier for other puposea made illegal. IMHO, it would not be an impossible task to generate a unique tax identifier for each person that is kept private to the government and then print a unique identifier on tax forms sent to each person to use for filing (that changes every year). The identifier isn't great, but it's the pervasive use of this identifier that is the problem.