> Because it helps align incentives. You can have a 7% tax on sales, or a 5% tax on sales plus a 2% tax based on a noisy correlate. The latter will raise more r

> Because it helps align incentives. You can have a 7% tax on sales, or a 5% tax on sales plus a 2% tax based on a noisy correlate. The latter will raise more revenue at a lower excess cost. I see. Well we seems to have different goals. As I see it, government is mostly good at destroying wealth, and so I aim to minimize their revenue. > That would make it a tax on revenue, which is quite distortionary indeed and generally considered a last-resort. (Or you could have a VAT, where all entities pay but tax paid on non-final sales is refunded. VATs are quite good but not totally free of this kind of gaming.) I am essentially suggesting a non-refundable, uniform VAT