4 ms·

Because of bad tax policy in California (Prop 13), the biggest source of taxes in California is personal income tax, and mostly by high earners, who are likely

Because of bad tax policy in California (Prop 13), the biggest source of taxes in California is personal income tax, and mostly by high earners, who are likely employees of these companies. There's already an effect on revenues when the stock market goes up and down, so I imagine companies leaving California would have an even more pronounced effect. Just because corporate tax is low, doesn't mean the money isn't taxed, it'll just be taxed when it's given to employees as salaries. Additionally, I don't get the impression that companies are able to buy legislation in SF. Otherwise, we wouldn't have policies like Gross Receipts tax, which most of tech companies in SF opposed [0]. In general, I think this obsession with "making corporations pay their fair share" isn't the right way of deciding a good tax policy. We should tax things we want to incentivize as little as possible, and tax things we want to discourage as much as possible. Maybe that leads to higher corporate taxes (I suspect it wouldn't), but the mindset should not revolve around trying to get a pound of flesh. Additionally, it isn't even guaranteed that the tax burden will fall on the corporation just because they're the ones writing the check. So even if our goal is "make corporations pay", tax incidence can just lead to us making labour and customers pay instead. [0] - FWIW, I don't think gross receipts is not a very efficient tax, since it just encourages vertical integration and discourages multiple companies working together; ie. less competition. Unfortunately, Prop 13 prevents the economically efficient and fair source of revenue

AnthonyMouse 6y ago
> FWIW, I don't think gross receipts is not a very efficient tax, since it just encourages vertical integration and discourages multiple companies working together; ie. less competition. Unfortunately, Prop 13 prevents the economically efficient and fair source of revenue They could just use VAT, which gives no advantage to vertical integration.
- grandmczeb 6y ago
  Implementing a VAT at the state level is difficult when goods can easily move across state borders. You'd need a federal system of collecting sales tax.
  - AnthonyMouse 6y ago
    They already have the big online retailers collecting sales tax. People can't save money by driving hundreds of miles to another state to buy small ticket items, and big ticket items like cars and boats get taxed on registration.
    - grandmczeb 6y ago
      How do you calculate value add if you’re a factory that imports parts from another state and sells an assembled final product?
      - AnthonyMouse 6y ago
        Being produced out of state doesn't get you out of it. If you import something from out of state, the act of importing causes VAT to be due on its value. If you then add value in the factory, you owe that too. The total VAT is always equal to the sale price. (If you like to promote exports you then give a refund for products not sold in the state.)
        grandmczeb 6y ago
        That gives a heavy incentive to lie about where it was produced. That’s fine when imports are tracked across a border, but not in the system we have in the US.
- neilparikh 6y ago
  SF already has a fairly high sales tax (~9%), so I doubt they could raise it anymore (I'm considering sales tax and VAT to be the same for this discussion, since they lead to the same revenue for the government, and same cost for the consumer). I think VAT/sales tax is bad in other ways, since it's a regressive tax (the poor spend more of their income/wealth on consumption vs. the rich), and it also reduces transactions being made, which just creates dead weight loss. Our goal should be to keep money moving around, not add barriers to new transactions. If I had to pick, I think I'd prefer the gross receipts tax, but I haven't studied the underlying economics to come to a conclusion on which is better/worse.
  - AnthonyMouse 6y ago
    > If I had to pick, I think I'd prefer the gross receipts tax, but I haven't studied the underlying economics to come to a conclusion on which is better/worse. Gross receipts tax is just sales tax that doesn't show up on the customer's receipt. They like to pretend that it's then the seller who pays it instead of the buyer, but that's not how it works. It gets paid by whoever can't pass it on. In a competitive market that's the consumer, because the seller already has thin margins and can't absorb the cost without going out of business. (In a monopolistic market it's the monopolist, but that's just as true of sales tax -- in a monopolistic market the customer can't absorb higher prices because they're already paying monopoly prices.) > SF already has a fairly high sales tax (~9%), so I doubt they could raise it anymore (I'm considering sales tax and VAT to be the same for this discussion, since they lead to the same revenue for the government, and same cost for the consumer). Denmark and Sweden have 25% VAT. The EU requires it to be at least 15%. > it's a regressive tax (the poor spend more of their income/wealth on consumption vs. the rich) People always use this argument to justify income tax over VAT even though everything about the income tax doesn't actually work like that. "Progressive income tax" but not for FICA, which is like half the income tax ordinary people pay, and hey let's disguise that fact by alleging that it's being paid half by the employer even though that's not how it works. Let's put a cap on that too, so the wealthiest pay proportionally less than regular people. And then we'll have a bunch of means-tested benefits so that even for the "progressive" income tax, in practice lower income people are paying the highest marginal rates due to the benefits phase outs. Meanwhile we'll have income tax on the "profit" of international corporations, but only on paper because they don't actually report their profits in your country. It also doesn't work when comparing VAT to property tax, because the rich generally don't use a disproportionate amount of their wealth to buy real estate -- unless it's rental properties in which case the property tax ends up being passed on to the tenants. If you want to make VAT progressive then use it to fund a UBI. All of these other games only give people with accountants more holes to hide in.

AnthonyMouse 6y ago

> FWIW, I don't think gross receipts is not a very efficient tax, since it just encourages vertical integration and discourages multiple companies working together; ie. less competition. Unfortunately, Prop 13 prevents the economically efficient and fair source of revenue They could just use VAT, which gives no advantage to vertical integration.

grandmczeb 6y ago
Implementing a VAT at the state level is difficult when goods can easily move across state borders. You'd need a federal system of collecting sales tax.
- AnthonyMouse 6y ago
  They already have the big online retailers collecting sales tax. People can't save money by driving hundreds of miles to another state to buy small ticket items, and big ticket items like cars and boats get taxed on registration.
  - grandmczeb 6y ago
    How do you calculate value add if you’re a factory that imports parts from another state and sells an assembled final product?
    - AnthonyMouse 6y ago
      Being produced out of state doesn't get you out of it. If you import something from out of state, the act of importing causes VAT to be due on its value. If you then add value in the factory, you owe that too. The total VAT is always equal to the sale price. (If you like to promote exports you then give a refund for products not sold in the state.)
      - grandmczeb 6y ago
        That gives a heavy incentive to lie about where it was produced. That’s fine when imports are tracked across a border, but not in the system we have in the US.
neilparikh 6y ago
SF already has a fairly high sales tax (~9%), so I doubt they could raise it anymore (I'm considering sales tax and VAT to be the same for this discussion, since they lead to the same revenue for the government, and same cost for the consumer). I think VAT/sales tax is bad in other ways, since it's a regressive tax (the poor spend more of their income/wealth on consumption vs. the rich), and it also reduces transactions being made, which just creates dead weight loss. Our goal should be to keep money moving around, not add barriers to new transactions. If I had to pick, I think I'd prefer the gross receipts tax, but I haven't studied the underlying economics to come to a conclusion on which is better/worse.
- AnthonyMouse 6y ago
  > If I had to pick, I think I'd prefer the gross receipts tax, but I haven't studied the underlying economics to come to a conclusion on which is better/worse. Gross receipts tax is just sales tax that doesn't show up on the customer's receipt. They like to pretend that it's then the seller who pays it instead of the buyer, but that's not how it works. It gets paid by whoever can't pass it on. In a competitive market that's the consumer, because the seller already has thin margins and can't absorb the cost without going out of business. (In a monopolistic market it's the monopolist, but that's just as true of sales tax -- in a monopolistic market the customer can't absorb higher prices because they're already paying monopoly prices.) > SF already has a fairly high sales tax (~9%), so I doubt they could raise it anymore (I'm considering sales tax and VAT to be the same for this discussion, since they lead to the same revenue for the government, and same cost for the consumer). Denmark and Sweden have 25% VAT. The EU requires it to be at least 15%. > it's a regressive tax (the poor spend more of their income/wealth on consumption vs. the rich) People always use this argument to justify income tax over VAT even though everything about the income tax doesn't actually work like that. "Progressive income tax" but not for FICA, which is like half the income tax ordinary people pay, and hey let's disguise that fact by alleging that it's being paid half by the employer even though that's not how it works. Let's put a cap on that too, so the wealthiest pay proportionally less than regular people. And then we'll have a bunch of means-tested benefits so that even for the "progressive" income tax, in practice lower income people are paying the highest marginal rates due to the benefits phase outs. Meanwhile we'll have income tax on the "profit" of international corporations, but only on paper because they don't actually report their profits in your country. It also doesn't work when comparing VAT to property tax, because the rich generally don't use a disproportionate amount of their wealth to buy real estate -- unless it's rental properties in which case the property tax ends up being passed on to the tenants. If you want to make VAT progressive then use it to fund a UBI. All of these other games only give people with accountants more holes to hide in.