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Why would you say it doesn't discourage labor? If instead of paying somebody $20/hour you need to pay them $30 because of taxes, that makes hiring them more co

Why would you say it doesn't discourage labor? If instead of paying somebody $20/hour you need to pay them $30 because of taxes, that makes hiring them more costly and you're incentivized to look for other options.

dragonwriter 6y ago
An income tax that doesn't discriminate among forms of income doesn't discourage labor, because any other options you look for have the same costs. Now, the specifics of the US system of taxation on income discourages labor/employment quite heavily, by tax favoring income through gifts and inheritances (up to a very large quantity) over capital income, which itself is favored over general income, which itself is favored over labor income. But none of that is inherent in the concept of an income tax system.
- akvadrako 6y ago
  You seem to be saying something much more complex then me. I'm saying having a tax on income discourages labor COMPARED TO NO TAX ON INCOME. That's seems true regardless of other taxes. The only way it wouldn't be true is if raising taxes on labor also raised taxes on all other possible actions in somehow an exactly symmetrical way.
  - _qulr 6y ago
    In effect, a sales tax "discourages labor" in the same way: if you have to charge customers more for your products because of sales tax, that discourage sales, and thus you have less revenue available to pay workers. The effect is the same. You can't eliminate income taxes and then magically have the same amount of capital available to pay wages, that's not how it works. If the government has to raise $N total in taxes, that amount of money is coming out no matter what. It has to come out somewhere. The real question is distribution, and that's when you have to look at fairness of taxation and ability to pay. You can't just say income taxes discourage labor and ignore the question of where you're getting the taxes instead, and how the alternative taxation method affects labor.

dragonwriter 6y ago

An income tax that doesn't discriminate among forms of income doesn't discourage labor, because any other options you look for have the same costs. Now, the specifics of the US system of taxation on income discourages labor/employment quite heavily, by tax favoring income through gifts and inheritances (up to a very large quantity) over capital income, which itself is favored over general income, which itself is favored over labor income. But none of that is inherent in the concept of an income tax system.

akvadrako 6y ago
You seem to be saying something much more complex then me. I'm saying having a tax on income discourages labor COMPARED TO NO TAX ON INCOME. That's seems true regardless of other taxes. The only way it wouldn't be true is if raising taxes on labor also raised taxes on all other possible actions in somehow an exactly symmetrical way.
- _qulr 6y ago
  In effect, a sales tax "discourages labor" in the same way: if you have to charge customers more for your products because of sales tax, that discourage sales, and thus you have less revenue available to pay workers. The effect is the same. You can't eliminate income taxes and then magically have the same amount of capital available to pay wages, that's not how it works. If the government has to raise $N total in taxes, that amount of money is coming out no matter what. It has to come out somewhere. The real question is distribution, and that's when you have to look at fairness of taxation and ability to pay. You can't just say income taxes discourage labor and ignore the question of where you're getting the taxes instead, and how the alternative taxation method affects labor.