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> Taxes are crazy, anyhow... Outside the Overton Window, why are individuals taxed rather than businesses? There was a time when the government had no busines

> Taxes are crazy, anyhow... Outside the Overton Window, why are individuals taxed rather than businesses? There was a time when the government had no business knowing the financial affairs of the citizens, but then some kings got the idea that they could tax everyone to pay for their wars. Nowadays we assume tax paying is good and socially responsible, with only tax-dodging scum not wanting to pay their taxes. Due to tax havens and whatnot, for a company to compete and be successful, some tax avoidance is needed. So we have every corporation opting out of paying taxes. Consequently, taxation is for the citizens, not the corporations. Companies have accountants and bookkeepers. Individuals don't unless they are seriously wealthy. As I see it, it would make much more sense to just tax companies and not individuals. Think of the amount of time that would be saved, particularly if VAT is a tax, which it isn't in America. I have to say that the American tax system sounds like hell, compared to what we have in the UK.

angiolillo 1y ago
> it would make much more sense to just tax companies and not individuals Sure, but taxes are applied due to political feasibility, not because they "make sense". The most sensible approach is to tax natural resources (land, carbon, mines, wells, electromagnetic spectrum) and other forms of economic rent, but that is politically infeasible (edit: or more accurately, very challenging) in a capitalist democracy.
- mothballed 1y ago
  Back when the federal government was constrained to that permitted within the 10th amendment, the average person paid taxes almost exclusively through indirect tariffs, property taxes, and some levies (effectively sales tax) on purchased goods. But back then the non-wartime spend of the federal government was like 2-4% of GDP
- skeeter2020 1y ago
  I don't follow you or the GP - all of these (and more) are taxed. I'm in Alberta, Canada where we pay property (land) tax, personal income tax, corporate income tax, consumption tax, payroll tax, wealth tax, estate transfer tax, mineral taxes (often in-kind), and (until recently) a direct carbon tax. And that's not nearly all of them. I can't imagine the US is much different.
  - angiolillo 1y ago
    Sorry, I should have been more specific. From an economic standpoint, the most "sensible" (i.e. most efficient and least distortionary) tax is one that relies primarily on natural resources and other forms of economic rent instead of taxing labor, businesses, non-land property, wealth, or the creation of value. However, these rent-based taxes would need to be set very high to fully replace income, corporate, payroll, sales, property, VAT, wealth, estate, etc taxes. Switching to such a system would be painful for people whose net worth is disproportionately invested in land or who consume significant resources relative to their income. If the majority of the population fall into this category (as is not uncommon in capitalist democracies) then such taxes would be broadly unpopular, making them politically infeasible.
- dimal 1y ago
  > that is politically infeasible in a capitalist democracy. It’s more accurate to say it it’s politically infeasible in our capitalist oligarchy. Just because this is the way our society works now, we shouldn’t be duped into thinking this is the natural order of things. It’s not. A democratic society with a free market economy could work very differently.
  - angiolillo 1y ago
    I agree that it's more "difficult" than "infeasible" so I've corrected above. But I'm not sure I agree that the difficulty is due to being an oligarchy. In a democracy where the majority of citizens have the majority of their capital tied up in land (as is the case in the US and many capitalist democracies), shifting the tax burden onto land seems like it would be broadly unpopular. I do agree with your main point though that a democratic society with a free market economy could work very differently, it's really the transition that would be broadly unpopular, and therefore politically difficult in a democracy.
  - mothballed 1y ago
    Even a theocratic ~monarchy with a ~free market could work very differently. Dubai has minimal tax burden, with normally 0 income tax and a 0 or 9% corporate tax.
pdonis 1y ago
> why are individuals taxed rather than businesses? The big question to me is, why do we tax production rather than consumption? We shouldn't have income taxes at all. We should have sales taxes. Make basic necessities like food exempt.
- saulpw 1y ago
  I've always heard that consumption taxes are regressive because poor people consume 100%+ of their income while rich people consume e.g. 1% of their income.
  - wagwang 1y ago
    Bad logic, if u dont consume then who cares if u have money.
    - hydrogen7800 1y ago
      >who cares The people who maintain the infrastructure which enables you to have that money.
    - saulpw 1y ago
      The people who don't have money because you have it and won't spend it. The dragon's hoard is bad for everyone (including the dragon, ultimately).
      - wagwang 1y ago
        You need to start thinking about the economy in terms of goods and services instead of money. Hoarded money is dead money, it's actually anti inflationary. If there are 100 apples and everyone can afford 1 apple except for a rich person who can buy it all, it's actually a good thing that the rich person doesnt spend their money to buy the apples, thus driving up the price and depleting supply.
        alchemism 1y ago
dboreham 1y ago
> why are individuals taxed rather than businesses Because rich people would find ways for all their income to be realized by businesses they control, resulting in zero personal tax liability. > particularly if VAT is a tax, which it isn't in America America has sales tax, which is functionally the same as VAT. It's levied at the state level, and some states have a zero rate at present. We also have high import tariffs now, which again work like VAT. > I have to say that the American tax system sounds like hell, compared to what we have in the UK. True.
- tekne 1y ago
  I don't get the first counterargument, since the OP is proposing taxing businesses. So the hypothetical rich guy here would want all the income to go to themselves, rather than the business. Anyways, something something Georgism something something.

angiolillo 1y ago

> it would make much more sense to just tax companies and not individuals Sure, but taxes are applied due to political feasibility, not because they "make sense". The most sensible approach is to tax natural resources (land, carbon, mines, wells, electromagnetic spectrum) and other forms of economic rent, but that is politically infeasible (edit: or more accurately, very challenging) in a capitalist democracy.

mothballed 1y ago
Back when the federal government was constrained to that permitted within the 10th amendment, the average person paid taxes almost exclusively through indirect tariffs, property taxes, and some levies (effectively sales tax) on purchased goods. But back then the non-wartime spend of the federal government was like 2-4% of GDP
skeeter2020 1y ago
I don't follow you or the GP - all of these (and more) are taxed. I'm in Alberta, Canada where we pay property (land) tax, personal income tax, corporate income tax, consumption tax, payroll tax, wealth tax, estate transfer tax, mineral taxes (often in-kind), and (until recently) a direct carbon tax. And that's not nearly all of them. I can't imagine the US is much different.
- angiolillo 1y ago
  Sorry, I should have been more specific. From an economic standpoint, the most "sensible" (i.e. most efficient and least distortionary) tax is one that relies primarily on natural resources and other forms of economic rent instead of taxing labor, businesses, non-land property, wealth, or the creation of value. However, these rent-based taxes would need to be set very high to fully replace income, corporate, payroll, sales, property, VAT, wealth, estate, etc taxes. Switching to such a system would be painful for people whose net worth is disproportionately invested in land or who consume significant resources relative to their income. If the majority of the population fall into this category (as is not uncommon in capitalist democracies) then such taxes would be broadly unpopular, making them politically infeasible.
dimal 1y ago
> that is politically infeasible in a capitalist democracy. It’s more accurate to say it it’s politically infeasible in our capitalist oligarchy. Just because this is the way our society works now, we shouldn’t be duped into thinking this is the natural order of things. It’s not. A democratic society with a free market economy could work very differently.
- angiolillo 1y ago
  I agree that it's more "difficult" than "infeasible" so I've corrected above. But I'm not sure I agree that the difficulty is due to being an oligarchy. In a democracy where the majority of citizens have the majority of their capital tied up in land (as is the case in the US and many capitalist democracies), shifting the tax burden onto land seems like it would be broadly unpopular. I do agree with your main point though that a democratic society with a free market economy could work very differently, it's really the transition that would be broadly unpopular, and therefore politically difficult in a democracy.
- mothballed 1y ago
  Even a theocratic ~monarchy with a ~free market could work very differently. Dubai has minimal tax burden, with normally 0 income tax and a 0 or 9% corporate tax.

pdonis 1y ago

> why are individuals taxed rather than businesses? The big question to me is, why do we tax production rather than consumption? We shouldn't have income taxes at all. We should have sales taxes. Make basic necessities like food exempt.

saulpw 1y ago
I've always heard that consumption taxes are regressive because poor people consume 100%+ of their income while rich people consume e.g. 1% of their income.
- wagwang 1y ago
  Bad logic, if u dont consume then who cares if u have money.
  - hydrogen7800 1y ago
    >who cares The people who maintain the infrastructure which enables you to have that money.
  - saulpw 1y ago
    The people who don't have money because you have it and won't spend it. The dragon's hoard is bad for everyone (including the dragon, ultimately).
    - wagwang 1y ago
      You need to start thinking about the economy in terms of goods and services instead of money. Hoarded money is dead money, it's actually anti inflationary. If there are 100 apples and everyone can afford 1 apple except for a rich person who can buy it all, it's actually a good thing that the rich person doesnt spend their money to buy the apples, thus driving up the price and depleting supply.
      - alchemism 1y ago

dboreham 1y ago

> why are individuals taxed rather than businesses Because rich people would find ways for all their income to be realized by businesses they control, resulting in zero personal tax liability. > particularly if VAT is a tax, which it isn't in America America has sales tax, which is functionally the same as VAT. It's levied at the state level, and some states have a zero rate at present. We also have high import tariffs now, which again work like VAT. > I have to say that the American tax system sounds like hell, compared to what we have in the UK. True.

tekne 1y ago
I don't get the first counterargument, since the OP is proposing taxing businesses. So the hypothetical rich guy here would want all the income to go to themselves, rather than the business. Anyways, something something Georgism something something.