2 ms·

I personally like the idea of dropping income taxes and switching to just sales/use tax. Compliance is simplified, tax codes are simplified, and tax avoidance i

I personally like the idea of dropping income taxes and switching to just sales/use tax. Compliance is simplified, tax codes are simplified, and tax avoidance is reduced. There are many practical aspect that would need to be resolved, like how do you apply this to imports and such, but those are solvable problems.

mike_hearn 12y ago
Most countries use VAT rather than sales tax, which is generally agreed by people who specialise in tax incidence to be better, but comes with its own interesting forms of evasion (see "carousel fraud"). Phasing out corporation tax entirely would be impossible for most countries to do quickly because such a huge part of their budgets come from that. In the UK it's about 25% I believe and the government there is still spending far, far more than it takes in via tax, so losing 25% of that revenue is a non-starter, and making it up with higher personal income taxes would be politically impossible: even if you could prove mathematically it was equivalent or better to do that, people feel very strongly that there exists an "us vs them" relationship between people and companies, where "us" often includes the government. This is despite that most people work for companies, and there's lots of evidence governments should sometimes be in the "them" bucket. I don't really know where societies go from here with corporation tax - there are so many good arguments against it, but it's sort of like trying to give up smoking. You can argue all you want but lots of countries just aren't going to do it. The first step would be to get western state finances more balanced though. Once governments aren't ballooning their debt, more complex arguments about taxation become possible to make. Whilst they're all spiralling the drain it's too hard.

2 ms·

I personally like the idea of dropping income taxes and switching to just sales/use tax. Compliance is simplified, tax codes are simplified, and tax avoidance i

by lsaferite 12y ago

mike_hearn 12y ago
Most countries use VAT rather than sales tax, which is generally agreed by people who specialise in tax incidence to be better, but comes with its own interesting forms of evasion (see "carousel fraud"). Phasing out corporation tax entirely would be impossible for most countries to do quickly because such a huge part of their budgets come from that. In the UK it's about 25% I believe and the government there is still spending far, far more than it takes in via tax, so losing 25% of that revenue is a non-starter, and making it up with higher personal income taxes would be politically impossible: even if you could prove mathematically it was equivalent or better to do that, people feel very strongly that there exists an "us vs them" relationship between people and companies, where "us" often includes the government. This is despite that most people work for companies, and there's lots of evidence governments should sometimes be in the "them" bucket. I don't really know where societies go from here with corporation tax - there are so many good arguments against it, but it's sort of like trying to give up smoking. You can argue all you want but lots of countries just aren't going to do it. The first step would be to get western state finances more balanced though. Once governments aren't ballooning their debt, more complex arguments about taxation become possible to make. Whilst they're all spiralling the drain it's too hard.