So here's my attempt:

1. Remove subsidies including tax writeoffs like depreciation. Either an asset brings value or it doesn't.

2. Tax revenue not profits. Either you make a profit selling a thing or you don't. Fancy tricks like buying an item from a fully owned subsidiary and selling it at a loss to compensate for profits from services is not realising the value your services and products bring to the economy

3. Change the paradigm from employees serve the company to companies serve the employees. Companies are a way to insulate participants from economic risk of a capital-intensive activity, not a way to structure tax affairs.

Edited for formatting

> One potential problem with a GRT is its impact on high-volume, low-profit margin businesses, for which the tax can represent a high percentage of potential profits. Another potential problem is that a GRT favors businesses that conduct most operations in-house over businesses that purchase intermediate goods and services from other firms, since the tax is imposed each time a business purchases inputs from an outside firm. (This latter problem is called “pyramiding.”) Illinois can address both of these problems, however, by allowing businesses to subtract the cost of goods purchased from other companies from the gross receipts subject to the tax.

Which, whether you call it a deduction or a simplification of the way corporate income tax is currently based on profits now, brings us back to square one.

Are you familiar with the reason the concept of depreciation exists in tax law? Because profits are what the government is trying to tax. Contra your point 2, it makes no sense to tax revenue in a way that ignores expenses. You'd be taxing two businesses the same, whether or not those revenues were just eaten by expenses.

But once you're taxing profits, you need a sane model of what constitutes business profits, and which handles more than the (very atypical) case of "buy a block of stuff, then sell it for more". At any given moment, a business has inventory and capital equipment, which is not completely used up, nor sold. How should that affect profit?

When you say "don't allow depreciation writeoff", then you're saying one of two things, neither of which maps to a good model of "how much profit is this business making".

You're saying either:

1) Any capital good should be booked immediately as a pure expense. That would imply that businesses can forever defer taxable profits simply by spending all profits on such equipment. "Oops, don't owe taxes -- again -- because we bought another robot. Sorry!"

2) Any capital good should be completely non-deductible as an expense. This would mean that one class of expense somehow "doesn't count" merely because it happens over years rather than the moment you buy it (e.g. wear-down of a saw vs purchase of electricity).

Depreciation schedules do not exist as some giveaway-subsidy for capital good purchases, but to recognize the economic reality that the truth is somewhere in the middle; that a capital (durable) good does not immediately decrease profits, but does function as an expense over a longer span of time.

In an ideal world, we would have an auction to get the market value of each used capital good to know how much value the business lost as the capital good lost its value. But this would be horribly expensive and convoluted, so businesses are allowed to assume a certain schedule. The harm of such an approximation is minimal; any discrepancy between the schedule value vs the true market value is realized as income or loss when the good is sold.

tl;dr: Depreciation is not a subsidy, but a recognition of the true effect of capital good usage on a business's book value and therefore taxable quarterly profits.

Late edit: Disclaimer: not an accountant, just my understanding of the logic behind depreciation in tax law.

You mean, make Apple a Chinese company because being an American one is no longer viable? A VAT would be more reasonable, as it taxes value actually added at each point in the system, rather than a flat tax on each point in the system as you are proposing.

Also, please say that you mean American companies, you obviously don't mean companies like SAP or infosys that the American companies compete with.

Might solve the obesity epidemic :) Might also cause riots because people are not used to eating yucky foods like vegetabables.

Vegetables like kale and broccoli? No way. The ratio of labor and land required per produced calorie for these kinds vegetables is far too high. In addition to existing farmland, we would need to convert large amoutns of existing natural environments areas like forests into farms.

But back to your point, why would the industry collapse? Wouldn't prices just increase?

Prices are already astronomically low given the subsidies. No one would pay for a $15-20 burger.

> In addition to existing farmland, we would need to convert large amoutns of existing natural environments areas like forests into farms.

https://web.archive.org/web/20081216230507/https://www.ers.u...

Well, given that the majority (more than 80%) of land is used for growing grass, wheat, soybean and corn for cattle there's no fear for vegetables.

Although soy grown for human consumption is not popular now, it's the most efficient legume there is. More protein than a steak.

This went a little bit off topic, although my point was that removing subsidies on food makes things tricky. Given that in some parts of US burger price is halved if not 20% of what it should be due to subsidies on water and corn and soybean etc.

Why not? There are places in the world where burgers cost this much and people still buy them.

That's the theory that the rich hoard their money in Scrooge McDuck cash vaults, keeping it out of the economy.

That's false - all of it is in the economy, via investments. Even money kept in a checking account is invested in the economy (banks loan out that money).

The only cash kept in cash vaults is the reserve that the government requires banks to keep to provide a buffer against runs on the bank.

Various times in history people have "liberated" wealth from wealthy people, and it never stimulated the economy (quite the reverse), because the wealth was already in the economy.

I did NOT say that. Please don't attack a straw man!

> All of it is in the economy, via investments. Even money kept in a checking account is invested in the economy (banks loan out that money).

It's a little more complicated than that. Since the Global Financial Crisis, many central banks around the world, including the Federal Reserve, have been doing EVERYTHING and ANYTHING they can to get banks to lend more, and to get businesses and individuals to borrow more and invest more.

Yet no matter what central banks have tried, individuals and businesses are not yet investing at historical rates, as evidenced by historically high liquidity[1], historically low money velocity[2], and even negative nominal interest rates in some countries[3], which are historically unique.[4] Keynes's argument that depressionary depressions/recessions may be caused by increased 'preference' for liquidity and lack of aggregate demand could actually be right, for all I know.

Meanwhile, the evidence I've seen suggests that redistributionist policies don't seem to have an impact on economic growth. For example, see: http://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf

So, why not try it, e.g., in the form of UBI or works programs, say, in controlled regional experiments? If it turns out that it works, great; if it doesn't work, then let's try something else.

NOTES:

[1] https://fred.stlouisfed.org/series/AMBNS -- look at that jump in 2008!

[2] https://fred.stlouisfed.org/series/M2V

[3] Example: https://www.reuters.com/article/us-snb-results-banks-idUSKBN...

[4] http://www.businessinsider.com/chart-5000-years-of-interest-...

Initially, yes. But people borrow money in order to spend it, not leave it on deposit.

> not constrained

That's right, just as airlines are not constrained to keep their airplanes flying payloads. But if they don't, they are not making money.

Every time you step in a bank, they try to sell you a loan for a reason.

https://en.wikipedia.org/wiki/Georgism

The distinction is that mere ownership of capital, especially common goods (such as land and natural resources) excludes other members of society from access to that resource. It does not create value, but merely holds claim to existing value, seeking rent for allowing others access to it. This should be taxed. OTOH, productive activity takes that capital, adds labor and ingenuity, and creates goods or services which benefit society--such activity should be taxed less, or not at all.

If you tax owning things a lot, then you tell people that there is no point being very productive as savings throughs higher income go all into taxes. Then people don't have much incentive to be productive.

Most of these ideas have been tried before and you eventually arrive to picking up lesser of many evils kind of situation.

People should own what they create (organizations, buildings, goods, and services), but the natural geography of the world should belong to all. If one wishes to lay claim to a stretch of land, and prevent all other equally born humans from entering or making use of that land and its resources, one should pay a tax to society for that privilege.

As you say, "people competing to allocate capital for higher returns" is a great thing. However, I dispute the fact that some people should even have the right to decide how to invest their land without first paying a societal price for it (much higher than current land tax levels--high enough to cover a corresponding decrease in most other taxes on labor or production).

The workable solution through a tax policy might include reducing the number of brackets for personal income tax, dropping personal income tax rates within those brackets, and removing deductibility of all aforementioned corporate benefits as a trade-off.

I don't see a wave of pent-up consumer demand though, as cheap and easy credit de-couples spending and earning. A lot of economists predicted boost in consumer spending as oil (and gas) prices fell over the past few years, but in reality all that spending had already taken place years before, and consumers simply used gas savings to deleverage their credit accounts. Household debt is peaking again https://www.nytimes.com/2017/05/17/business/dealbook/househo... so any additional savings or boosts in earnings will likely go towards deleveraging.

In the case of student loans, that amounts to confidence in being able to find a good job to pay them off.

Membership in the first club is more or less permanent, while the second club has a revolving door. A bunch of members of the high-income club - employees of a high-tech startup, hedge fund managers, movie producers, inventors, lottery winners, wrongfully imprisoned individuals, victims of malfeasance or drug side effects - get one large paycheck once in their life, representing sometimes decades of work at below-market rates.

They won't have another Powerball jackpot, court settlement or a startup IPO next year.

Apple made $700k per employee in a single quarter.

Our whole economy is set up to funnel money to the top. We need a new way of structuring corporations to change that.

"In terms of types of financial wealth, in 2013 the top one percent of households had 49.8% of all privately held stock, 54.7% of financial securities, and 62.8% of business equity. The top ten percent had 84% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate."

For instance say a company's CEO was the only person who got a raise for 30 years.

One possibility is the CEO was a real go getter who kept getting better and more valuable at his job and while everyone else stagnated.

The other possibility is that the CEO locked all of his employees into non-competes, keeping their salaries low, and freeing up budget to write himself large bonuses.

Obviously these two situations aren't going to be solved by the same solution.

Regardless of whether he bargained for it or squashed the employees, someone paid for this gain. With increased productivity they didn't benefit from or with plain old loss.

It probably really is the only way to prevent rich from getting much richer than everyone else and taking it all.

1) There might be a way to have higher productivity than we have now. This can't be why, it's always a goal regardless right?

2) Strategies should be considered than intentionally reduce productivity and/economic growth in order to increase worker compensation. Now things get tricky - productivity helps everyone, it makes the things we buy cheap, it boosts our standard of living. Is such a strategy even feasible?

3) There might exist some kind of goldilocks plan whereby growth and productivity are not affected, yet average compensation grows substantially. Again, kind of gets into uncharted economic waters no?

4) It wouldn't be about economics. It's just about fairness, morality, and maybe the self-interested prevention of civil unrest. It's policy not to change economics, but to change politics, who gets what, move things around, etc.

I don't doubt there are some all around good win-win ideas that could be implemented, but as a category it doesn't seem full enough to be game changing.

It may be easy to sit on top of the busily productive pile and insinuate that those on the bottom be satisfied with the scraps ("...those at the bottom get bigger scraps than they otherwise would have", etc.). But it's much more palatable and interesting for me to seek out how to remedy injustices (as I perceive them, I can't claim to be objective about this), to "quantum tunnel" out of this extreme gravitational well of inequality, so to speak.

The point is, everyone wants to charge forward without thinking about what are the solutions that will really work. This is a problem of economics and politics. The more that this problem can be solved by best economic evidence and theory (apolitical), the better. A solution based purely on politics gets progressively worse, all the way down to the level or torches and pitchforks.

I listed a few economic issues I see (as a lay person) that if answered could start thinking towards something that ends well. Shall we consider those, or shall we head to straight to the pitchforks?

At the end of the day, because I and the other not-ultra-wealthy want that money the ultra-wealth are capturing to be more equitably distributed.

The system didn't just end up this way as a quirk of chance--the ultra-wealthy have used their money to influence laws to arrange everything this way. They didn't need a reason to make it this way, except they wanted more.

Why even say "why should we be looking for solutions" as though that's what any of this is about?

It means nothing to say "this is wrong damn it" without thinking about how it can be fixed.

Please see my response to sooheon.

Sooner or later.

  For the median (50% percentile): 1.005**36 = 1.2
  P99: 1.022**36 = 2.2
  P99.9: 1.032**36 = 3.1
  P99.99: 1.043**36 = 4.6
  P99.999: 1.06**36 = 8.1