If you think about it, the most common federal tax on individuals or families, income wage taxes, is in fact a revenue tax on businesses just like the payroll tax. A business has to pay an employee more to cover that employee's income and payroll taxes.
If we are going to replace all taxes with one tax, I would like to see a simple, flat business revenue tax. This has a few benefits. First, businesses already pay revenue taxes and individuals don't have to worry about taxes. Companies like Amazon cannot behave like a non-profit to avoid taxes. Individuals will have more money in their pockets to spend which helps business make more money. We could probably excempt small businesses and/or startups and still generate enough tax revenue. A revenue tax would also double as a consumption tax except it is only the richest that have to pay it.
Why? This is a built-in assumption most people seem to be operating with and I've never understood the rationale that the rich should pay more.
Does a rich person wear roads out more than a poor one? And if they do, wouldn't it be better if they paid for how much they wear the road down? As in: a percentages of miles driven on it? As in: a consumption-based tax?
Anyhow, even if you decide to work with that flawed premise, to me, if we're going to tax revenue, then "fair" translate to a very simple mathematical concept: fixed-rate.
Everyone pays 10% tax on their income. This way, the "rich" pay more, and the "poor" pay less. Because 10% of 1M is 100k and 10% of 100k is 10k.
Fairness handled.
If you pay 10% on $20,000, you have $18,000. It was already hard to live on 20k, living on 18k and having your needs met is even harder.
Your examples reveal your bias. Most people don't make $100,000. And it's the "most people" that you would impact hardest with the flat tax scheme.
It is possible to do a flat tax while protecting the poor.
But, as Milton Friedman said, the tax code is complex for a reason — it gives politicians a means to exert power and reward or punish. With a simple tax code, the incentive to donate to campaigns would be reduced. The Democrat and Republican establishment both oppose simplifying the tax code because they would be killing the golden geese that keep getting them re-elected. It’s no accident that the tax code changes literally every year. Politicians are busy rewarding or punishing constituencies.
a) most people are along for the ride that it's a moral imperative to keep all of the population happy b) the more money you have, the easier it is to make money. If you don't even that out at all you end up in a feudal society where some dude owns all the land, air, water and you're effectively his slave. Which is broadly the direction America has been going to for the last (30?) years
Fairness is very motivating for people but I don't think it's how you should base your society, I don't really think there's such a thing as fairness as a useful concept.
The real fix is a wealth tax but that is hated by both the old and the rich (look at how mansion tax policy was received in the UK). It's also kind of harder to measure than income.
I can never get this narrative. A business is an organization of people, of investors workers and consumers. You cant offload taxes to an abstract business, you are putting it on one of the groups of people above.
And those groups of people are financially more powerful collectively than individuals which means those groups of people have a responsibility to help pay for society which they benefit directly from such as roads, power cables, etc.
If only one or a very small group "abstract business" was required to pay all the taxes for the entire society, then I would agree with you. However no one is arguing that.
There is little merit in name of a tax that it gets to "the majority of people". It can fail equitability super hard because of who pays the economic burden of the tax.
> And those groups of people are financially more powerful collectively than individuals which means those groups of people have a responsibility to help pay for society which they benefit directly from such as roads, power cables, etc.
Sorry, but this is just not economic thinking, not even of the wrong kind. If the burden of a tax is on consumers, your assertion falls hard. If it falls on workers, then you are punishing labor. If it falls on investors you are punishing investment. "Being powerful parts of society" is not an argument for taxation.
EDIT
Just to add, if you agree we need taxation to have functioning society, why wouldn't we get the money from the richest? Why wouldn't we put the burden on the richest? In terms of people inside rich organizations, it is only the already rich, owners and investors, which would feel the burden. Supply and demand will continue to give consumers high quality and low prices. Employees will still get their market-rate wages or minimum wage for low-skill jobs.
"Punishment" carries some unnecessary connotation. How about "disincentive." People respond to incentives; good policy exploits this by taxing the things society wants less of. Failing that, it levies taxes that don't depend much on behavior, to avoid undesired distortions.
The argument is not that corporations have some kind of right to their income that's being unfairly abridged. It's that taxing corporations is sloppy: the true cost of the tax falls on consumers, workers, and owners in not-very-deliberate proportions. If you want to put the burden on "the richest," great, so do I. But let's tax those actual people.
In other words, the true cost may be on individual people. But so is the true benefit. So would taxing solely corporations have more cost or benefit for those people? Both for the people in the corporations and those without? I have yet to see a coherent, let alone persuasive, argument against the idea.
These are the questions the field of economics studies. Thats what they say.
> Morality or not there is a benefit to taxes which many purely economic arguments on HN ignore.
Saying that there is a benefit of taxes is an economic argument. Thats why it gets responded with economic arguments. If you imply the act of paying taxes is moral, I would compare it to the donation to church, where self-sacrifice is a virtue of its own. Much like the donation to church, it should be for those that want it. After all, its not self-sacrifice if its not voluntary!
> In other words, the true cost may be on individual people. But so is the true benefit
The ones that pay are not the ones that receive the benefit. Under this Doctrine you could always see a robber stealing a wallet and conclude that society is not a dime poorer. After all, one side gained what the other side has lost. What a defense the criminal has! That he has not made society poorer!
> So would taxing solely corporations have more cost or benefit for those people? Both for the people in the corporations and those without? I have yet to see a coherent, let alone persuasive, argument against the idea.
Its very hard to tell , precisely because corporate taxes hit different people in different ways in a chaotic way. It is much easier to make a conclusion with different taxation methods, but corporate taxes are very obscure and distortive.
Again, that is factually and objectively incorrect. I even gave you a personal example where I pay and I benefit. You are entitled to your own opinions but not your own facts.
If the latter is true, there is no need for a tax: the government can sell it optionally and every single payer would subscribe to it. The tax is only necessary to collect the money from people that would not pay for it.
A tax IS a punishment. It is a charge not reciprocated by a service to the person that pays for it. Collective goods dont require individualized sacrifices, just individual collaborations. But okay, we can divert ideologically on that point, but nevertheless any effect of taxation is a cost on the person paying for it, and will have the same effects to him as if the person lost the taxed money into the abyss.
> Just to add, if you agree we need taxation to have functioning society, why wouldn't we get the money from the richest? Why wouldn't we put the burden on the richest? In terms of people inside rich organizations, it is only the already rich, owners and investors, which would feel the burden. Supply and demand will continue to give consumers high quality and low prices. Employees will still get their market-rate wages or minimum wage for low-skill jobs.
I think I've always had a curious thought about the idea of not discriminating minorities, except for the rich, you better discriminate those! If we can agree at least that taxation is the cost of government, why should the cost of government only come from a section of society? A society that achieves to make a part of it responsible for its whole will not thrive in collaboration and cohesiveness. A society where some expect to make a living at the others expense is not a free one.
In economic terms, there are multiple criteria on measuring how good a tax is. There is of course how the burden affects the person itself, but also how efficient it is to levy it, how convenient it is to pay or how predictable it is. Satisfying multiple criteria will not give you much room to tax "the rich".
There are normative arguments as well: just placing a tax on the rich doesnt mean you'll be able to raise that money, as the rich have the highest recourse to escape. Human beings are very hard to corner!
A tax is a legitimate cost of a functioning economy as much as an electricity bill or a truckload of cement. That tax pays for the infrastructure which makes that same transaction possible in the first place.
Ideally the cost of participation in the economy should scale linearly with how much excess benefit you derive. Total benefit minus the cost of being a functioning human in the society. This requires the insight that a person who has $1,000 of discretionary money every week has a lot more than ten times the excess benefit as someone who has just $100 discretionary every week.
Put another way, from the perspective of a rich person, it's in my interest to have everyone else in society well fed, free of disease, mentally healthy and able to work productively. The best way for rich people to ensure that is to require them all to pay a much larger proportion of taxes.
> A tax is a legitimate cost of a functioning economy as much as an electricity bill or a truckload of cement. That tax pays for the infrastructure which makes that same transaction possible in the first place.
A tax can be used to pay for the infrastructure, and also pay many other things that are terrible and inefficient and immoral. Government spends a very small fraction of its budget on infrastructure, what about the rest? If only a fraction of the spending justifies the whole, then as long as you use some part for good you are entitled to rob the whole.
Moreover, as time progresses, we find more and more ways to pay for infrastructure without taxes. Why is the infrastructure of the US is crumbling, and tax pressure is equal or higher? Its just not real that taxes are necessary for infrastructure, and that taxes are spent on infrastructure.
> Ideally the cost of participation in the economy should scale linearly with how much excess benefit you derive. Total benefit minus the cost of being a functioning human in the society. This requires the insight that a person who has $1,000 of discretionary money every week has a lot more than ten times the excess benefit as someone who has just $100 discretionary every week.
I dont see well the justification for 'excess benefit'. What is excess benefit and who decides? For me, goverment employee salaries are excess benefit, because many of them do actual damange and collect a paycheck. Can we tax those 100%? The second part talks about the ability to pay: if someone has higher ability to pay a tax they should pay a higher tax. I dont think this is in everyones best interest either. If someone is earning a lot more because he produces more value, the tax will punish the productive fields, and prize the least productive fields. This means more people will work on the least productive, and less people on the most productive. The end result is worse wealth for the entire society.
> Put another way, from the perspective of a rich person, it's in my interest to have everyone else in society well fed, free of disease, mentally healthy and able to work productively. The best way for rich people to ensure that is to require them all to pay a much larger proportion of taxes.
It is not true that taxes are the way to help people advance. The greatest advances of human kind in quality of life and wealth happened in time of low government tax and intervention. Equating taxes to benefit is a grave mistake, one that reality has once and again shown extreme dangers. The society with the ultimate taxation, Socialist-communist, has shown greatest decline and misery of its people.
In my town, in addition to the normal local taxes, there is a special greenery fee/tax that all residents must pay. It is only $25/year. The purpose is to pay the upkeep of all the green spaces which there are many. I happily pay this because I like to walk through these green spaces. Individually there is no way that $25/year would pay for that, but collectively the town can afford to and it improves living here for all the residents.
There are of course many examples where tax money is not used wisely, but there are also many examples where it is. We should get better at spending it wisely which is of course easier said than done. But to say that taxes are like throwing money into the abyss just doesn't stack up to the data.
Also, if that inefficiency is in the form of salaries or domestic spending, it's only partly wasted as it adds to movement of money in the economy.
If you pay someone to do nothing you waste both the money you used that could have gone to something useful and the time of the person that would have done something else, hopefully productive, instead.
Unless you want other people to pay for it, of course.
Democracy is not a justification for payment. 51% can vote to rob the other 49%.
But lets say I go down this path with you, one that is not only not how democracies work, but a reprehensible if it were. Lets put it up to a poll then. Lets vote for all these issues and see what happens. The results might surprise you. I have seldom if ever seen a vote for a tax increase to pass popular support.
Consumption tax is much harder to gain than income taxes. Corporations pay in the country they sell to so that closed all tax heaven loopholes instantly. Making the system progressive is easy as well, just allow every citizen to bring receipts up to X$ per month to the taxman and get the money back. If you really want you can tax luxury items at higher rate as well.
Without going to that level of simplicity, it's worth noting that some countries have done away with capital gains altogether and are doing perfectly well socially. That would be a perfect first step.