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Author Topic: What tax/es should a country use to collect revenue?  (Read 738 times)
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Rockingham
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« on: April 21, 2012, 12:13:51 am »
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Two things: firstly assume the country is going to collect x amount of revenue, with x being the same regardless of what tax you select(this is to deflect all of the people screeching higher/lower/none!)

Secondly this isn't intended to be a debate about progressive vs non-progressive systems. Any given tax(even consumption taxes) can have both progressive and non-progressive variants... assume for the sake of discussion that all of the taxes under consideration are of identical progressivity.

Thirdly assume that retired and welfare dependant folk are rendered exempt/compensated from all of them(as is typically the case with taxes)

(the first two requests will probably be ignored, but at least I tried. le sigh.)

With that out of way which tax/es would you consider preferable for collecting revenue? Rank them in order of preference if you wish.

Personally I would say property taxes are the optimum revenue source. This has been the conclusion of most studies by economic institutions: property tax>consumption tax>income/payroll tax/corporate/capital gains tax(see here http://www.politifact.com/rhode-island/statements/2010/nov/14/lincoln-chafee/chafee-quotes-experts-saying-sales-tax-increase-wo/ ).

A property tax(ideally structured as a land value tax so as to avoid penalizing improvements to property) would probably be a insufficient source of revenue however. So on top of that I would put a consumption tax and perhaps a tax on extraction of finite resources(ie. mining).


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Redalgo
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« Reply #1 on: April 21, 2012, 02:15:47 am »
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My entirely unfounded impression of how it should be until someone talks sense into me is:

Income/Payroll Tax > Capital Gains Tax > Consumption Tax > Corporate Tax > Property Tax

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« Reply #2 on: April 21, 2012, 08:20:39 am »
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Is it even possible to collect the same amount of revenue from each tax while having them have the same progressivity level? I don't see how a sales tax will bring in the same amount of revenue as a bracketed income tax and have the same level of progressiveness.
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« Reply #3 on: April 21, 2012, 10:11:23 am »
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one-time steeply progressive wealth tax
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« Reply #4 on: April 21, 2012, 11:20:25 am »
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one-time steeply progressive wealth tax

Yes! 

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Rockingham
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« Reply #5 on: April 21, 2012, 11:38:40 am »
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I love your username Miamiu Smiley lol.

Is it even possible to collect the same amount of revenue from each tax while having them have the same progressivity level? I don't see how a sales tax will bring in the same amount of revenue as a bracketed income tax and have the same level of progressiveness.
I only said that to stop this being an argument about progressiveness and quantity of taxation, and keep it about the style of tax. You may be right, technically, in that more money is recieved as personal income then is spent. But that also holds true for a flat or regressive income tax vis a vis a flat or regressive consumption tax. And we're talking there about maximum potential revenue... no one is considering a 100% tax therefore the percentage tax rater would just need to be set higher for consumption tax for it to recieve the same quantity of revenue.

My entirely unfounded impression of how it should be until someone talks sense into me is:

Income/Payroll Tax > Capital Gains Tax > Consumption Tax > Corporate Tax > Property Tax
I'll accept that invitation Smiley.

I'd first point to the the OECD study in question(http://www.oecd.org/dataoecd/34/49/46617652.pdf) which stated

"The analysis suggests a tax and economic growth ranking
order according to which corporate taxes are the most harmful type of tax for economic
growth, followed by personal income taxes and then consumption taxes, with recurrent
taxes on immovable property being the least harmful tax."

The reason for the ranking are several:
1) Ease of escaping the tax. Corporations can easily outsource and conceal their real net revenue. Workers have a harder time immigrating then corporations do(though corporation can outsource their jobs) but they can easily conceal their real income. Consumption cannot be outsourced and is quite hard to conceal. Land value is impossible to outsource or conceal.

2) Economic effects. A corporate tax leaves some corporations unviable. An income tax leaves a higher quantity of people unemployed and reduces marginal incentive to work. A consumption tax directly reduces consumption. But what economic activity does a land  tax reduce?... land supply is almost totally inelastic. It can actually increase economic activity if structured as a land value tax(calculated based on the value of the land itself while excluding the value of improvements made to it(ie. a house)), because it strongly penalizes underutilization of land.

I would also add 3) Moral and philosophical arguments.
a)Whereas wealth from income is earnt, wealth from land is entirely unearnt... the value goes up or down without any input from it's owner. Even stockmarket investors have an edge there... their money is being directly utilized by the company to enable growth, whereas your land is not being utilized at all to stimulate the increase in land value. It is a fundamentally undeserved increase in wealth.
b)Land ownership is zerosum, unlike labour/enterprise/capital/investment. Your owning it comes at the expense of everyone else because its supply cannot be increased.
c)Its fundamentally more egalitarian. The biggest source of the gap between the wealth of white versus nonwhites is not income, it is land value(especially since the presence of whites tends to increase a neighborhoods land value while white flight leads to a collapse in land values).
« Last Edit: April 21, 2012, 11:46:36 am by Kyro sayz »Logged
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Rockingham
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« Reply #6 on: April 21, 2012, 11:40:00 am »
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You are one funny troll.
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« Reply #7 on: April 21, 2012, 11:44:54 am »
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My system would use a mix of a steeply progressive income tax, land value tax, sin taxes (extended to include the drugs I would legalize), Tobin tax and an array of tariffs.
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Redalgo
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« Reply #8 on: April 21, 2012, 12:16:46 pm »
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Thanks for the input, Kyro. Once I've gone through the .pdf and re-read your post I'll probably sneak back into this thread to offer a more complete response.

In the meanwhile, thanks again for offering me something to read!
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« Reply #9 on: April 21, 2012, 07:07:33 pm »
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A property tax(ideally structured as a land value tax so as to avoid penalizing improvements to property) would probably be a insufficient source of revenue however.

Why do you say that?
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« Reply #10 on: April 21, 2012, 10:25:05 pm »
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I prefer a real estate tax over a land value tax.  This is for two reasons.  First, the idea that we should encourage construction by not taxing improvements strikes me as placing an unhealthy emphasis upon economic activity as the sole positive good in a society.  Second, I feel the need for many government services such as police and fire services is more likely to be proportionate to real estate values than to land values alone.  Hence the variation in rates needed to pay for the desired level of service between different areas should be lower with a real estate tax than with a land value tax.

Next, Pigovian taxes upon specific products whose consumption we wish to reduce.  They are generally fairly easy to collect and have useful secondary effects, provided they are not set so high as to unduly encourage criminal evasion of the tax.  Alcohol, tobacco, marijuana, fossil fuels, lead, and more can all be subjected to them.  Gambling and prostitution as well, but the ease with which independent operators can enter into these fields suggests that they should be limited to casinos and brothels (including the virtual internet kind).

Third, short-term capital gains (ideally long-term capital gains, i.e., taking ten or more years to be realized, should not be taxed), with the shorter the term, the higher the tax rate.

Next comes user fees disguised as taxes for ease of collection.  For example, sewer rates based on water consumption because the incoming is easier to measure than the outgoing.  If we do start to see a significant decline in internal combustion engine powered vehicles as a share of the motor vehicle fleet, we'll need to shift away from motor fuel taxes to other taxes such as odometer taxes or tire taxes.  (Altho tire taxes alone cannot hope to raise anything close to what motor fuel taxes do now without being so high as to make tire theft very tempting.  Still, it would be a way for bicyclists to contribute to the cost of bike lanes.)

Then comes death taxes.  These taxes are intended to serve a particular function, to prevent the concentration of wealth, and as such as social engineering at its most class conscious.  The confiscatory rates they were once at were too high, and to some extent still are high.  They should be no more than the level of taxes on ordinary income.  If levied at all, I'd prefer to see them levied as inheritance taxes rather than estate taxes.  (The difference is that if there are exemptions as there should be, then the more inheritors of an estate, the greater the exemption.)  I'd like to see spouses exempt, save that if they remarry, then the new spouse would be subject to an inheritance tax on anything that came from the estate of the guy or gal he replaced.  The trust and family business problems can be dealt with by having such estate assets subject to an inheritance tax only upon the receipt of funds from the trust or business.

Last but not least we come to generic taxes on gross-receipts and personal income (sans capital gains, see above).  I'd prefer eliminating all so-called corporate income taxes and sales taxes by replacing them with gross-receipts taxes.  It is far more difficult to use accounting gimmicks to avoid taxes on gross-receipts than on taxes on gross-receipts without engaging in outright tax fraud.  Sales taxes levied only on the "final" consumer invite fraud as to who a final consumer is.

If the rates are equal on gross-receipts and wage income, then there is no reason for taxing dividends as income (save as part of an inheritance tax, see above), but if the gross-receipts tax is lower, or there are exemptions on gross-receipts tax not available for personal income tax, then I would support a dividend tax to prevent the establishment of companies for the sole purpose of tax management.

The sole virtue of the complexity of a VAT is that in comparison to a straight up gross-receipts tax, a gross-receipts tax encourages vertical integration of businesses.  However, vertically integrated businesses have difficulties in efficiently managing their supply chains, so I'm not certain it's a big problem.  It certainly would not be a major problem for the retail industry, tho you'd see a bigger use of the consignment method of doing business.  (I.e., that cottage cheese you bought at the supermarket was actually owned by the dairy and not the store until you took it to the checkout.)
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My ballot:
Ervin(I) Gov.
Sellers(D) Lt. Gov.
Hammond(R) Sec. of State
Diggs(D) Att. Gen.
Herbert(D) Comptroller Gen.
Spearman(R) Supt. of Education
DeFelice(American) Commissioner of Agriculture
Hutto(D/Working Families) US Sen (full)
Scott(R) US Sen (special)
Geddings(Labor) US House SC-2
Quinn(R) SC House District 69
TBD: Lex 1 School Board
Yes: Am. 1 (allow charity raffles)
No: Am. 2 (end election of the Adj. General)
No: Local Sales Tax
Yes: Temp Beer/Wine Permits
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« Reply #11 on: April 27, 2012, 12:52:49 pm »
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-Personal Income
-Capital gains
-Estate
-Corporate Income
-Dividends
-Payroll
-Commercial Property
-Residential Property

Etc.
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R2D2
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« Reply #12 on: April 27, 2012, 03:24:47 pm »
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Income.

That's it.
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« Reply #13 on: April 27, 2012, 04:32:15 pm »
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I'll add to this discussion when I have more time, but one point I'd like to make:

It can actually increase economic activity if structured as a land value tax(calculated based on the value of the land itself while excluding the value of improvements made to it(ie. a house)), because it strongly penalizes underutilization of land.

While I suppose it's not really something to worry about in today's economy, couldn't this potentially lead to rather significant real estate speculation and thus risk creating a new housing bubble?
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Ernest
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« Reply #14 on: April 27, 2012, 07:31:46 pm »
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I'll add to this discussion when I have more time, but one point I'd like to make:

It can actually increase economic activity if structured as a land value tax(calculated based on the value of the land itself while excluding the value of improvements made to it(ie. a house)), because it strongly penalizes underutilization of land.

While I suppose it's not really something to worry about in today's economy, couldn't this potentially lead to rather significant real estate speculation and thus risk creating a new housing bubble?

Not really.  Assuming a land value tax is structured to generate the same revenue as a real property tax does, then it should have no significant effect on a speculation based on a general rise in property values.

More significant is the effects going to a land value tax would have on land use.  In urban residential and commercial areas, a land value tax promotes the building of multi-user structures in the high-value core since that reduces the per user tax.  Apartment buildings and multistory malls would be more common.  The tax advantages of living in the exurbs instead of the suburbs would be greater as well.  Gotham likely has a land value tax, as it helps explain why Gotham City has so many skyscrapers and why stately Wayne Manor is 14 miles from it.
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My ballot:
Ervin(I) Gov.
Sellers(D) Lt. Gov.
Hammond(R) Sec. of State
Diggs(D) Att. Gen.
Herbert(D) Comptroller Gen.
Spearman(R) Supt. of Education
DeFelice(American) Commissioner of Agriculture
Hutto(D/Working Families) US Sen (full)
Scott(R) US Sen (special)
Geddings(Labor) US House SC-2
Quinn(R) SC House District 69
TBD: Lex 1 School Board
Yes: Am. 1 (allow charity raffles)
No: Am. 2 (end election of the Adj. General)
No: Local Sales Tax
Yes: Temp Beer/Wine Permits
phk
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« Reply #15 on: April 28, 2012, 07:37:46 pm »
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I prefer a lot of small taxes than a single large tax. The deadweight loss of a tax rises approximately with the square of the tax rate.
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politicus
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« Reply #16 on: April 29, 2012, 02:49:34 pm »
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Generally I would prefer to tax income people haven't earned and taxes on things that damage the environment, but those taxes tend to harm poor people who cant subsidize their energy consumption with smarter solutions.

1. Property taxes (centered on value increase not due to improvements)

2. Inheritance taxes (high on huge fortunes - almost confiscation, low on small family businesses. Capitalism with a fair chance for everybody)

3. Registration fees on cars (road pricing would be better, but it limits personal freedom)
This works best in cities, there should be exemptions for rural areas.

4. Gasoline and oil taxes.

5. Water consumption fees (with a taxfree minimum for per person).

6. Taxes on hash (legal), liquor and tobacco.

7. Income tax as low as possible on wages, higher on capital gains

8. Tobin tax


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