[extropy-chat] Income Tax

[Rafal Smigrodzki]

On 7/29/05, The Avantguardian <avantguardian2020 at yahoo.com> wrote:
>      After many years of careful consideration, I have
> come to the conclusion that progressive taxation and
> income tax in general is inefficient. The benefit to
> the poor is minimal, the rich just hide their money,
> and the middle class gets SCREWED.
> 
>      IMHO, I believe that the IRS should be abolsihed
> and a nationwide sales tax should be implemented on
> everything except for store bought food. I don't know
> what percentage would be optimal, but it would solve a
> number of problems. First, it would eliminate the
> excuses of the rich that they bear an unfair tax
> burden. Second, while the rich may still try to hide
> their money, the moment they tried to spend it, the
> government would gets its due. It would increase
> savings and reduce consumption across the board. It
> would eliminate tons of stupid tax laws and the
> expensive tax accountants and lawyers needed to keep
> abreast of them. It would equalize taxes for
> corporations and individuals. It would eliminate tax
> incentives for monopolistic business practices. It
> would be just plain more efficient. Any thoughts?
> 

### Bravo!!! 

Yes, of course, and this is the kind of thing I have been suggesting,
on this list and elsewhere, for many years.

Actually I go even further - I think that exempting anything, such as
food, from the tax is not a good idea, and any exemptions should be
explicitly forbidden (by a constituion that is not "loosely"
interpreted). Consider - what happens when you exempt food? People eat
more, and may get fatter. The "poor people" argument doesn't apply -
the poor eat too much anyway in this country, and if you are really
worried about malnutrition (which is not a feature of poverty per se,
but rather abusive parenting, mental disease, and drug/alcohol use
frequently associated with poverty) you can specifically target the
hungry poor with soup kitchens. There is really no reason to exempt
anything whatsoever, since any perceived undersupply can be corrected
by subsidies - and in my opinion these are less dangerous than
exemptions, since they are easier to abolish, and require a less
complex administrative effort.

The sales tax is however not the end of the way for tax reform - think
about the following tax: a tax on any financial transaction
whatsoever, any transfer of ownership, the "universal transaction
tax". This would be even less likely to distort the economy than a
sales tax but  it's too late to write about it today.

Of course, the final reform of taxation is to abolish it altogether
but discussing such breathtakingly non-PC ideas could get us banished
from the list.

Once again, kudos!

Rafal