What is the fairest form of tax?

The Corinthian

Victor wrote: »

In fairness, it beats other protection rackets. :pac:

Ex of mine once commented that if you were ever robbed back in her home town, the local Camorra clan would sort it out for you pretty quickly, so I'm not so sure if we have such a good protection racket in the Gardai. Unless you happen to be an inner city shop that *ahem* doesn't exactly charge the guards who come in during the day, then you do see a good bit of proactive policing.

I suspect the only reason people even bother to report a robbery is for the insurance.

OK, off topic. Sorry

Victor

The Corinthian wrote: »

OK, off topic. Sorry

Not necessarily. It is an alternative form of government, although I would be less than willing to make the reverse argument that government is an alternative form of theft.

The Corinthian wrote: »

Ex of mine once commented that if you were ever robbed back in her home town, the local Camorra clan would sort it out for you pretty quickly

But at what cost to society as a whole?

Valmont

Valmont wrote: »

Outgoing tax > Incoming Benefits.

That does not constitute evidence for your original statement, for three reasons. Firstly, there isn't a full cost-benefit analysis; you haven't enumerated the costs and benefits, therefore you haven't enabled a calculation that would determine that either is greater or less than the other. Secondly, to the extent that we can call your one-liner an "analysis" at all, it refers to you only. You haven't shown that it has general applicability, but your original statement was a general one. Thirdly, you haven't shown that there are no benefits. Your original statement was that there are no benefits.

The Corinthian

The Corinthian wrote: »

You can also see the same dynamic in Ireland; during the boom years, the number of students going onto third level plummeted. Why? Because there were so many jobs, they didn't need a degree to get one.

Do you have a source for this?

Valmont

Deleted User wrote: »

That does not constitute evidence for your original statement, for three reasons. Firstly, there isn't a full cost-benefit analysis; you haven't enumerated the costs and benefits, therefore you haven't enabled a calculation that would determine that either is greater or less than the other.

I'm not sure how you manage your finances but I keep a very close eye on how much I earn and how much I spend in a given month. The total financial benefit I receive from the state is significantly less than the tax taken from me in various ways. This is without counting the VAT on miscellaneous purchases. This position can be summarised thus: outgoing tax > incoming benefits.

Ulysses wrote:

You haven't shown that it has general applicability, but your original statement was a general one.

Speaking in terms of cash, net tax contributors do not benefit from our tax system. This is a fact and stated aim of a progressive tax code. Those with more subsidise those with less; you can't redistribute wealth and have both parties magically better off. Unless there is some alchemy afoot.

Valmont

Peregrinus wrote: »

The flaw in your position, I think, is that you fail to recognize that property is a social construct; it rests, if you will on “majority decree”.

But I fully agree with you on this point. The institution of private property, as Hayek outlined in The Fatal Conceit, is not a result of a centrally planned policy but rather the outcome of cultural evolution. One that more and more groups adopted simply because it allowed them to thrive and cooperate in greater numbers than before.

Peregrinus wrote:

Similarly, if society feels that Valmont’s ownership of blackacre is subject to a requirement to pay rates assessed on blackacre, then requiring him to pay the rates is not an infringement of his property rights, and is not theft, and is not unfair.

Private property, strictly speaking, refers to the individual as sovereign owner of their property; they alone have the authority to choose how to utilise their property for various ends of their own design. If a society accepts this premise, which we do in certain respects (show me one person who would be ok with another telling them when and how to use their iPod), then fine. However, the hypothetical situation you outlined above simply refers to the majority rejecting the concept of private property and replacing it with another idea of property: that we can own and dispose of our property only within limits set by the state. If my choices on how to use my iPod were subject to the rules set forth by a gang down the road I might begin to question whether the iPod is truly my exclusive private property any more.

Peregrinus wrote:

I am not saying that the rates are necessarily “fair”; they may not be. But they are not shown to be unfair merely by pointing out that Valmont owns blackacre.

As far we accept the full implications private property, then yes, I contend that forcibly expropriating 'rates' or 'taxes' or 'protection money' is most definitely unfair. If we accept that property ultimately belongs to the state and that they have the final say on what ends we may use it for then there is definitely an argument in favour of the classically liberal idea of private property being unfair. But given the lip-service the modern state pays to the idea of private property while directing, taking, planning almost at whim then I must firmly say that our tax system is most definitely unfair.

Permabear

This post has been deleted.

Valmont

Valmont wrote: »

I'm not sure how you manage your finances but I keep a very close eye on how much I earn and how much I spend in a given month. The total financial benefit I receive from the state is significantly less than the tax taken from me in various ways. This is without counting the VAT on miscellaneous purchases. This position can be summarised thus: outgoing tax > incoming benefits.

Firstly, this position cannot be summarised as you say. Nor can it be summarised in any other way. It is personal and private. It may not even be true, and there is no way to assess if it is. In short, it is not publicly available verifiable data against which to test your hypothesis.

Secondly, even if we accept the position insofar as it might apply to you, there is still no evidence to allow extrapolation from your specific personal circumstances to the general statement that you made.

Valmont wrote: »

Speaking in terms of cash, net tax contributors do not benefit from our tax system.

That is incorrect, as you well know. Speaking in terms of cash, net tax contributors do benefit from the tax system. The benefits are lower than the costs, but that is beside the point, because your assertion is that they receive no benefits at all.

Valmont

The Corinthian wrote: »

This may be authoritarian - the few imposing their choices on the many - or it may be democratic - the many imposing their choices on the few. Either way not everyone will agree, but without it a society literally cannot function.

Considering the majority of societal interactions are peaceful and voluntary, I don't see how it follows that violence is a necessary foundation for civilsation.

Valmont

Deleted User wrote: »

Speaking in terms of cash, net tax contributors do benefit from the tax system. The benefits are lower than the costs

Let me see...in terms of cash, they benefit from the tax system yet the benefits are lower than the costs.

Step 1: Pay Tax
Step 2: ?
Step 3: Profit

I see underpants economics are alive and well!

Permabear

Permabear wrote: »

This post had been deleted.

Interesting as all of that is, it amounts to a set of complaints about the political system and the quality of public services. The issue raised by the OP, however, is about what might constitute a fair system of taxation.

To illustrate the point, I pay the same regime of taxes that you do, but.....


....the roads around where I live range in quality from good to superb.....


.....my family's experience of primary and secondary education has been positive, as has my personal experience in third level.....


.....I have rarely needed to call upon the services of my local Gardaí, but when I have done so I have never had cause for concern or complaint.


The foregoing are only my experiences of public services - and they are equally off topic as your experiences are to the point made by the OP.

Valmont

Valmont wrote: »

Let me see...in terms of cash, they benefit from the tax system yet the benefits are lower than the costs.

Step 1: Pay Tax
Step 2: ?
Step 3: Profit

I see underpants economics are alive and well!

The fact that you need to resort to the childish remark in the last line merely serves to demonstrate the weakness of your position.

You didn't say that net contributors incurred greater costs than benefits. You said they got no benefits at all. That was your logical error, not mine.

In the question of "what is the fairest form of tax", "no tax" is a valid option, which means no, they're not off topic. Asking "what are they actually doing with my taxes and should they be getting them at all" should be a very reasonable first question in the whole discussion.

Permabear

This post has been deleted.

Valmont

Deleted User wrote: »

Interesting as all of that is, it amounts to a set of complaints about the political system and the quality of public services. The issue raised by the OP, however, is about what might constitute a fair system of taxation.

The political system and its public services are paid for by taxes. If the quality of these services is unsatisfactory for anyone being taxed then yes, I think that is entirely of relevance to the question of whether our particular tax system is fair or not.

bluewolf

bluewolf wrote: »

In the question of "what is the fairest form of tax", "no tax" is a valid option, which means no, they're not off topic.

Do you mean an income tax rate of 0%? A VAT rate of nil? Or do you mean no taxes at all?

Permabear

This post has been deleted.

Valmont

Valmont wrote: »

The political system and its public services are paid for by taxes. If the quality of these services is unsatisfactory for anyone being taxed then yes, I think that is entirely of relevance to the question of whether our particular tax system is fair or not.

It isn't - though of course it is relevant to a discussion about whether we get value for money for our taxes.

In any case, public services are paid for by taxes because that is the way we happen to organise things. While this is the way most societies run things, there's no immutable law of the universe that says they have to do that. In fact, there's no immutable law requiring societies to have any specific quantity of public services, or indeed any quantity at all.

Permabear

Permabear wrote: »

This post had been deleted.

One can. Perhaps it's a sign of our consumerist obsession with money that we so readily fall into the trap of conflating value for money with fairness.

Permabear wrote: »

This post had been deleted.

In that particular case, yes I do. There are costs and benefits in our personal choices. I live in a place where paving and repairing roads is a relatively low burden on my local authority, but where peace, quiet, housing and air quality are at something of a premium. Both of those circumstances, of course, impact on me because I opt to live in an area with a higher than average population density. I am free to move.

Permabear wrote: »

This post had been deleted.

I don't deny the existence of any factors you've mentioned - I'm merely pointing out my own positive experiences of public services. Of course, I do deny the relevance of those factors to a discussion about the fairness of taxation systems. Even if a country has public services pitched at an optimum level in terms of both quantity and quality, it can still have a fair or unfair system of taxation.

Victor

Permabear wrote: »

This post had been deleted.

Only as a percentage of national income. The cash amount was largely static, save for the sale of state enterprises and the like. From 2008, as national income dropped and the state's finances fell apart, the percentage rose steeply.

In this graph, show me where there was any concerted effort to pay off debt (capital receipts and departments unable to spend their annual allocations doesn't count)?



Original data: http://epp.eurostat.ec.europa.eu/tgm/refreshTableAction.do;jsessionid=9ea7d07e30dda7c5127953a44865846bca40c8d88838.e34MbxeSahmMa40LbNiMbxaMbxiRe0?tab=table&plugin=1&pcode=tsdde410&language=en

Secondly, the end was not seen as "inevitable" by the politicians to whom you want to transfer billions of people's private wealth.

And we know what sort of idiots they are, telling prudent people to commit suicide.

Their only goal was to make the boom "boomier," enriching themselves and their friends in the process.

Yes, corrupt idiots, part of whose policy was to discriminate between means of earning and not give a thought to the future.

You seem to believe that only an irresponsible government would reduce its total tax take below 50 percent. Why?

Well, allowing for the basic tax credits and a lower rate (25%?) on the first portion of income.

In the given set of circumstances, I'm suggesting 50%. In different circumstances (Norway's oil income, countries that don't have state pensions), I would use a different number.

Valmont

Deleted User wrote: »

One can. Perhaps it's a sign of our consumerist obsession with money that we so readily fall into the trap of conflating value for money with fairness.

It's fair if tax is wasted.

Deleted User wrote: »

In that particular case, yes I do.

It's fair if it isn't wasted.

What's the point in discussing the fairness of a tax system if you're arguing that it's fair solely by merit of its existence? You've rendered the word so flexible as to be almost meaningless.

fasttalkerchat

I suppose 100% of earnings, wealth and property would be the most fair rate, implementing it would be where unfairness arises.

Victor

fasttalkerchat wrote: »

I suppose 100% of earnings, wealth and property would be the most fair rate, implementing it would be where unfairness arises.

There are two rates of income tax that raise no revenue - 0% (Revenue assessments would be nil) and 100% (people would be disinclined to work).

fasttalkerchat

Victor wrote: »

There are two rates of income tax that raise no revenue - 0% (Revenue assessments would be nil) and 100% (people would be disinclined to work).

If only the Irish government knew that! They seem to think that increased taxation on cigarettes means increased revenue...

Victor

fasttalkerchat wrote: »

If only the Irish government knew that! They seem to think that increased taxation on cigarettes means increased revenue...

A 100% tax on income takes all the income as tax.

A 100% tax on cigarettes takes only 50% of the sales value as tax.

Regardless, revenue from cigarettes is secondary, the primary objective is discouraging smoking.

There is the black market issue, but the claims from the tobacco companies are likely to be rather self-serving.

Peregrinus

Valmont wrote: »

But I fully agree with you on this point. The institution of private property, as Hayek outlined in The Fatal Conceit, is not a result of a centrally planned policy but rather the outcome of cultural evolution. One that more and more groups adopted simply because it allowed them to thrive and cooperate in greater numbers than before.

Private property, strictly speaking, refers to the individual as sovereign owner of their property; they alone have the authority to choose how to utilise their property for various ends of their own design. If a society accepts this premise, which we do in certain respects (show me one person who would be ok with another telling them when and how to use their iPod), then fine. However, the hypothetical situation you outlined above simply refers to the majority rejecting the concept of private property and replacing it with another idea of property: that we can own and dispose of our property only within limits set by the state. If my choices on how to use my iPod were subject to the rules set forth by a gang down the road I might begin to question whether the iPod is truly my exclusive private property any more.

But you seem to be treating absolute unqualified private property as “the outcome of cultural evolution”, whereas any more limited notion of property is something “set by the state”.

No offence, but that’s b*lls, isn’t it? The state’s legislation about property is the outcome of cultural and social values and decisions. Absolute unqualified private property, if that’s what a particular society institutes, is exactly as much a “cultural evolution” as any more limited notion of property.

Valmont wrote: »

As far we accept the full implications private property, then yes, I contend that forcibly expropriating 'rates' or 'taxes' or 'protection money' is most definitely unfair. If we accept that property ultimately belongs to the state and that they have the final say on what ends we may use it for then there is definitely an argument in favour of the classically liberal idea of private property being unfair. But given the lip-service the modern state pays to the idea of private property while directing, taking, planning almost at whim then I must firmly say that our tax system is most definitely unfair.

Nobody is suggesting that “all property ultimately belongs to the state”. What we are saying is that the meaning of the word property is socially determined. You may assert that “this is my property” means “I can leave it in my will to whoever I like”, but if you live in a society in which your surviving spouse has a right to half your estate, then “this is my property” does not mean that. You still have property in your goods, but your property does not confer upon you the rights you wish it did. The fact that your rights of property are not as extensive as you wish they were does not mean that the limitation is unfair; it may be unfair, but it’s not established as unfair simply by showing that we could conceive of a more extensive notion of property which would include freedom of testamentary disposition.

Permabear

This post has been deleted.

The Corinthian

Victor wrote: »

Not necessarily. It is an alternative form of government, although I would be less than willing to make the reverse argument that government is an alternative form of theft.

But at what cost to society as a whole?

I wasn't exactly making a serious argument in favour of rule by Mafia, Victor...

Deleted User wrote: »

Do you have a source for this?

Not particularly strong ones; it's largely based on a few articles I remember reading about dropping enrolment rates around 2006.

Nonetheless, it's not exactly a radical thesis; you don't have to go far to find articles that discuss it, for example.

Closer to home, if you look at the figures for the Republic, between even 2000 and 2012, you will quickly note that growth in third level attendance pretty much flat-lines between 2004 and 2008 (even dropping in 2005), while increasing substantially following the 2008 crisis and 2001 recession.

Ultimately, it's not difficult to accept; most 'white collar' jobs don't actually require a degree - indeed, what's a BA in history and philosophy qualify you to do anyway? But when the job market tightens, employment tends to go to those better educated, thus prompting many to go, or return, to college to improve their longer term chances of employment.

Conversely, if jobs are plentiful (or guaranteed, as they were in former socialist economies), you don't need that extra - and often unnecessary - qualification. You can go from school directly into employment, without needing to invest several years of your life in an unpaid pursuit.

Peregrinus

The Corinthian wrote: »

. . . it's largely based on a few articles I remember reading about dropping enrolment rates around 2006.

Nonetheless, it's not exactly a radical thesis; you don't have to go far to find articles that discuss it, for example.

Closer to home, if you look at the figures for the Republic, between even 2000 and 2012, you will quickly note that growth in third level attendance pretty much flat-lines between 2004 and 2008 (even dropping in 2005), while increasing substantially following the 2008 crisis and 2001 recession.

But does this perhaps point to a weakness in your argument?

In 2004-2008 demand for third level education dropped because of high prosperity and increasing job opportunities. But of course we wouldn’t use this to argue that high prosperity and increasing job opportunities were bad things, or undesirable. If people don’t go to college because they have other options, and some of them are more attractive, isn’t that presumptively a good thing? Overall utility is increased, because people can choose to do something which they value more than going to college.

Right: back to income tax. Even if there’s no tax at all, for everyone there is a point at which the extra money they could earn by working longer or harder will not justify the stress/lack of leisure/etc involved. That’s probably a different point for different people, and perhaps even a different point for the same person at different times, but the point is always there. Let’s call this the “can’t be arsed to work any harder” point, or CBATWAH point for short. The important point to grasp is that, at income levels above the CBATWAH point, people increase their utililty by not working.

All taxes distort people’s choices, and taxing employment income makes people less inclined to choose to work. In other words, it lowers people’s CBATWAH points. This is true to some extent for any level of tax at any level of income. Increasing tax rates will tend to lower them further, reducing tax rates will tend to raise them, and having and big steps between graduated tax rates will tend to “cluster” them to a noticeable degree - i.e. a bunch of people will tend to have a CBATWAH point at around €32,800.

Obviously, lowering the CBATWAH point discourages labour productivity, and all other things being equal discouraging labour productivity is a bad thing. But all other things are not equal, because paying for public goods is a good thing, as is maintaining public solvency, and the increased income tax serves these purposes.

So I don’t think we can take it as established that income tax is “unfair” if it is structured in such a way as to cause people’s CBATWAH points to cluster. On the individual level, people affected by those forgo extra income which in other circumstances they would have earned, but they benefit from extra leisure, etc, which in other circumstances they would have lost. We’ve changed the point at which this become true for them, but we change that point by having any income tax at all. Merely because CBATWAH points have clustered doesn’t prove that they are the “wrong” CBATWAH points.

On the societal level, we lose the benefits of a degree of labour productivity, but we gain tax revenue, and the associated public goods on which it is spent, and we improve public solvency.

Victor

Peregrinus wrote: »

Right: back to income tax. Even if there’s no tax at all, for everyone there is a point at which the extra money they could earn by working longer or harder will not justify the stress/lack of leisure/etc involved. That’s probably a different point for different people, and perhaps even a different point for the same person at different times, but the point is always there. Let’s call this the “can’t be arsed to work any harder” point, or CBATWAH point for short. The important point to grasp is that, at income levels above the CBATWAH point, people increase their utililty by not working.

All taxes distort people’s choices, and taxing employment income makes people less inclined to choose to work. In other words, it lowers people’s CBATWAH points. This is true to some extent for any level of tax at any level of income. Increasing tax rates will tend to lower them further, reducing tax rates will tend to raise them, and having and big steps between graduated tax rates will tend to “cluster” them to a noticeable degree - i.e. a bunch of people will tend to have a CBATWAH point at around €32,800.

I'm a bit tired, so I'll come back to this later, but reducing income tax may not necessarily make people work more - the eatra effort required to earn more is still a disincentive to earn more - the reduction in income tax may mean they are happy with their lot.

Peregrinus

Victor wrote: »

I'm a bit tired, so I'll come back to this later, but reducing income tax may not necessarily make people work more - the eatra effort required to earn more is still a disincentive to earn more - the reduction in income tax may mean they are happy with their lot.

Oh, sure. Tax rates are not the only thing which affect the CBATWAH point. All I'm saying is that, all other things being equal, lowering the marginal rate will tend to raise the CBATWAH point, and raising it will tend to have the reverse effect.

In essence, workers are selling their labour and, the lower the price which they get for their labour, the less of it they they are likely to sell.

blatantrereg

Victor wrote: »

There is the black market issue, but the claims from the tobacco companies are likely to be rather self-serving.

There's evidence that the black market issue is realistic. Alcoholism was a major problem in the USSR. Gorbacev sought to address it by increasing the tax on alcohol. The result was a great increase in black market activity, and a huge loss in tax revenue.

The Corinthian

Peregrinus wrote: »

But does this perhaps point to a weakness in your argument?

If I'd made the argument you go onto quote, I'd agree, but I didn't really. I was simply pointing out that education is a cost or investment, for the individual, for the purposes of increasing future wealth. Where education is unnecessary (e.g. you can get a good job anyway without a degree), people won't peruse it because it is a cost - and so when people here were making calculations on the value of labour, they were ignoring this cost.

Overall utility is increased, because people can choose to do something which they value more than going to college.

Absolutely, but if they have invested in education, will you ignore this investment?

Let’s call this the “can’t be arsed to work any harder” point, or CBATWAH point for short. The important point to grasp is that, at income levels above the CBATWAH point, people increase their utililty by not working.

It's actually called the substitution effect.

So I don’t think we can take it as established that income tax is “unfair” if it is structured in such a way as to cause people’s CBATWAH points to cluster. On the individual level, people affected by those forgo extra income which in other circumstances they would have earned, but they benefit from extra leisure, etc, which in other circumstances they would have lost.

Except it doesn't actually work that way. I've already mentioned education, but also risk has a value also. Something like nine out of ten start-ups will fail; so there must be some reason why entrepreneurs exist. Lifestyle is one reason, but ultimately the expectation of supernormal profit in a successful venture is a significant reason why they do what they do.

If you tax these supernormal profits to at a very high rate, then you end up in a situation whereby an entrepreneur has a choice between stable employment and their own risky venture, with little difference in the financial reward between them - and entrepreneurial activity will plummet accordingly.

Inflated income is a typical driver to a lot of economic activity; not only entrepreneurship and education, but innovation (the patent system) too. You can ignore the value of all these by only looking at work hours as your only determinant of value, but if you do, your economy will suffer the consequences.

Permabear

This post has been deleted.

Valmont

Valmont wrote: »

What's the point in discussing the fairness of a tax system.......

We haven't been discussing the fairness of a tax system, despite the fact that this is what the thread is supposed to be about. A primary reason for that is your conflation of value for money with fairness. I have made some observations to the effect that it is incorrect to do that.

Oddly enough, considering your failure to distinguish between value for money and fairness, you've assumed that I regard the tax system as we know it as fair - even though I haven't said that it is fair or unfair, and even though I haven't said whether or not it represents value for money.

If you were to stop leaping to conclusions and focus on what I've said and respond to it, you might find the discussion more fruitful - though of course it is also entirely possible that you would not.

The Corinthian

The Corinthian wrote: »

I wasn't exactly making a serious argument in favour of rule by Mafia, Victor...

Not particularly strong ones; it's largely based on a few articles I remember reading about dropping enrolment rates around 2006.

Nonetheless, it's not exactly a radical thesis; you don't have to go far to find articles that discuss it, for example.

Closer to home, if you look at the figures for the Republic, between even 2000 and 2012, you will quickly note that growth in third level attendance pretty much flat-lines between 2004 and 2008 (even dropping in 2005), while increasing substantially following the 2008 crisis and 2001 recession.

Ultimately, it's not difficult to accept; most 'white collar' jobs don't actually require a degree - indeed, what's a BA in history and philosophy qualify you to do anyway? But when the job market tightens, employment tends to go to those better educated, thus prompting many to go, or return, to college to improve their longer term chances of employment.

Conversely, if jobs are plentiful (or guaranteed, as they were in former socialist economies), you don't need that extra - and often unnecessary - qualification. You can go from school directly into employment, without needing to invest several years of your life in an unpaid pursuit.

Thanks for that; I'm going to go scramble around and look at some numbers. In asking for a source, I wasn't being critical of your observation. It's just that I've heard contradictory views about this in the past, but I've never read any data on the subject.

Permabear

This post has been deleted.

The Corinthian

Permabear wrote: »

This post had been deleted.

I agree with much of this, but would probably seek to retain some of these taxes, not for the purposes of raising revenue, but as macroeconomic tools (changing the value of capital gains can act in much the same way as changing interest rates, for example).

From an ethical or moral point of view, while I broadly agree with the principle of meritocracy you expanse, there are some 'grey areas'.

For example, inheritance tax is both counter and for merit. Counter in that if one through their labour, risk and talent makes a fortune, they should be allowed to dispose of it as they see fit, and bequeathing it to their children is a classic way of doing this.

On the other side, those children would be benefiting from wealth they have not earned. The most extreme example of this is the trust fund baby, people like Paris Hilton or Nicole Ritchie, who are able to live wealthy, lavish lifestyles courtesy of a legacy that while their ancestors may deserve to give, they certainly do not deserve to receive.

I'm not suggesting that inheritance tax is good or ill here, only that even when considering both meritocracy and the greater good, things are not always black and white.

Permabear

This post has been deleted.

Victor

Permabear wrote: »

This post had been deleted.

Just as well she sued that guy for her 'acting' fees.

Permabear wrote: »

This post had been deleted.

I think that is a blurring of issues. While yes, the state should spend in a wise and prudent fashion, surely a government can so spend on wise and prudent things while having the same tax income?

Back in my twenties, I was starting a pension and buying things like white goods, while the lads were still spending their money on beer. Your argument would appear to be akin to they were being unfairly paid too much.

Permabear wrote: »

There should be no tax on private property (which should be sacrosanct as the cornerstone of any liberal society),

But doesn't that completely discourage spending in huge chunks of the economy? It also makes the taxing of certain things impractical, e.g. removing motor tax would shift the balance in favour of motorised traffic, to the severe detriment of the common good (traffic, pollution, energy security, imports).

Does "no tax on private property" extend to no tax on sales?

no tax on capital gains (investment itself is a sufficient public good),

All this does is facilitate wheeler-dealer types to the disadvantage of people who work and make things. Why should someone who trades in capital goods be favourably treated over someone who trades in consumables or services?

no tax on corporate profits (which are the rewards for creating valuable and useful goods and services),

Then how should the benefits of limited liability be paid for?

no taxes on interest (people should be rewarded, not punished, for saving).

Interest is income.

Instead of proper wages and salaries, we would be paid a pittance and gain 1000000% interest on this pittance as it sat in a withholding account until pay day?

All your proposals would do is shift the vast bulk of tax onto work, which is where real wealth is created. It would tax someone who earned €20,000 and modest assets, but not someone who has €1,000,000 and little income.

It would massively facilitate drug dealers.

Permabear

Permabear wrote: »

This post had been deleted.

Can't? Once again, it is incumbent upon me to point out that making cheap shots only serve to demonstrate the lack of substance in the arguments of the person making them.

You are making an assertion for which you have advanced no evidence. It is not sufficient for you to state that something is true to make it so. If tax revenue is not used wisely or prudently, it follows without the need for proof that there is a lack of wisdom or prudence in government spending. However it does not so follow that government spending is unfair, or in turn that the collection of the revenue used to fund that spending is unfair. What is your evidence that your assertion is correct? Bear in mind that in answering the question, it would be helpful from the point of view of intellectual coherence if you were to avoid relying on a subjective definition of fairness.

Permabear wrote: »

This post had been deleted.

Why? By that, I mean why do you say that the attributes of taxation systems listed above fair?

Peregrinus

Permabear wrote: »

. . . I favor a low flat tax rate on income . . . There should be no tax on private property (which should be sacrosanct as the cornerstone of any liberal society), no tax on capital gains (investment itself is a sufficient public good), no tax on corporate profits (which are the rewards for creating valuable and useful goods and services), and no taxes on interest (people should be rewarded, not punished, for saving).

No offence, but this is not entirely coherent.

1. In what sense is earned income not “private property”? If I earn cash, do I not own that cash? If I spend the cash on an asset such as land, is the land my property in a way that the cash was not? How do you figure that?

2. How can you justify not taxing corporate profits, if the same profits earned by an individual would be taxed as income? If I earn income by creating valuable and useful goods and services - and this is how most of us earn income - how come I have to pay tax on it when a corporation would not? And, separately, is your position based on an assumption that corporate profits are necessarily the result of creating valuable and useful goods and services? Given that corporations can do pretty well anything that individuals can, and in particular can generate profits in the same ways that individuals can, I see no basis for this assumption.

3. As for people being rewarded, not punished, for saving, is the interest not the reward for saving? If taxing that interest is “punishment” for saving, then taxing employment income is “punishment” for working, taxing trading profits is “punishment” for trading. By your own account, you seem to want to “punish” all forms of productive activity other than depositing cash in banks, and speculating in asset values. Why?

Permabear wrote: »

But who decides who deserves to receive? Surely it's the owner of the property who gets to determine his gifts and bequests, not state bureaucrats?

Not at all. The (former) owner of the property is now dead; he no longer exists. How can a non-existent being have any rights of property in anything?

What were his goods are now ownerless and, since “property” is socially created, it is up to society to determine how this ownerless property is to be distributed. We may decide that it should be distributed in accordance with his will, or we may decide that it should go to his creditors, and then whatever is left should be distributed in accordance with his will, or we may decide that it should go to his creditors, and then to his dependents, and then whatever is left should be distributed in accordance with his will, or we may decide something else entirely. Whatever we decide may well have to take account of various claims of right and fairness that people have - his creditors, his family - and it may have to take account of wider social utility, and the advantages which accrue to the rest of us if people are given the right to dispose of assets by will. But it will take no account of any claim of property on the part of the deceased, because dead people can’t and don’t own things.

The Corinthian

Permabear wrote: »

This post had been deleted.

I was speaking more philosophically and not suggesting a practical solution. In this regard the principles of meritocracy present us a bit of a paradox; on one level the person who's 'earned' the wealth should have every right to dispose of that wealth as they see fit, yet in doing so they enrich others who have not 'earned' that wealth.

Victor wrote: »

Interest is income.

Not always. If wealth is liquid and personally accessible, then it is income, but often it can be tied up, reinvested and not actually benefit the individual for years, even decades.

Peregrinus wrote: »

Not at all. The (former) owner of the property is now dead; he no longer exists. How can a non-existent being have any rights of property in anything?

So if we abolish the notion of last wills and testaments, and such rights cease to exist upon the death of the individual, where do those rights transfer to? The next of kin? The state?

Can't see the latter being very popular. For a start, one would have to seek permission to bury the body - after all, it belongs to the state when dead.

What were his goods are now ownerless and, since “property” is socially created, it is up to society to determine how this ownerless property is to be distributed.

The 'property' was created as a result of individual labour, investment and risk within the framework of society - which was repaid for it's involvement in the form of income tax. Once that tax was paid, the individual and society are even and the individual owes society nothing more.

Or would you like the individual to pay tax on their income multiple times?

I can see that the original basis of this thread isn't making much progress, as predicted.

Duggys Housemate

Workers suggesting that "income tax" is fairest are losing the plot. The reason Soros et al. pay less tax than their cleaners is because the income tax is in fact largely a wage tax. It's what the PAYE sector pays. There are many other forms of income - dividends, capital gains, inheritance, bonuses paid into a pension scheme, shares, options, and on and on. Dividends are supposedly taxed as "normal" income, but rarely are in practice. So even though I am a centre-leftist, I believe some kind of flat tax would in fact force the rich to pay their share. In the US Reagan was thinking of removing all deductions, charity, pensions, etc. and charging individuals 27% on all income for the year. Add it all up ,and pay 27%. No need for an accountant. No avoidance, no evasion. Both illegal. Both the same.

That would increase the tax paid at the top 1% ( and particularly the top 0.1%) and - since people don't get this either - this does not mean we increase slightly the tax take from the top 1% of all income, but the top 1% of earners. They are earning about 40-50% of income, depending on the country.

Victor

The Corinthian wrote: »

Can't see the latter being very popular. For a start, one would have to seek permission to bury the body - after all, it belongs to the state when dead.

Nobody, not even the state can own human remains. By tradition, the wishes of the deceased and the family are respected. All that is required is that the remains be disposed of properly.

The Corinthian

Victor wrote: »

Nobody, not even the state can own human remains. By tradition, the wishes of the deceased and the family are respected. All that is required is that the remains be disposed of properly.

By tradition, the wishes of the deceased, where it comes to their property are also respected. Are we cherry picking which traditions we want to respect now?

Valmont

Peregrinus wrote: »

What were his goods are now ownerless and, since “property” is socially created, it is up to society to determine how this ownerless property is to be distributed.

I don't follow how the fact that private property rests on widespread acceptance, some group of individuals claiming to speak on behalf of 'society' therefore gets to determine how the ownerless property is to be distributed.

In fact the very act distributing any property implies ownership by those doing the distributing (the state) so you are simply arguing that when someone dies the state should get everything. Which doesn't sound as the way you phrased it above. I think you need to define explicitly who this 'we' is to clear up the confusion.

Victor

The Corinthian wrote: »

By tradition, the wishes of the deceased, where it comes to their property are also respected. Are we cherry picking which traditions we want to respect now?

No, the situation and traditions have evolved. Once upon a time, the Church of Ireland, as the established church was entitled to tax non-members. However, it also had the responsibility for proper burials for paupers. Nowadays, it has neither that right, not responsibility.

I think the CAT regime gets things about right, although I'm not quite so happy about the farm and business exemptions.

Peregrinus

The Corinthian wrote: »

By tradition, the wishes of the deceased, where it comes to their property are also respected.

Not at all. Traditionally, there were very strict rules about how property - especially land - passed on the death of the current owner, and the current owner to could little to circumvent them. Freedom of testamentary disposition is a modern invention, the outcome of legislation - as Permabear would say, the work of “state bureaucrats”, or as Valmont would say, the work of "some group of individuals claiming to speak on behalf of 'society' ".

Peregrinus

Valmont wrote: »

I don't follow how the fact that private property rests on widespread acceptance, some group of individuals claiming to speak on behalf of 'society' therefore gets to determine how the ownerless property is to be distributed.

Who said that “some group of individuals” gets to determine how ownerless property is distributed? Certainly not me. What I said was that society gets to determine it. The mechanism by which society determines this will vary from society to society, but it is always socially determined. Even if a particular society applies the rule that “the property of a deceased is distributed in accordance with his will”, that’s a socially determined rule.

In our society, that rule (to the extent that we have it) was introduced by Parliament, so if you want to take the view that the members of Parliament concerned were “some group of individuals claiming to speak on behalf of society” then, fine, you can do so.

But I don’t really see where that gets you. You can argue all you like about the mechanisms by which societal decisions should be taken and implemented, but the fact remains that unless you have societal decisions, you don’t have property. If you think there ought to be a rule that everyone has unfettered freedom to leave his property by will, then you want society to adopt such a rule and, unless and until society does that, there is no such rule. If you are convinced that the mechanism by which society takes and implements decisions should not involve any individuals, then feel free to propose a mechanism which doesn't.

Valmont wrote: »

In fact the very act distributing any property implies ownership by those doing the distributing (the state) so you are simply arguing that when someone dies the state should get everything. Which doesn't sound as the way you phrased it above. I think you need to define explicitly who this 'we' is to clear up the confusion.

You’re making this stuff up as you go along, Valmont. I am not arguing that the state gets everything when someone dies. What I am saying is not difficult to grasp: the distribution of the property of a deceased person is societally determined. If society determines that the state gets some of it (e.g. through inheritance taxes, or as the ultimate intestate successor when there is no will and no next of kin) then, and only then, is society determining that the state gets the property. For the most part society determines that the property of a deceased person goes to that person’s creditors, dependents and beneficiaries named by will. If you want to call that “state ownership” go ahead, but I think you’ll find that English speakers disagree with you.