Monday, October 23, 2017

At what rate should business be taxed?

A great many say not at all, that is, 0%. But what are we as individuals and households but businesses without license or incorporation? Should none of us pay taxes? How will we raise the taxes necessary to operate? It may be preferable to tax consumption more and production less, but even that requires distinguishing consumption from production, not that easily done. Much consumption is necessary for production and much production throws off consumptive benefits, and consumption can occur at a basic level of necessity to an extraordinary level of opulence, just as production can maximize profits or growth or minimize them in favor of non pecuniary benefits. Consumption also varies much less than production and so requires much higher rates to generate the same in taxes. Higher rates mean more is spent in avoidance and evasion. While taxing production sounds bad as it can lead to less of it, production being highly unequal, leads to further inequality, which leads to corruption and distortion of the political system in its favor, not just output but rents as well. Ability to pay is more important than willingness to consume for taxation.

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