Tuesday, April 9, 2019

Know what you are talking about

On a recent post about taxes, irontomflint left this comment:

Taxes will be fair when everyone pays the same rate- no deductions, no pro-rating systems. You earn a dollar, you pay the rate. The business earns a billion dollars, it pays the same rate. If you or a business loses money, too bad, you learn from your mistakes and move on. You want to advertise or have children, why should the rest of the country subsidize you? That comes from yoour own profits. You want to take a risky chance? Fine, but why should anyone else be forced help you along? THAT'S when taxes will be fair

There are more than a few problems with this statement. Let's look at the problems one at a time:

1 According to this comment, businesses cannot deduct expenses before calculating profit. In other words, they will be taxed on gross receipts, not on profit. Advertising and other expenses could not be deducted. A car dealer would sell a car, but cannot deduct the cost of acquiring the car, advertising the car, the pay of the staff, or the cost of the car lot and building. They would be responsible for paying income tax on the entire price of the car. If they lose money, "too bad." The truck transporting the car from the factory to the dealer could not deduct expenses, nor could the factory, the parts supplier, and everyone else in the supply chain. This would be an incentive for companies to move manufacturing jobs overseas to avoid the taxes, and raise prices drastically for the rest of costs.

2 If this were to come to pass, the rich would pay the same tax rate as the poor. Either my taxes would massively fall, or the tax on the poor would greatly increase. This would likely cause shenanigans like a universal 40% income tax rate with a massive welfare program to return money to the poor.

Whoever irontomflint is, he doesn't know squat about economics.


Aaron C. de Bruyn said...

Since taxation is theft anyways, we could simply abolish it altogether and not worry about the economics of theft in the first place.

Beans said...

Most sensible system was a national sales tax. That way, the illegals and criminals end up paying their fair share. Maybe. Yeah, right...