[net.taxes] Competitive disadvantage of tax on businesses

trc (04/27/83)

You have a good point.  I can see how it could be gotten around by a
system of import tarrifs, with the income from the tarrifs returned to the
nations of the foreign corporations (with the agreement that those nations
would not give their corporations "export incentives" with the returned 
funds.)  However, it all gets rather complex.

How about a consumption sales tax instead?   Any time something is 
purchased to be used, not re-sold, it would be taxed.  Goods purchased 
abroad and brought back would be subject to a tarrif.  The tax is still
proportional to the value created.  There would still be a slight effect, 
since our manufacturers would be purchasing taxed equipment, and manufacturers 
in other countries would not.  However, this should be slight, and could 
easily be counter-balanced by some other measure, if necessary.  

As to the flat tax, while far better than progressive taxation, I still 
think it gives the govt too much of a peek into our lives, and requires
a vast bureaucracy to gather it.  A sales tax will be easy to gather,
and require no intrusion into private lives.  The bureaucracy should be 
smaller, since there are fewer businesses than there are families and 
the tax is much simpler.  And what tax could be fairer than a tax on the
amount one consumes?  It would be in direct proportion to the amount 
that one gains from the various contracts that led to production of
the goods one comsumes.  In fact, it has an advantage over the value
added tax - it requires less govt poking into business records.

Of course, there is bound to be a great deal of concern in some quarters
that this tax would be unfair to people on fixed incomes, etc.  Probably
there would have to be a compromise whereby there would be a phase in 
period of 20 years during which the tax would become applicable to
those on fixed incomes.  There would also be a much shorter period
of phasing in everyone else and phasing out income taxes.


	Tom Craver
	houti!trc

wally (04/29/83)

You said a sales tax would require "intrusion into private lives."
                                                
Presumably the sales tax would have to be larger than it would be
now, so avoiding it would be more worthwhile.

How do you think the gov't would enforce taxes on bartered property?  
What about the black market that would arise to avoid sales tax?