Taxation Through Inflation
Taxes are way too complicated. Your company pays all sorts of taxes on their profits, then you pay all sorts of taxes when you're paid, only to pay taxes on everything you purchase with what's left over. You pay taxes just to own things, and then taxes when you use them. If you manage to put a little money aside, guess what? You pay taxes on that, too.
How about one single tax instead? What if the government could figure out how much money it needs, compute your share, and get it from you in one, single, regular payment?
Of course, it shouldn't tax everyone evenly, so what if that payment were calculated by how rich you are? What if it were based on your net worth?
You know, there is actually a very simple way of doing this: taxation through inflation.
Whenever the government increases the money supply by printing more money, it de-values the currency. That extra money causes inflation, making the money that already exists (i.e. yours) worth less.
It's a sneaky form of taxation, but governments are already doing it. You'd vote them out of office if they raised your taxes, or cut your services, but you don't blame them when the price up milk and bread goes up 20%, do you?
We should get rid of all taxes. Let people keep the money they earn and spend it how they please, and when the government needs money they can just print as much as they need. Without any need to report income or file taxes, the government has effectively taxed everyone according to how much money they have. Perfect!
Tax rates are usually different from case to case, because they're used to manipulate people into doing what the government wants, which is inherently unfair. Rich people can pay punitive taxes that poor people can't, so you're essentially saying that the rich can smoke, drive hummers, and do whatever they want as long as they pay for it, but the working class has no such option.
If government wants to mould society and get people to stop doing certain things, don't do it with taxes, do it with rules that rich people can't buy their way out of. Taxes should be for raising money, not to manipulate people into doing what the government thinks best.
I know this idea isn't without its flaws. For example, people aren't going to want to own our currency if it's going to drop in value like this - they're either going to spend/invest it right away (actually that's a good thing), or immediately exchange it for another currency (that's bad).
But you know, I don't think it would be that bad in the long run. Managing those money supply increases predictably should keep currency exchanges from becoming too volatile. And like I said, governments are already doing this.
Furthermore, the desire to work in a no-tax market should offset some of the fear - both the dramatically increased profits and the savings from not having to do complicated tax-related paperwork. This should stimulate investment and competition, which will lower prices and generate growth that would largely offset the negative effects of inflation.
Bear in mind that I'm no economist, so this may be completely crazy. I just think that taxes are way too complicated, and being used in a way that's completely unfair. I'm open to suggestions!
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Labels: taxes
posted by Robert Vollman at Tuesday, September 06, 2011
4 Comments:
You are right Mr Vollman. Totally crazy. Most people think that a VAT like the GST is the most fair way to tax. That was investment is encouraged because it's not taxed, while only consumption is taxes. The wealthy, who consume a lot more, are taxed much more as well. Usually there are VAT exempt categories like food or basic shelter so that the really poor get taxed even less.
No currency devaluation and no huge tax department.
Taxes shouldn't be used to influence people to consume less and invest more.
And generally the working class don't have that same wiggle room, so again the rich come out ahead.
This will end up punishing the poor more than the rich. Once you have enough money the ability to shift your money around is easier: you get lower rates and preferred bank treatment.
What this means is that rich will simply not retain any assets in Canadian dollars. As they need the money they will convert only the amount they need.
This also discourages any form of savings what-so-ever. People have strong incentive to spend everything they make since tomorrow it'll be worth less. Thus retirement becomes an issue.
Ok the premise is that the current system is too complicated (and inefficient), favours the rich, and is more about influencing behaviour than raising money.
Having shot down my ideas, put forward one of yours.
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