How to Tax

The government needs revenue. It must acquire that somehow. That somehow is taxes. What would be the most "fair" method to tax by? I have my opinion, but here is my overview...

1. Income taxes: taxes on all income.

2. Wage taxes: taxes only on income earned by working.

3. Consumption taxes: value added taxes (VAT) and sales taxes.

4. Corporate taxes: taxing business (profit).

5. Tariffs: taxes on import/export of trade goods.

6. Property taxes: taxing ownership of somethings.

7. Estate taxes: taxing transfer by deed.

Numbers 2 and 3 are inherently regressive taxes. The rest can be progressive, flat or regressive depending on how they are set up. In many states property taxes are flat. Income taxes are generally set up to be progressive. The Estate tax is very progressive (though becomming less meaningful every alteration). It's hard to gauge the exact nature of corporate taxes and tariffs, and it isn't going to get you a good answer to ask. Still my ranking of like to dislike...

1. Estate tax. This is a great tax, that shouldn't really bug conservatives (though it does). It lets someone who has worked hard to build up a fortune keep it. But once they die their mostly good for nothing offspring (see: Walton family) have to pay a pretty hefty tax on what they are deeded. Progressive, decent revenue source, truly does not hurt anyone (the farmer issue is b.s.).

2. I like income tax. A lot. I would particularly like income tax to treat capital gains as normal income rather than in the bizarre way that it does in the US. Easy to make progressive. Generally pretty fair: everyone gets taxed according to their means (well not really, at present low to mid-income people are overtaxed, but ideally--with a good progressive tax scheme--it could be that way). Mostly it produces a lot of money in a relatively simple fashion. It's still way too damned complex, but so long as we have an elected government that won't change.

3. Corporate taxes. This is the first one that I am a bit ambivalent about. I think that it is a good way to get to a lot of revenue, some of which would otherwise be tax sheltered by people who have enough money to do that. I also think that it can stifle growth some. This is a tax I think needs lots of work to be really good, but that it can be really good. As it is too many big companies pay too little, while many smaller companies end up paying too much.

4. Consumption taxes I'm pretty ok with. I think VAT would be best, but even a simple sales tax is not a bad thing. Particularly one that does not apply to certain necessities (like non-junk food). While it does hit poor people harder, exempting food is a good way to minimize that. Specifying food that does and doesn't count, and having lots of other goods producers lobbying to be considered a necessity complicates things. VAT helps somewhat by having more tax on higher margin items...also by burying the tax to most people, it becomes easier to raise by 0.1% points every now and again. Most people wouldn't even notice. Of course, that is also a reason not to like it. Note: gas taxes are a special consumption tax.

5. Tariffs, I see, as more an international, economic negotiation tool than one for generating revenue. It could be simply because that is really how we use them. Kind of neutral except I don't think that protectionist taxes are a particularly good idea as they can (and do) end up hurting export oriented domestic business.

6. I generally don't like property taxes. Odd, as they have a possibility of being progressive to an extent nothing else on this list does (cap gains income is easier to shelter even with an ideal progressive income tax scheme). An ideal property tax system probably would be the most progressive system we could have, but I don't see it as a remotely real possibility. In the mean time, I do feel like if I purchase something, it is mine. I don't mind a small amount of property taxes to fund certain infrastructure issues (power, sewer, trash, roads), but I am strongly opposed to their, in some places dominant, use to fund schools. The quality of public schools should not be tied to the value of the neighborhoods that surround them. It's possible that I would like these better if they were state levied and redistributed according to need.

7. I detest wage taxes. Working people pay wage taxes. Rich people living off of interest and dividends and other capital gains do not pay any wage tax. Federal wage taxes are even worse since they have a dollar cut off and therefore wage earners are taxed in a regressive style. PA's state "income" tax is in fact a wage tax. As are the city taxes around here. Working people have to pay more than trust fund babies. Not fair, and morally reprehensible.