Dear David, feel free to offer an article on alternative taxation, where you explain your point above in a bit more detail for our readers!

Michel

hi david, but that’s the whole point, above a certain income, the income is usually derived and used for speculative activities ..

The very wealthy do in fact benefit from unearned wealth (or “rents” in econ parlance) but using common income taxation methods it is impossible to ascertain where is the line between earned and unearned for a given individual; it becomes an exercise in arbitrariness, making it easy for critics to fire back that one is out to rob the “makers” and give their wealth to the “takers.”

Also, if the last century has taught us anything, it’s that it is too easy for the very wealthy to both escape income taxation, and gradually shift it onto lower income earners.

Another important part is the sheer economic cost of compliance with income tax itself, as well as the onerous invasions of privacy and hours of involuntary servitude it places upon the taxpayer.

There is a much better way. One form of tax meets both tests of ability-to-pay and benefits-received; falls purely on provably unearned income, rather than labor, employment or productive investment; and cannot be shifted or escaped: tax on land and resources. See Henry George! Or see contemporary Georgian economists such as Mason Gaffney, Michael Hudson or Fred Harrison.

Hi Sepp, I hadn’t read the 2nd part of your answer in facebook, if it was there … In any case, would you be interested in curating a series on tax alternatives for the blog, in the medium term, it’s really important topic … in the short term, expanding on your idea here would already be interesting,

Michel

Sigh. Some people never learn.

All that would do is to drive the high income earners to hide some of their income and, failing that, to emigrate to less hostile tax environments. It has been shown time and time again that progressive income tax does not hit the high income individuals OR the high income corporations proportionately. They always find ways around and if they can’t, they leave. How many corporations have their headquarters in countries that ask little by the way of tax? How many individuals eventually end up physically living in a tax heaven or at least in a country that does not tax them to death?

Want a solution?

Tax liquidity. Who uses more (liquid) money pays more. Who uses less (liquid) money pays less. Very simple. Bank accounts can be taxed with a low percentage every month, and cash can be periodically re-issued, taxing it in the process. In any case, about 97 % of all liquidity is in electronic form, accessible to easy taxation.

That would allow ALL other taxes to be scrapped.

Income tax only acts to stifle initiative (why work my ass of, if I will be taxed 90%) and sales tax hits the poorest hardest, as they have to spend a high percentage of their disposable income on items that are subject to that tax.

Taxing money (it’s also called demurrage) would be the great equalizer.

And it would equalize in the right direction, i.e. it would hit the ones with the largest activity the most. It would especially hit speculators, who have to have large stocks of liquid money to do their speculating.

What more could we want?