(OPE-L) Re: another bit about taxation

From: Gerald A. Levy (Gerald_A_Levy@MSN.COM)
Date: Wed Jun 02 2004 - 07:46:08 EDT

Hi Anders.

> As far as I can see nobody responded directly my questions, in particular:
> - What would be the effect of an non-refundable indirect tax of say 5-
> 10%?

If everyone pays the same rate, it would be regressive.

> Since there is a lot of tax evasion from firms and rich persons,

The tax code can be changed to close loopholes. There is something to be
said for tax simplification.  (In the 1980's in the US the Reagan
administration fought hard for passage of a 'tax simplification bill.'
Indeed, at one point Reagan said that if there is one thing that he wanted
to be remembered for was that he was the president who simplified taxes.
Although a 'tax simplification' bill was passed by Congress and signed
into law it is doubtful whether it _actually_ simplified taxes and the bill
itself had thousands of pages of special tax advantages for particular
corporations and loopholes for the wealthy.  _Real_ tax simplification,
however, would/should make tax evasion much more difficult.)

> a turnover
> tax would actually hit them more than the complicated system of income
> taxes, that on paper is progressive but in reality is much less so -  some
> economists in Norway argue that the tax system is in fact regressive for
> the really rich.

Then the income tax  (and other progressive taxes) can be _made_ much
more progressive and the tax breaks for the wealthy can be eliminated.

> I do not think that there is something wrong with using progressive
> taxes - of course not, but maybe we then should make them
> dramatically progressive,
> so that in practice progressive taxation ensured that nobody had more that
> the double of average industrial workers wage as after-tax income. Such a
> drastic measure would signal that one did not see such high incomes as
> nothing else than exploitation - as at least I do.

Well, that's a plan.

I don't really see why you think a flat indirect tax would be better than a
more heavily progressive income tax re-written in such a way so as to
make it much less likely that the wealthy will be able to evade taxes.
Also, in the tax mix, other progressive taxes such as corporate taxes,
the capital gains tax, and property taxes (perhaps specially directed at
the consumption of luxury goods) should be included.

In solidarity, Jerry

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