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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: 1tank who wrote (21033)	8/2/2004 2:56:06 PM
From: kodiak_bull	Read Replies (1) \| Respond to of 23153

The key to taxation is 1) to have a very clear and understandable tax with as few complexities as possible, 2) to remember that the purpose is to extract tax revenue as fairly and justly as possible (not to achieve social ends) and 3) to tax as few entities as possible. In terms of 1), our system is an abject failure. In terms of 2), we also fail, with some huge social policy issues (dependent deduction, mortgage deduction, investment tax credits, energy credits, etc.) wagging the tax collector's dog. In terms of 3), VAT (the essential flat tax) makes so much more sense because it extracts tax from producers at each step along the way and never from the final buyer (the consumer). Think of the economy as a series of inverted pyramids, where a huge fabric producer sells to 10 shirt makers--the producer pays a VAT (and passes it along to the makers) on the difference between his inputs (costs) and his revenues (sales). Now the 10 shirt makers sell their shirts to 100 department stores, and the tax boys collect from the 10 makers on the same basis. Finally, the 100 department stores sell to 100,000 consumers; the 100 department stores make the last tax payment to the taxing authority. You have to only collect from 111 entities, and NOT from 100,111 entities. So simple. Our system is a joke. Kb