Now, I don't think anyone really likes taxes, but it is also unlikely that they are suddenly going to disappear. What I do wonder though is, that if we were going to move to a better economy, the taxation system has to be one of the things that changes radically from the current hodgepodge of loopholes that only a narrow subset of the world by population, but the majority of the wealth, can take advantage of.
There is such a massive asymmetry in how an individual or a corporation, the poor or the very wealthy are able to as manage there various forms of incomes and, not to mention all of the tax benefits for investors, who are often investing into vehicles that the average person has no access to begin with.
But, what if rather than all of the various tiers and potential for creative accounting evasion, there was just a flat tax on all income and expenditures. For example, let's say it was the same as the corporate tax in many places of 20%, so no matter what you earned or what you bought, it was going to be the same for all, corporations and individuals, investments, inheritances, buying bread or buying planes.
Firstly, I think this would make it all far, far simpler to manage, but it will also make it extremely clear when someone isn't paying their "fair share", as all will be paying the same. This cleans up a lot of the ambiguity and complexity around taxing systems and most importantly, shuts a lot of the "loopholes" that the majority of wealth can use, but no one else.
But, what about the other side of the equation? The earning side? I think this is interesting to consider front he perspective of tax also, as when there are various tiers and ways to decrease tax liability creatively, there is far more incentive to affect what earnings look like. I remember when I was younger there were people who would reject (postpone) a pay increase because it would push them into the next tax bracket and actually leave them with less in their pocket. Even now in many places, a second job is taxed at a higher rate than a main job. This is quite ludicrous if you think even slightly about it, especially now that there is a shortage of labor in many sectors.
Why discourage people from earning more?
This is of course salient for crypto earnings at the moment too, where many countries seem to tax it at a higher rate than pretty much anything else. However, if there was a uniform flat tax, people would be encouraged to earn what they can, wherever they can and use it, rather than try to hide it. What this essentially does is brings about more of a "free market" in terms of earning and taxation, so that people and the "entities" are on an even footing. Well, it is obvious why this would not fly through legislation, unlike taxing earners even more.
But, what it would do for the countries that do it, would be attract more wealth to be earned within, stay within and be spent within their borders. This in itself would be incentive enough for many of at least the smaller countries to make a change, as we can see that some are starting to do for crypto already.
Attracting wealth from outside the borders to inside, is a massive boon that has in the past come through goods and service exports and tourism, but crypto gives a new channel to do this and can effectively allow for economic "leakage" from countries, in the same way that many Indians would work abroad and send cash home in envelopes to their families. That money went "offshore" (illegally), making it unavailable locally.
But, this is the thing, illegal or not when people feel that they are being forced or they think they can get away with it, they will find the loopholes and use them. As I mentioned though, often in tax codes there are so many legal ways for the wealthy to take advantage of, that those who do it illegally really are showing their true colors. But, the incentive is there, it is never enough.
Now, doing this would set up all kinds of disruptions, but would soon lead to a far simpler system where most participants feel that they are fairly treated in comparison to everyone and everything (corporations are considered by law as entities so they can own assets - it is a tax thing) else. This means that there is simplicity and a better experience.
While tax is seen as untenable by many people, it isn't going to be, given up easily or disappear quickly. However, there are better ways to manage it in the interim that improves conditions for everyone (majority) financially and encourages people to work and earn more, not less. This free market sets up for a healthier lifestyle for many people, or at least one that they have agency in choosing how they live, without being punished for wanting to earn and spend a little more.
I am not a tax expert by any measure, but just "getting rid of them" isn't going to happen.
Unless everyone does it together at scale.
Until then, we have to try and improve what we have.
Taraz
[ Gen1: Hive ]
