Re: OT: taxation (was Re: Mountains Rush and Moore)

From: Alan Anderson (aranders_at_insightbb.com)
Date: 08/21/04 

Date: Sat, 21 Aug 2004 17:09:45 GMT

Rand Simberg <newsgroups@transterrestrial.com> wrote:

> > That's only a problem if your assets aren't producing enough income.
>
> If I have a business worth a billion dollars, and I'm getting ten
> percent profits out of it (in terms of return on assets), but my "asset
> tax" is twenty percent, what do I do?

Propery taxes of twenty percent are absurd (in the logical sense of
reducto ad absurdum, not the knee-jerk sense of emotional dislike). A
government which imposed such a tax would quickly deplete its tax base and
run out of income -- though it would simultaneously end up owning the bulk
of the assets in the process. If the explicit goal is a transition to
socialism, I suppose it might make sense, in which case what you do is
simple: you sell your business to the government in order to pay your
taxes.

> If my largest asset is my home (the case for very many people), are you
> proposing that I should have to take in renters in order to pay my
> property tax?

No, your regular income ought to be plenty to pay for your property
taxes. Remember income? It's not being taxed in thie scenario. Keep in
mind that most people will have a lot more take-home pay, since there
won't be the same kind of withholding applied.

> Sorry, but it's a very bad idea. Not all assets produce cash with which
> to pay a wealth tax. It's not fair to make someone sell their family
> heirlooms in order to pay an annual tax for the privilege of owning them.

Why isn't it fair to make people pay in order to possess valuable items?
And under what set of rules is the value assessed? If property were the
only basis for taxation, its value would arguably end up being based
mostly on its potential for generating income.

> I'm all in favor of getting rid of income tax, but this would be much worse.

There are certainly a lot of implications, but I've debated it with many
people over many years, and the best arguments I've seen against it are
predicated on the idea that private property should be able to be kept
*secret* as well as private. I counter that with the observation that
markets don't work right unless everyone has good information. I think
you believe in the power of markets.

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