shanen's Journal: Principles of taxation?

There are various principles for personal taxation. I favor progressive taxation that increases the tax burden on people who can afford it, mostly because they are getting most of the benefits from the civilization that the taxes pay for, but also because poor people are human, too, and their suffering should be reduced when possible.

It is obvious that the current principles of personal taxation are working to make the rich richer and the poor poorer. My interpretation of Ryan's proposed "tax reforms" is that the so-called Republicans have realized they can't squeeze any more blood out of the poor people, so they are going to squeeze more out of the people who aren't poor. Yet. Unfortunately, this will NOT solve the fake problem of the super-rich people. There is NO amount of money that would "solve" such greed.

The usual principle given to justify consumption or sales taxes is that they are equal for everyone. A common buzzword is proportional taxation. However the reality is that they are actually regressive because poor people have to spend all of their money and get taxed on all of it. If the rich people spent all of their money, then they would become poor, and it never works that way. However, there's a much more serious problem with taxing consumption. Taxing something tends to discourage it, but consumption is fundamentally a good thing and should be ENCOURAGED, not discouraged. Consumption is what drives the economy, and the main job of the government is to make it as smooth and as convenient as possible for people to buy stuff, but sales taxes are like throwing sand into a machine.

Corporate taxation should also be considered in the broader topic of taxation. Obviously the current American tax system supports corporate cancerism with many industries collapsing to one or two companies. Capitalism requires meaningful competition (per my sig), but cancer worship is NOT capitalism.

I would like to propose a new principle of corporate taxation to increase human freedom. Progressive corporate taxation based on market share. Once a company's market share gets too high and starts reducing the customers' freedom, then its tax rates start rising. Don't think of it as a penalty for success. Rather the winners are being rewarded by being encouraged to reproduce and COMPETE with more choices. Going farther, I think there should be special tax incentives when a giant company divides itself into directly competing companies.

Rather than protecting a monopolist's profits by fighting against innovation and dangerous changes, the company's would be motivated to keep right on competing and innovating. In cases where there really is a natural monopoly, the extra taxes should mostly be invested in (1) carefully regulating the monopolist and (2) researching (and even investing in) ways to break the monopoly.

Lots more details available upon polite request, as the old joke goes.