Taxes & Taxation

This thread will house discussions on taxes and taxation.

I had a random thought today. A business revenue tax. How much would this generate verses the current system of taxing profit? I know it would be much easier to collect.

I don’t know about using revenue as a basis would be any “easier” than using profit.

Defining what is considered taxable revenue would likely take quite some time to set up. For example, should “accounts receivable” be considered taxable at year end?

What about consideration for state/local sales tax that is collected? Would that be taxable as well?

Collection of “late fees” and “service charges”? Interest from investments?

Not to mention what the new rate/rate-structure should look like to be revenue neutral in terms of taxation.

I think it’d be tricky to differentiate lots of types of revenue. For example some revenue items will have very tight margins but perhaps high volume versus another item with same total revenue but it’s small volume high margin.

It could generate and equal amount, if the rate were determined to do that.
Need it to be progressive, so give everyone a fixed amount of dollars back.
And, look at Fair Tax website.

There could still be a lot of cheating by people taking cash and not using whatever national cash registers (no, not NCR) that everyone would be required to input every transaction on.
And, people can still claim to be “buying for resale,” then never reselling. That’s fixed by a “value-added tax” which sounds just as complicated and cheatable.
Services would also have to be taxed.

And, any change should definitely be phased in slowly. Need CPA’s to find other lines of work, for example, and shocks to economic systems always favor the rich (their wealth gets invested more wisely).

What is a “business”? I’ve got a relative who is a self-employed consultant. Does she get taxed on revenue or profit?

I prefer one tax base to avoid questions like that. Wherever there is a question, we’ll spend money on private lawyers and gov’t lawyers arguing about the line.

I’d get rid of the Social Security tax, Medicare tax, most of the corporate income tax, and tax all income at the same rates. Simpler, easier to understand, fewer opportunities for avoidance and evasion.

Yep, and what about gov’t services? If my city funds trash collection with property taxes, and your city uses private companies, do you pay the 25% sales/VAT tax while I pay no sales/VAT tax?

Any other nits to pick?

With the VAT tax? Sure. People think a VAT tax would be incredibly simple, but that’s before lobbying. The FairTax people already have an exception for education expenses (does the include my PC?). Others will look for outright exemptions or reductions. Say medical expenses, or purchases by charitable organizations, or mortgage loan interest.

But the non-nit complaint is that it isn’t progressive. Even if it includes a flat rebate, the “bend” from the rebate is irrelevant at the 1% level, where there is lots of income that could be taxed.

I am thinking if I sell you 10 containers of product X for $10 million I pay the revenue tax on the $10 million no matter what you do with the 10 containers. If you sell them you pay the tax too.

Might be worthwhile to ask what is the purpose or goal of taxation.

I think it is primarily a tool for income and wealth redistribution. So I tend towards systems that are progressive in structure.

This can be done with relatively flat tax rates. Low income people get back much more n benefits than they pay in taxes, ala Scandinavian countries. That means big increases in “the welfare state” and may not be palatable in the USA.

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I can’t think of a flat tax rate that I’d want for both people who earn $50,000 per year and people with incomes of $50,000,000 per year.

I think taxation should be used to make sure no one is profiting unduly off of where the currency is entering the system from the government. For instance given the federal government pays for roughly 50% of all prescription drugs in the US. The big companies in that industry currently make nearly 50% gross profit and 25% net. Those are astronomical margins when the federal government is their biggest customer.

It seems like that could be fixed easier by the govt having some balls and acting like they are the biggest customer by demanding lower prices.

I’m not an economist though.


As an health insurance provider we are on basically a 5% margin limit on everything we sell to the government. Sounds reasonable to me. Honestly this is the biggest charitable service we provide to the world. Our pharmaceutical companies make outlandish margins and basically create all the new medicines used and sold throughout the rest of the world at little or no profit for reasonable prices.

I’m confused, probably because I don’t know who “we” is.
Insurers? Pharma companies? US taxpayers? US private drug buyers?

Health insurers, health insurers, US Treasury

Okay, but the earlier post was all about pharma companies. I’m not sure how health insurers got into the picture.

I think soyleche was expecting that if the gov’t insists on lower prices for drugs, the lower margins would land on the drug companies, not the intermediaries.