Let's have some fun. Since we all seem to have opinions here, let's change gears and talk a little about the philosophy of tax.
And so why is there tax? I don't want to dwell on that so let's just say tax is the price we pay for civilization. Go live out in the wilderness and don't worry about tax. Live in society and be prepared to pay. OK so far?
And so depending on the specific context, we get taxed to pay for a particular set of social goods. Social goods are by nature communal. It's difficult to itemize such things as common defense or something like an interstate highway system. Murray Rothbard's "Libertarian Manifesto" comes as close to total privatization of public goods as I can conceive of. But I digress.
Next is to consider how to best assess and collect tax for these social goods. Here in the USA today we get taxed in many ways. For the purpose of this discussion, I'll focus on the federal income tax, individual and corporate.
Fundamental tax reform as a topic of discussion in recent years has focused on essentially the flat tax, consumption "Fair" tax, and transactions "APT" tax, and I'll throw in VAT tax. I want to compare and contrast these approaches from a philosophical perspective.
Let's start with the income tax we're all familiar with. The name tells us it taxes income. This can be corporate profits. Or it can be the proverbial "wages, tips, and employee compensation". These are taxes on the supposed "gain" from productive activities. The idea of the flat tax is simply to keep it simple. A consumption tax envisions shifting the onus of the tax to the consumption of goods and services, and not the productive activities involved in providing them. A transactions tax such as APT envisions incremental tax collection whenever a mutually beneficial consensual financial transaction occurs.
So on a philosophical level, can we somehow discern a qualitative difference between these approaches to tax collection? I know the FAIR TAX advocates seem to be philosophically persuaded for a consumption tax. At least one poster on this board has defended the desirability of the current income tax. We have a website here that pretty well lays out a strong position favoring a transactions tax. Is there maybe something qualitatively superior to the transactions tax approach?
I welcome all thoughtful replies...