Governments of first-world nations spend huge amounts of money on public infrastructure and services. These same nations also tend to impose income tax.
Assuming we want to retain these services, that we want to continue developing and maintaining the infrastructure, and assuming that we also want a healthy economy...
Is imposing an income tax really necessary to achieve this?
Couldn't we instead achieve the same result through other means?
For example, we could impose an additional property tax to make up the difference. People who live in the most expensive properties and larger houses, or live in the most prosperous regions would pay the most tax. (Property tax would be passed on through increased rent, lease and hotel bills for non-homeowners.)
Maybe supplement this with higher sales tax on luxury goods, or government ownership of public utilities, higher annual registration fees for cars that increase in a nonlinear rate with the value of the vehicle, ect.
(I'm just suggesting this as a hypothetical situation, I'm not arguing that we would necessarily be better off getting rid of income tax.)
Thoughts?
I don't usually visit this forum, but.....
Quickly responding here before reading the rest of the thread, one argument for the income tax is that it is relatively progressive, where most other taxes are not, or are less so. In theory, at least, you pay income tax in direct proportion to your income, which means that if you're richer you pay more than if you are poorer, and once the tax is paid, you get to choose what to do with it. Of course this idea is very flawed, alloyed, and relative, but there is at least some merit to the idea. Most other forms of taxation must undergo a good deal of jiggling and recomputation in order not to be regressive and to burden the poor more than the rich.
Property taxation, for example, adds up often to a declaration that people who are deemed too poor to live in a certain style must abandon it. ONce I have bought a house, it is already up to a point necessary that I maintain a certain life-style to keep it. I can't just buy it and be done with it. It is odd that I can buy gold, or guns, or pornography, and never have to support my ownership once these things are bought, but not a home. If I buy a house and the neighborhood around it becomes more stylish, the decisions of others may well force me out even though I once could afford to stay. Many locales have provisions to prevent this value increase from forcing the elderly from their homes, but even these measures are limited. Increased rent is not exactly going to be a popular idea either among those who are already struggling to pay what they do. After all, many of the people now trying with limited success to pay rising rents are already non-payers of income tax. The shift in taxation will not benefit them at all. If added taxes cause some homeowners to sell out and become renters, the problem is compounded. Excessive property taxation ends up being a pretty good formula for concentrating wealth, but if that is not your goal, then it's not optimal.
Luxury taxes are already in place in some areas, with varying results. A big surtax on expensive yachts, for example, had a significant part, I am told, in driving the building of such yachts overseas, an unintended consequence.
Some places do have additional property tax on vehicles according to value (e.g. Connecticut), and that leads to the anomaly that a person in Falls Village, for example, where property values are relatively low and the mill rate thus must be high, pay a great deal more for the same car than their neighbors in richer Salisbury. In other words, the effect is rather the reverse of what many would consider the best goal. Of course, there is an alternative of taxing all vehicles at a set mill rate, perhaps state based, but it adds some administrative problems too. Everywhere that has a sales tax, of course, already collects a sales tax on cars, and that is directly related to the value of the car sold.
In New York (last I knew at least) cars are taxed at registration based on weight, which has some merit at least for economy if not for wealth, as a hefty old clunker will cost more than a sleek new BMW.
All sorts of arguments can be brought for and against all sorts of taxes, of course, but the fundamental question here seems to be "what is so bad about income taxes?" Why do you think a nation would be better off without them?
