Poet's Corner

[Bird of Prey]

Fred,


Feel free to call me Dave.

I can see that we have two very differing views of the effects of taxation on entities and economies. Rather than blast off on a long drawn out tirade, let's see if I can simplify things a bit.

Point #1

It is not the job of government to legislate or control individual morals and ethics. While it might seem a desirable thing to do for the "good of the people", the end result is usually "bad" for all but a chosen few people. Take away any individual freedom to choose and you pave the way for the removal of all freedom.

Point #2

All progressive taxation systems are socialistic by nature and seek to redistribute wealth from one class to another. As such those entities targeted by the progressive structure will do everything possible to undermine the effects of the progressive structure on their property. All entities will use all legal means and some entities will resort to illegal means to avoid having the wealth they have stored being raided and redistributed.


Your proposal is a progressive system of taxation that, if I read correctly, would be an additional tax over and above any that might be due to the entities country of origin. Its purpose as stated is to curtail the oversized monopolistic entity from absorbing resources beyond its capacity to recycle them back into the community, if I understand your proposal correctly.

For example, If you found yourself nearing the end of a tax year and expecting to fall just a few hundred dollars over the amount topping the 15% tax bracket (putting you in the 28% bracket) would you not do everything in your power to find a way to keep your income below the threshold? If not, what about your neighbor? Or perhaps your competitor?
If I understand correctly some entities would be subject to tax rates (between the US tax and proposed Citizenship tax) of 90%. It is possible that the proposed Citizenship tax would force a large number of entities into bankruptcy. Unless there are ways around it. If there are ways around it, (if not at first, there will be) then what is the point of having it in the first place? Given the choice going under or finding a way around it I doubt it is much of a stretch to think that a vast majority will opt for finding a way around it.


Point #3


By instituting a flat taxation system without loopholes, deductions, exceptions, etc. the opportunity for unfair exploitation of the progressive system with its inherent loopholes, deductions, exceptions, etc. is greatly reduced.
Also the flat taxation system addresses the issue of proper funding for the various needs of the government by providing a more stable base from which to predict future tax revenues. (EX: If the tax rate were 15% and based on revenue (profit or income) and the GNP can be expected to grow by 3%, then the tax revenue can also be expected to grow by 3%). With a more stable base and a sound "no deficit" spending policy, lawmakers would be forced to meet the needs of the community instead of trying to ensure their powerbase.


Point #4

Though I didn't say this before…

Show of hands, "Who wants a bigger Global version of the IRS?"

Or did you think it would be easy to manage the collection of all that money?

Couple of things from your post directly…

>> g) "One need only to poll the CEO's and BOD's of the Fortune 500 companies to learn this lesson."

Oh, c'mon, BOP. That's as bad as putting a fox to guard a hen-house. Among the Fortune 500 companies are some of the greatest exploiters of our resources extant.

I was simply pointing out how the "foxes", as you describe them, would react to the imposition of a new tax code and expense to their businesses. I will agree that some F500 companies are terrible exploiters. But your plan would punish not only the exploiters, but those that are performing appropriately as well.

>> a) "The solution presented would do nothing to prevent another Enron. The next Enron would still occur, just under a different set of rules."

First and foremost, my suggestion was not developed to prevent "an Enron". Enron was not even a gleam in Kenneth Lay's eye when I formulated these ideas. I cited some Enron material because it was a timely topic when I was writing, and because it showed an instance of "... the rogues' most effective and long-lasting method ..." of "... influencing those who make the laws intended to control them ..."

It is important to recognize the Enron is not the disease, Enron is just a symptom of it.

I think it is inaccurate to say, "The solution would do nothing to prevent another Enron." It would, at the very least, make it much more difficult for a single entity to gain control of such a large portion of a market.

You used Enron as an example of the symptoms. Your proposal seeks to treat the disease as exemplified by Enron. I could have used Drexel Burnham or any other large-scale scandal from the last twenty years. I followed your lead in using Enron as an example. It is bad form to chide one's opponent for continuing a theme you began.

>> b) "In fact, because of the progressive nature of the tax, the likelihood of impropriety is increased."

I don't see any logic in this assertion. Smaller entities, under the duress of greater competition, would (probably) make stronger efforts to root out impropriety. The phrase "lean and mean" comes to mind.


Another phrase comes to mind, Survival of the fittest. In this, as in many arenas "the Fittest" may not always be "Good". Any entity able to get a leg up on the competition, by any means, will do so in order to survive.
Another point to consider…
Smaller entities, under the duress of greater competition, would (probably) be too busy simply trying to survive to make any efforts to root out impropriety.

But all of this really boils down to this.

By making it prohibitively expensive to be successful, you remove the incentive for doing so. By removing the incentive you also remove the desire to be successful. As a result humans will become unproductive.
This has been proven countless times, as various entities have tried to make everyone "Equal". While we are all born Equal, we do not remain Equal. Each of us will respond to life's challenges according to his talents. Remove the rewards for being talented and watch the soul shrivel before your eyes.
A shining example of the failure of the "communal" system and at the same time a resounding shout of the success of the Free Market system is the story of the first two years of an American Settlement. Their original system was communal, planned sharing of all production equally. Trouble was no one bothered to producing anything beyond what they could use themselves. Unfortunately not everyone was successful at meeting their own needs and because of the "sharing" arrangement everyone suffered and many starved to death that first year. Had it not been for some compassionate Natives the Colony would not have survived that first year. As the survivors emerged from that winter a new plan was instituted. Anyone could keep or sell whatever they produced. This smaller group actually produced enough not only for the colony to thrive, but they had enough excess to trade with the Natives. You can read all about it if you delve deeply into the history of the first Pilgrim Colony.

Good Luck in your New Business venture.


The Bird of Prey