"Taxing high incomes is very hopeless. It would be better to consider why
they are high. Taxing profits merely passes those taxes through to the
consumer."
Well Harry, this bit of truism has stumped me for quite awhile but I think
I have a rebuttal.
The conventional neo-con wisdom is that if you tax my profits, then I have
to raise my prices which makes the price of my goods and services higher
which means that you can buy less. So, why don't you pay all the taxes and
for my part of the bargain I will deliver the best and lowest priced
products to
you and because of my superior wisdom and entrepreneurial spirit, my
benefit
should be increased income because I am more productive.
Well, if that is the Faustian bargain they offer, let me try a counter
proposal. Let the prices rise, tax the profits and your income heavily or
at least at the same level as mine. This will in effect lower my taxes
giving me more disposable income. Now the difference is that with more
disposable income, I have more choice as to which of the high priced goods
you produce I might want to purchase and own/use.
In my personal life, I have four kinds of income that come from my gross.
1. The portion I owe the government for all the services it provides.
2. Essential income - food to continue living, shelter and transportation.
3. Disposable income, which is what I spend in the private sector for all
the goods and services they provide.
4. Savings and emergency income for when my car breaks down or I want to
retire and not take up residence on the pavement at some future time.
Now, if I pay out too much for one and two, then number three becomes less.
Because it is less, there are many things I can't buy even though the
price is low. If my share to the government was reduced by 10%, that money
goes down to income number 3 and 4 where I am the one having choice. So,
what I am saying is that I would rather have the choice of which high
priced goods I buy, because I will have some money, rather than paying it
in taxes so the neo-cons can work to produce lower priced goods which I
can't afford anyway because in the hierarchy of income, I don't get a
choice.
Now, aside from all the other problems in the economic world, I would like
to thank you for giving me a reason for writing this and putting it our for
criticism and review.
Respectfully
Thomas Lunde
