3 pages of gobble-de-gook & confusion. How's this for a fair system.

EVERYBODY pays 10% of their Total Gross Earnings in Tax from any sourse, including Off Shore hidie holes & Trust/Slush Accounts in someone elses name. 20% on non-refundable loans.

No Deductions of any discription for anything.

Get rid of all the Fees, etc.

Get rid of all the Rebates for paying Fees, etc.

10% GST on the first instance of everything then 10% on the Added Value only.

Abolish all other Taxes.

It's simple & fair. It ensures everybody pays taxes.

Jayb
I am all in favour of simplification but wouldn't the scheme you suggest have the following fatal flaw?

Say a business's income is $1,000,000, and expenses are $950,000, leaving the business owner a net income of $50,000.

If there were no deductions for expenses, then the income tax would be $100,000, which is more than he earns out of it.

So my question is, why would not that scheme cause the collapse of the business? I don't see how a tax on income could avoid taxing net income, in which case, there's an empire of jiggery-pokery in all the tax deductions for expenses.

I guess it was an over simplifacation. It would work for Wages & Salaries.

As regards to business expences. We all know that quite a bit of these expences are borderline fraud. An ex brother-in-law used to collect everyones expenses for the resturant bill, even for family & pay the bill on his MC. Then claim it off the Business. A Dr friend has never had a holiday, He has seminars. (I tried it myself once & went on a study tour overseas. It worked.I had all the right paperwork & letters of introduction, etc) Non-refundable loans. All these are common business practises claimed as expences. Consultancy expences would have to be the greatest fraud ever concocted, especially when you or the family own the Consultancy setup as another Company. One manufacture I worked for had every step of the process setup as it's own company. They all made a loss except one. Therefore tax paid was virtually nil. Most Big Companies are set up like that.

That's why personal income tax is so high. It's to make up for the legal fraud foisted on the Country by these big business. I remember the story of one notorious big businessman, despite earning millions, only paid $1 tax for the year. No names no pack drill, but you know who I mean.

?fair. I don't think so.

Jayb,

I agree with you in principle. But unfortunately where you can devise a way to make tax fairer, accountants, lawyers and businesses will find a loophole, because they can afford to invest resources into creatively adjusting their earnings to reduce tax.

"A Dr friend has never had a holiday, He has seminars."

Of course he does. In exotic locations.

However avoiding tax is never fraud, because the tax-payer never agreed to pay tax in the first place. It's just a straight power-play. Ethically and economically, taxation is no different from a robbery. On the redistribution model, all the bank-robber has got to do, to establish that it's not robbery, is point to the fact that he's got less money than the bank. If the armed gang got so big it was able to legalise its own robbery, it wouldn't be robbery, right? It would be 'fiscal policy'.

What is causing the high tax bill is not the fact that some people succeed in protecting their property from being taken against their will, it's government's confiscating it

Hi Peter,

I've read a few of your post regarding the principles of taxation with interest. I would like to hear your views on how our society would function without taxation.

Stezza

Peter Hume,
If your business only makes $50,000 out of 1 million than your income is $50,000 & you pay tax on $50,000. You have already paid tax on the infrastructure you bought so you only pay tax on what you earn. What is so complicated about that ? Make or spend a $ & you pay 10 cents tax. simple ! I fail to see why business people should be able to write things off when the bloke on the street can't. You'd find a lot more money going around & a hell of a lot of people better off.

WTF?

A 10% tax – a bit of overkill.

With a 0.4% Debit tax all other forms of taxation could be eliminated.

WTF
Certainly sounds simpler and easier than what we’ve got.

Individual
I was responding to jayb’s suggestion of abolishing deductions. The assessable income would only be $50,000 if expenses were tax deductible. If they weren’t, it’d be $1,000,000. I can’t see how it would work without causing the economy to collapse.

Stezza
Difficult in 350, or even 700 words, but I’ll try.

Social co-operation can be based on private property, individual freedom and voluntary production and exchange (private sector); or on government - a legal monopoly of ultimate decision-making (jurisdiction), confiscations of property (taxation), and property redistributions based, in a democratic state, on the principle of ‘one person one-vote’.

If we have 100% government, the result must be political totalitarianism, economic chaos, and social collapse. And the closer we approach that state, the more anti-social the result will be. To assert there must be a “balance” of state and private is to beg the question whether state provision is better in any given area.

What about in the other direction? Can we see how society would function if current government were reduced by 5%? By 10%? Easy. We provide goods and services as we’re providing them now. In principle, if people are ready willing and able to pay for a particular service, there is no need for taxation; and if they are not, there is no justification for compelling other people to provide the service.

The classical liberal justification of the state is that a legal monopoly of taxation and force is necessary in order to perform the state’s limited but legitimate functions of protecting life, liberty and property. However in theory, an institution based on monopoly compulsory confiscations to protect against violations of property rights, is a contradiction in terms. Assuming only self-interest, we would expect it to constantly expand, requiring ever-increasing expenditure on, and definition of supposedly necessary ‘protections’; while reducing the protection actually produced, and increasingly benefitting tax-consumers at the expense of tax-payers.

And in practice, that’s what we see. Any attempt by positive law to limit government to its core functions has failed.

We have only to look at the U.S. and the Australian Constitutions, and compare the limited governments they prescribe, with their current leviathans trying to tax all aspects of human activity, to see that these attempts are futile.

Socialism either envisages no limit on government, or envisages it in a model which inexorably leads to bigger and bigger government, and thus should more aptly be named ‘anti-socialism’.

It’s easy to see how we could produce food, without a Department of Agriculture; or forests, without a Department of Forestry; or films, without taxpayers subsidising film-makers.

But how far could we go?

For an interesting discussion of private production of the supposedly core state function of security services, see for example:
http://mises.org/books/private_production_of_defense.pdf

…of roads etc. see:
http://mises.org/books/roads_web.pdf

… law and justice:
http://mises.org/store/Enterprise-of-Law-The-Justice-without-the-State-P297.aspx

In short, the argument is that a compulsory territorial monopoly, which is all a state has to offer, provides no practical or ethical improvement and is actively much worse, than would otherwise obtain by providing goods or services through the operations of individual freedom, private property, and the general requirement of consent to transactions - as much in the supposedly ‘core’ state areas of security, infrastructure, justice and welfare, as in non-core areas such as film-making.

For pragmatic purposes in contemporary Australia, the point is not to assume that we should pay tax for no other reason than that government wants it, and to start now to demand gradually reducing taxation itself; whether or not we try finding cleverer ways of plucking the goose.

Yes, but they won't because they like it the way it is. Tax the low to middle income earner more and more. What government would change it? That's where the tax income comes from. The high income earners have more tax breaks and off shore accounts that you can poke a stick at and can and do employ accountants to lessen their tax and off set their wealth. The PAYE tax payer can't.. You have no choice at all, you can't afford it.

It's easy to pay no income tax legally, contrary to popular opinion. You don't need a fancy accountant, or offshore hidey-hole.

You just hold assets, the costs of which are equal to your tax bill. Simple as that.

What gives rich people an unfair advantage is not that the politicians are trying to favour them. It's that they're trying to *disfavour* them, through the progressive tax system. Low and middle income earners try to vote themselves a share of richer people's incomes through the progressive income tax, thinking richer people will have to pay more. But because tax deductions cannot be abolished as PH has pointed out, the richer just take advantage of their higher tax rate, by converting expenses into handouts from the tax man - all paid for by the poor and middle class who thought they were being so clever trying rip them off.

I don't know how many of you recall old Joh for PM proposing a flat tax. Many loved the idea but as usual big business & all the hangers-on in the Public Service crapped themselves when they realized how much support there was for this system. By engaging the ignorant Media they quickly maligned Joh (as they always did & still do) to convince the vulnerable masses to leave the tax as it was. It was many years later that Johnny succeeded in forcing a marginally fairer GST past the ignoramuses. If only people enlarge would think more of Australia's future than worrying about Paris Hilton's antics or Wayne Carey's or celebrities' in general than we all could live a nicer life with some future. Presently, the light at the end of the tunnel is not an oncoming train its the glowing marks for start drilling the tunnel here.