Study Guide to Man, Economy, and State with Power and Market

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Chapter 4: Binary Intervention: Taxation 207 the net income as “undistributed” earnings and hence distorts the flow of funds. (3) “Excess” Profit Taxation This is a direct penalty on successful entrepreneurship. (4) The Capital Gains Problem A capital gain is a form of income, just as other types of profit. If we desire the (unattainable) goal of uniform taxation, one would need to correct capital gains for inflation. (5) Is a Tax on Consumption Possible? Proposals (such as Irving Fisher’s) to directly tax consumption merely translate to an income tax (albeit at a lower rate). Such a tax does not favor savings, because the point of savings is to consume in the future (when the tax will also operate). (This conclusion only holds if we rule out dishoarding or dissaving.) 4. The Incidence and Effects of Taxation Part II: Taxes on Accumulated Capital In contrast to a tax on current savings, the charge of “double taxation” is coherent when it comes to taxes on accumulated capital. These destroy the inherited tools, equipment, etc. from the past, and thus a 20 percent tax on capital is far more destructive than a 20 percent tax on income.
208 Study Guide to Man, Economy, and State with Power and Market A. Taxation on Gratuitous Transfers: Bequests and Gifts Gifts are transfers, rather than payment for production. Consequently taxes on gifts are taxes on capital. These taxes weaken private charity and family ties. B. Property Taxation Property taxes must rely on assessed values which can’t be known outside of market sales. They also penalize property under debt because of “double taxation.” Taxes on rents are capitalized in the sale price of assets and do not fall on future buyers. C. A Tax on Individual Wealth Although no one proposes it, we can analyze the effects of a hypothetical tax on individual wealth. Like an income tax, it could not be shifted. Unlike a tax on property, it could not be capitalized and hence the market could not “contain” its harmful effects after the initial shock. 5. The Incidence and Effects of Taxation Part III: The Progressive Tax The typical arguments against the progressive tax are that (1) it reduces the incentive to work, (2) it reduces savings, and (3) it is robbery of the rich by the poor. The first argument is correct, but this is also true of a proportional tax. The second argument is also correct, but those making it usually imply (with no justification) that it is somehow worse to reduce saving than to reduce consumption. The third argument is wrong: Under
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STUDY GUIDE TO MAN, ECONOMY, AND ST
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STUDY GUIDE TO MAN, ECONOMY, AND ST
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CONTENTS INTRODUCTION . . . . . . .
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In June of 2004, I became convinced
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Introduction ix appropriate, I have
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Chapter Summary In a money economy,
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Chapter 4: Prices and Consumption 4
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Chapter Summary In the evenly rotat
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Chapter 6: Production: The Rate of
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Chapter Summary This chapter explai
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Chapter 7: Production: General Pric
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Chapter Summary Entrepreneurial pro
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Chapter 8: Production: Entrepreneur
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Chapter Summary Consumer preference
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Chapter 10: Monopoly and Competitio
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Chapter Summary Like all goods, the
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Chapter 11: Money and Its Purchasin
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Page 230 and 231: Chapter Summary There has been litt
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Page 260 and 261: Apriorism, 1, 9 Ability-to-pay prin
Page 262 and 263: Index 251 Equilibrium, 47, 104 macr
Page 264 and 265: Index 253 Medium of exchange, 27, 3
Page 266 and 267: Index 255 See also Economy, Evenly
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