Compliance costs would be hard to calculate because I expect that direct compliance costs (hours spent by accountants) would be smaller than the indirect cost of doing economically stupid things to jump through tax hoopsYou aren't getting it. 20 to 30% of the (gross) price of every product/service (no matter what country it's from) is imbedded tax costs. If a company is paying 3% of it's gross in actual tax then 17 to 27% of the price is compliance cost...Oh yea and if five companies in the supply chain pay 5% of their gross then it's 25% "cascading" tax...
Just ask them for an example. phil_will1 has one to show you I'm sure.
Ask him about the "asymptotic curve"...That ought to prove it for you.
phil_will1: "The answer in both cases is the same: they are both asymptotic curves, meaning that they approach a constant but never reach it, even if you extend the curve into infinity. If you were to go thousands of levels deep into the supply chain, you would reach a point where accumulated taxes account for well over 99% of the price you would be paying.
In other words you get to 30% really fast but to get to "well over 99%" takes quite a bit longer.
I do get it. I just don't accept that the number is that high. I could be convinced with actual numbers. I figured about 9% was the cost for directly embedded taxes (SS+medicare for labor at every step and corporate income tax for corporate profits at every level). That means that the rest of the embedded tax(14% by taking the middle of your 20-30% total - my 9% direct figure) would have to come from compliance costs at every level. That would be about leave about a trillion dollars agregate compliance costs for the entire economy. I don't believe that $1 trillion of the economy is spent doing tax accounting or inefficient investments to avoid taxes.
Oh yea and if five companies in the supply chain pay 5% of their gross then it's 25% "cascading" tax...
But that's only true if each company's full expenses are for supplies from the next company in line without adding any of it's own value. If each company's output is made up of 40% bought from the last step in line and 60% from its own labor and profits, then your 5%/level compliance cost adds up to 5 + 5*0.4 + 5*0.4*0.4 + 5*0.4*0.4*0.4 + 5*0.4*0.4*0.4*0.4 = 8.25%. Carried out to an infinite number of levels you reach a limit of 5% / (1-0.4) = 8.33%. Pick different values for single level compliance costs and pass through from one level to the next and you get a different final value.
"phil_will1: The answer in both cases is the same: they are both asymptotic curves, meaning that they approach a constant but never reach it, even if you extend the curve into infinity. If you were to go thousands of levels deep into the supply chain, you would reach a point where accumulated taxes account for well over 99% of the price you would be paying.
In other words you get to 30% really fast but to get to 'well over 99%' takes quite a bit longer."
I notice that you left out a very important part of that post in which I said that that was the way the mathematical model worked, but supply chains didn't run into the thousands in the real world.
I also seem to recall that that comment began an amusing exchange in which you revealed your belief that if a product had 100 components, that equated to 100 levels in the supply chain in your mind.
If you don't understand my posts, that's fine. However, I would appreciate it if you would stop quoting me out of context and distorting the meaning of my words. That isn't beneficial to any position you advocate for - even one as loathsome as your beloved Marxist progressive income tax.