Why do we have to skew the tax structure at all?
Why do we have to skew the tax structure?
An excellent question!
We don't.
A flat 1% tax on wealth would easily replace all other taxes, generate all needed revenue, and would hit everybody equally.
If we decide we are NOT going to tax welath, but are goingto tax income and sales instead, we have decided to skew the tax code by privileging wealth over work and by privileging settled property over exchanges of property.
Don't want any skew? Then just tax wealth. 1% ought to do it.
Do something else, and you're choosing who to hit, and choosing to hit some a lot harder than others.
We aren't going to tax wealth.
So, we have to settle on some combination of measures that bring in necessary revenue. Income taxes, sales taxes, user fees, property taxes, etc. And each of those you have to skew because the alternative creates some dramatic wrinkles. Consider the sales tax. 5%. Should that apply to ALL sales? A non-skewed sales tax would hit all sales. Sounds fair. What's 5% of the price of a house? Want to pay $25,000 in sales taxed to buy a house?
What about shares of stock on the stock exchange?
That's a sale. Want to tax that?
No?
Then you're building in a skew, to preference some assets over others.
In a democracy, you have to do that.
It's just a question of who benefits.