[tonyedgecombe]

I have thought for a while it would be better not to tax businesses at all, instead tax individuals when they draw funds from the business, either as dividends or salary.

I'm not sure how you could get from here to there though.

[zanny]

But then you use the same loophole where you write all your personal expenses off as business write offs, except its even worse because you can tax exempt everything under the pretense of it being a business purchase.

The real proper tax is a transaction tax. Not a flat sales tax or anything, just whenever money changes hands between entities (personal or institutional) in exchange for goods or services (including you paychecks, which are an exchange of your time for money) you get flat taxed on that.

The exception to this is capital gains, since those are not really transactions, just money you are making for owning some form of the means of production. You would definitely want a strict yet simple progressive tax on that, to curtail wealth concentration of the pandemic nature we see happening today. Rather than tax brackets, they should just use a linear function with no capital gains below the happiness threshold up to, say, (now these numbers are fudged and should be researched) 100% tax on capital gains over 1000 times that threshold.

[dredmorbius]

I agree with you up until capital gains.

Those are in fact transactions, at least when they're realized, and are supported by a huge class of apparatus of the State, from property laws to courts to communications infrastructure, and more.

[3pt14159]

Transaction taxes are inefficient because they punish market makers that build books across active, volatile markets with low average yields.

[tonyedgecombe]

In the UK we already have rules that stop that sort of thing, for instance if you use a company owned vehicle for personal use you have to pay tax on that. You also have the fact that these avoidances are local so are easier for the tax authority to stop.

[ajross]

Really it doesn't matter where, specifically, you draw funds from. Taxing corporations makes their products more expensive. Taxing individuals reduces their purchasing power in the economy, which is sort of the same thing. Taxing all transactions with a VAT is the cleanest expression of this idea, the government basically ends up being (by definition) a fixed size relative to the economy.

A VAT or sales tax has the advantage of efficiency and ease of implementation. A personal income tax can be made more progressive and socially fair more easily. Most western governments have settled on some mix of these for the bulk of their revenue.

[tonyedgecombe]

I don't disagree, I wasn't arguing about VAT or sales tax, rather corporation tax which international companies seem able to avoid but their smaller competitors end up paying.