Detailed Paper
http://www.geocities.com/kmar86/Fund...Government.doc
Excel Chart
http://www.geocities.com/kmar86/Fund...Government.xls
FairTax?
FlatTax?
Income Tax?
No. None of the above is satisfactory.
Why not lower the payroll tax rate as your business spends more money on labor?
Why not lower the dividend tax rate as your business earns more profits?
These things are possible if taxation was calculated simply as:
spending*(sales-spending)/sales
From "no spending" up to "spending equal to 100% of sales", the tax goes from 100% of nothing, to nothing of 100%. With the abolition of "traditional" taxation, a business has two choices to eliminate all of its taxes. It can choose a primarily a cost reducing strategy in which it pays less taxes by reducing its costs below 50% of sales. Otherwise, it may choose a labor, land, and capital investment strategy, in which it spends more of the money in excess of 50% of its sales in order to reduce or eliminate taxes. The former is equivalent to subsidizing the business if it is exceptionally strong at making profits, because it would be possible for net profits to rise faster than profits. The latter is equivalent to subsidizing investment in labor, land, and capital in excess of 50% of sales, because it would be possible for spending on these items to rise faster than the company's net profits would fall.
Subsidization of profits above 50% of sales:
profits=50%*sales increased by an additional 10%*sales increases net profits by 11%*sales (10% subsidy)
profits=60%*sales increased by an additional 10%*sales increases net profits by 13%*sales (30% subsidy)
profits=70%*sales increased by an additional 10%*sales increases net profits by 15%*sales (50% subsidy)
profits=80%*sales increased by an additional 10%*sales increases net profits by 17%*sales (70% subsidy)
profits=90%*sales increased by an additional 10%*sales increases net profits by 19%*sales (90% subsidy)
Subsidization of expenses above 50% of sales:
expenses=50%*sales increased by an additional 10%*sales decreases net profits by 9%*sales (10% subsidy)
expenses=60%*sales increased by an additional 10%*sales decreases net profits by 7%*sales (30% subsidy)
expenses=70%*sales increased by an additional 10%*sales decreases net profits by 5%*sales (50% subsidy)
expenses=80%*sales increased by an additional 10%*sales decreases net profits by 3%*sales (70% subsidy)
expenses=90%*sales increased by an additional 10%*sales decreases net profits by 1%*sales (90% subsidy)
RATIONAL AGENTS THINK ON THE MARGIN (fact of economics)
Encourages average businesses to spend in land, labor, and capital in turn for tax reductions.
Encourages businesses with exceptional profits (greater than 50%) to reduce expenses on land, labor, and capital in turn for tax reductions.
Absolutely does not tax companies beyond their means.
Calculated only one time per business by only knowing the revenues and expenses and absoutely nothing else.
Fits on a paper as small as a fortune from a fortune cookie.
Has only two variables (e.g. revenues and expenses).
Not a direct tax.
The tax code is as short as: (R-E)*E/R.
Replaces several already existing forms of government by liberalizing tax treatment for low-profit businesses.
Stabilizes the stock market by shifting earnings volatility from businesses with low profit margins to business with high profit margins, exactly where they are needed.
Does not tax non-profits (or their laborers) when they are in-fact not making profits.
Does not tax R&D companies (or their laborers) when they are in-fact not making profits.
Redistributes wealth using only tax incentives and not taxes on business expenses such as land, labor, and capital.
Does not have anything to do with the highly malleable payroll system.
I propose fairer corporate welfare
