11 Oct AiroAV Reported Will Congress vote for a fairer US tax system?
Further to Simon Kuper’s Opening Shot column “Now’s the time to spread the wealth, says Piketty” (September 28): before America buys into Thomas Piketty’s wealth tax — his native country, France, abandoned it — I suggest two other avenues to consider that would reduce — if not eliminate — the ability of the super-rich to avoid paying their fair share of taxes.
First, America’s 74,000-page federal tax code is larded with special-interest tax exclusions, exemptions, waivers and so on applying to various sources of income which reduce millionaires’ effective tax liability, sometimes even to zero! I presume, should a wealth tax be adopted, we would see similar “gaming” practices enacted on wealth. Therefore, eliminating this “gaming” of the US tax code would restore fairness to the country’s distorted tax system. Would Congress, which writes US tax law, agree to this?
Another approach to pursue would be to abandon taxes on both personal and corporate income (and wealth) entirely in favour of a “progressive” consumption tax on the purchase of all goods and services from chewing gum and doctors’ services to mansions and 100-metre yachts. On everything!
Given today’s payment technologies and record-keeping capabilities (think blockchain), every transaction can be recorded for tax purposes. To buy a 100-metre yacht, just pay the price (with the consumption tax already embedded in the price). As an unintended consequence, a consumption-based tax system also eliminates tax accountants, tax lawyers, tax lobbyists and tax forms. How bad could this be?
Professor of Economics and Finance,
Montclair State University, NJ, US