A Volume Tax

Tyler Cowan posted a good piece on Taxation:

http://www.marginalrevolution.com/marginalrevolution/2005/12/what_is_the_evi.html

Does capital taxation hurt an economy?

It contains links to a number of good Studies to be considered. The trouble lay in the fact they all may miss the mark somewhat. This Author has lately been considering a monetary Volume Tax. This basically means taxation based upon the rotation of funds through each Tax-paying account without resort to any preference of any kind. Economists will quickly protest such a movement, stating loss of economic incentive. Below is a list of some of my Thoughts:

1) Taxation distorts the equalization process of equating one Product to Another through Pricing. Taxation serves as an outside Cost striking the two Products with different impact.

2) Capital Investment is distorted in that the highest Investment ratios flow to those economic elements who can generate the highest Tax reductions.

3) The sheer magnitude increase in Revenues in excess proportion to Others provide individual Taxpayers with excessive leverage, even against other Producers of higher Capitalization.

4) A taxation on Volume of Cash Turnover would regulate such turnover, and more adequately reflect the true Cost of Capitalization of enterprise.

The real primary question to be asked is whether Tax incentives actually affect the volume of Capitalization. Investors are skilled in the arenas where they have expertise, and work in a schedule which generates a consistent amount of Investment Capital. This requires much deeper thought, by both the Author and Others. lgl