Money, Taxes, and Corporations |
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Serial Taxation by
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Serial Taxation
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Serial Taxation
The economic process presented in this essay has been simplified and idealized so that the results illustrated by it will be easier to understand. However, the results apply just as well to larger and more complex real-world transactions. Suppose that you're paid $10 for doing a job. If you pay a 10% income tax on the $10, then you'll have $9 remaining. If you spend the $9 in a store and pay a 5% sales tax, then you'll spend only $8.55 because 45¢ was diverted to the sales tax. If the merchant pays a 10% income tax on the transaction, then he'll have only $7.70 left from your purchase. If he uses the $7.70 to pay an employee and diverts 20% of it to the various taxes associated with having an employee, then he'll pay the employee only $6.16. The employee will have to pay a 10% income tax, leaving him with $5.54. When he spends the $5.54 and pays a 5% sales tax, he'll be able to spend only $5.26 because the other 5% went to the sales tax. It's easier to understand when it's viewed in tabular form.
The reduction in the usable residue of the original $10 might never reach zero in theory but it will be quickly reduced to a useless amount. Is it any wonder that people can't live within their incomes and are forced instead to live on credit? When you consider that all funds are taxed at least once per transaction,
it's amazing that anybody has any funds at all. With such a large
proportion of our funds being siphoned away as taxes, one has to wonder
how replacement funds enter the economy. I suggest that you read
my essay, They
Can Fool Too Many of the People Too Much of the Time.
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Serial Taxation
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Serial Taxation
References
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Serial Taxation
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Money, Taxes, and Corporations |
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