Wednesday, March 11, 2009

Thoughts on an ideal Tax rate.

Taxes have long been a subject of contention in the US of A. That they purchase representation is the basis for rebellion against the King of England, and they are very constitutional [Article 1: (Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.) (The previous sentence in parentheses was modified by the 14th Amendment, section.)] Under Communism, one might argue that taxes are 100%. Under Socialism 60% or so, and in our current US of A, around 27%. The Republican party continually suggests lowering the tax rate as a way to stimulate the economy. At a higher tax rate, the amount of taxes realized at a certain percentage is in fact less than the actual amount realized at a lower tax percentage over a more active economy. As such, considering it takes an act of Congress to change the tax rate, we are essentially playing a congressional game of 'pin the tail on the donkey' of the ideal tax rate. I would imagine that THERE EXISTS A CALCULUS THAT CAN COMPUTE THE IDEAL TAX RATE, given the GDP and interest rates, the co-efficient of the stock market that indicates value (distinguishing it from tulip mania) and other values. I wish I could remember the name of the co-efficient in question - I saw that we monitor that value on the Chinese stock market govermentally 'in the news somewhere.' The calculus to determine the ideal tax rate would be to maximize the amount of revenue realized by the government in ratio to the percentage rate, so that we can have the most taxes with which to pay off the debt. I have argued before that the debt cannot be allowed to exceed the value of what may be realized in profit from mining and manufacture, unless we go to the bubble economy Japan enjoyed in the 70s. If you have read this far, you may like to know that I personally consider it a privilege to pay taxes, and that since taxes purchase representation, and I think that we have a certain wrongheadedness in a lobbying system where businesses that do not pay taxes purchase representation in some other fashion, in a process that some might argue bypasses the sovereignty of the people.

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