Tuesday, July 15, 2008

Can tax be fair?

 
A tax proposal in the US congress, that says you only pay tax on what you consume... no income tax or capital gains tax... Eg. you buy a car, you pay tax, you dont buy a car, you dont pay tax... simple. 
 
I wonder if something like this can drive down an economy into recession... I wont buy a car to save tax. Many people will not buy a car for the same reason. The car company loses sales numbers, and shuts down. More people then dont have money to buy something else, and so on.  Maybe yes, maybe no. People still need to buy cars :-)
 
Does that reduce the responsibility of the government in a way? The government says - Ok, you paid tax for what you bought. We are not accountable to you now.
OR no... what business does the government have in a sale between two parties. If you collect tax in a deal between two entities, you are answerable to both of them.
 
Of course, it has its demerits. Most likely, it wont be implemented, but then, even in matters of law (which I expect Indians to excel in, since its mostly bakr bakr) , they have some ideas for improvization...

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