I don't know what he means, but he's wrong. The only tax with non-distortionary effects is a transfer tax, i.e. where everyone pays $x to the government.

Income tax has distortionary effects because it increases the attractiveness of leisure compared to working. That being said, just because it's distortionary and not maximally efficient doesn't mean it's not good.

David



Interested in Illinois (@.com) on 2/11/03 wrote:
---------------------------
>Alejandro Belluscio (baldusi@hotmail.com) on 2/11/03 wrote:
>---------------------------
>>Dean Kent (dkent@realworldtech.com) on 2/10/03 wrote:
>>---------------------------
>>>Interested in Illinois (@.com) on 2/10/03 wrote:
>>>---------------------------
>>>>
>>>>If my HIStory is correct, the federal gov. tried to get income tax from citizens
>>>>way before the Great War, and only when the Supreme Court rejected income tax as
>>>>unconstitutional did the federal government pass an amendment to the constitution.
>>>>And this was in 1913, again before the War To End All Wars.
>>>
>>>I guess I was thinking of the War Revenue Act(s), rather than the Sixteenth Amendment.
>>>After looking about, it turns out that an income tax was imposed during the Civil
>>>War (1867 to 1872), and then repealed. Subsequent attempts to reimpose one were
>>>rebuffed by the Supreme Court, as you indicated, until ratification in 1913 of the 16th Amendment.
>>>
>>>Immediately after the 16th Amendment passed, Congress imposed an income tax - but
>>>it affected less than 1% of the population. It was the War Revenue Act that brought
>>>the graduated income tax that we have come to know and love. In other words, it
>>>was a tax imposed to pay for the war, and was simply built upon and never repealed...
>>>so I think the original comment still stands. :-)
>>Well, I think that the 'problem' you see is on the level of taxation and not on
>>the 'method' of taxing. I'd love to explain the economics, but I'll refrain for
>>it being OT and quite boring for the general people. But let's just say that very
>>efficient (since it get's most of the incentive of the economy intact) and it's
>>correctly applicable to the federal government (else you could get your legal address
>>to wherever has the lower tax while actually working somewhere else). It's a lot
>>better than salary tax, customs tax, public utilities tax, revenue tax and some
>>other much worse kludges that I have the pleasure of pay in my not voted goverment
>>that we Argentinians happen to enjoy nowadays. And we didn't had a 'no taxation
>>without representation' campaign in our history so generaly the people is not
>aware of this little right we should have.
>>Regarding the level of taxation, I'll alse refrain myself because Americans don't
>>usually like my views about their government and what I belevie to be it's true interest.
>
>
>Isn't salary tax equivalent to income tax? And revenue tax similar to sales tax?
>I assume customs tax is tariffs right?
>
>What do you mean by saying that income tax is very efficient / 'incentive of economy intact'?
>
>The slogan 'No taxation w/o representation' was not actually true in the new Republic
>since a very small amount of the populace could have their views represented. It
>was a conflict over competing visions of the 'new continent.
>
>Please do share your views about the level of taxation here and the federal government.
>
>Sincerely,