Taxation systems

Article: The Battle in 64 bit Land, 2003 and Beyond
By: Alejandro Belluscio (, February 12, 2003 9:54 am
Room: Moderated Discussions
Interested in Illinois ( on 2/11/03 wrote:
>Alejandro Belluscio ( on 2/11/03 wrote:
>>Dean Kent ( on 2/10/03 wrote:
>>>Interested in Illinois ( on 2/10/03 wrote:
>Isn't salary tax equivalent to income tax? And revenue tax similar to sales tax?
Not exaclty. Particularly for professionals. When you pay income tax you pay it on all your earning (profits paid by companies already payed taxes, so it's discussible) and you can deduct some expenditures. Salary tax only taxes salaries and you can deduct no cost. Which brings me to the difference between revenue and value added tax. They would be equivalent iff comanies sold to the final consumer and him didn't use it for any other product. But when you tax a company's reveune, company A has to increase it's price acordingly (let's not get to the market elasticity). So when company B buy from company A product, it's got a higher cost, so it has to increase the price of its product. But they have to ad their revenue tax. So you're taxing twice the taxes paid by company A. Compare it to VAT tax. Company A is the same. But Company B has to pay a percentage of the revenue, minus those taxes already payed when buying inputs. So you don't double taxate. It has two implications. First is that with revenue taxes you incentivate the vertical integration (a bad thing, since usually different stages of production have natural monopolies, thus you make the whole market go to monopolies). And second, it's been mathematically demonstrated that VAT requires less taxation to get the same level of levied money and couses less increase in final prices.
Sales tax is only used to final sells. It has the problem that's difficult to decide when something is a final sell and not an input for something else. But you can't have VAT at the state level because you'd have to have a way fo deducting taxes payed to other states. Which is a bit difficult politically.

>I assume customs tax is tariffs right?
Tariffs is a kind of custom tax. But yes, those are bad too. But since usually the Europeans imperiums based their taxation systems on them it's still widely used. That and the fact that certain companies are more than willing to pay^H^H^H lobby for them.

>What do you mean by saying that income tax is very efficient / 'incentive of economy intact'?
Well, the only non distorsive tax is the lump sum tax (i.e. everybody has to pay $x(i) to the government). But you get two problems, for everybody to be able to pay you'd levie too little money. Not to mention that's considered very unfair by many and absolutly inviable politically. Technically you could have a different amount pay by different people, but then how do you decide how much has each to pay without making it dependant on anything (like income, age, spending, wealth and such) and still being fair? It seems that's impossible to be fair and efficient at the same time (Amaytha Sen got a Nobel Prize for just saying that). So you have to get to the second best: VAT and Income tax. VAT is a bit more efficient because it's orthogonal to the investment decition, while Income it's not (compare profits vs. profits after taxes and may be you decide not to invest becuse of the taxes). But it's also considered more regressive because poor people tend to spend most of it's wealth while rich has most of it on investments. So you end up taxing more heavily the poor than the rich. Or you spend more the spenders than the savers, which might be good for an economy like the American (a bit saving averse). So in the end it's usually considered that a mix of both taxes is a good compromise between efficiency and fairness.

>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.
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TopicPosted ByDate
New Article AvailableDavid Kanter2003/02/02 01:44 AM
  Excellent Article, Paul (NT)Arcadian2003/02/02 03:57 PM
  Yikes! Slashdotted!Dean Kent2003/02/02 06:53 PM
    Yikes! Slashdotted!Singh, S.R.2003/02/02 11:38 PM
      Yikes! Slashdotted!Dean Kent2003/02/02 11:53 PM
        Yikes! Slashdotted!Anonymous2003/02/03 06:03 AM
          Yikes! Slashdotted!Dean Kent2003/02/03 08:13 AM
  FYI, Paul:Peter Gerassimoff2003/02/03 12:38 AM
    FYI, Paul:Bill Todd2003/02/03 02:18 AM
      FYI, Paul:Marc M.2003/02/03 09:08 AM
        Opteron SPEC PerformanceArcadian2003/02/03 11:15 AM
          Opteron SPEC PerformanceMarc M.2003/02/03 11:18 AM
      i want to see those links pls!! (NT)waitressInGaza2003/02/03 12:15 PM
        i want to see those links pls!! (NT)José Javier Zarate2003/02/05 08:23 AM
          i want to see those links pls!! (NT)waitressInGaza2003/02/05 01:50 PM
            i want to see those links pls!! (NT)tecate2003/02/05 04:09 PM
              gender should be irrelevantwaitressInGaza2003/02/05 05:36 PM
                gender should be irrelevantDean Kent2003/02/05 06:03 PM
                gender should be irrelevanttecate2003/02/05 08:27 PM
                  well it is all about your viewpointwaitressInGaza2003/02/05 11:44 PM
                    well it is all about your viewpointdoriangrey2003/02/06 11:39 PM
                Please be a girl. :pNIKOLAS2003/02/06 05:28 AM
    FYI, Paul:Paul DeMone2003/02/03 07:43 AM
  larger cache for POWER4+?Anil Maliyekkel2003/02/03 04:08 AM
    larger cache for POWER4+?Thu Nguyen2003/02/03 05:35 AM
  well written indeedhobold2003/02/03 06:41 AM
    well written indeedtecate2003/02/03 08:05 AM
      well written indeedhobold2003/02/03 08:12 AM
    well written indeedPaul DeMone2003/02/03 08:15 AM
      well written indeedhobold2003/02/03 11:04 AM
        well written indeedPaul DeMone2003/02/03 11:58 AM
          about Jim KellerMarc M.2003/02/03 12:50 PM
            about Jim KellerPaul DeMone2003/02/03 01:22 PM
              Nope but will now (NT)Marc M.2003/02/03 01:50 PM
              patent info...Marc M.2003/02/03 01:52 PM
              about the article...Dean Kent2003/02/03 03:49 PM
              Er, I just have to point something out.Anonymous2003/02/04 09:19 PM
                Next time check the date.Paul DeMone2003/02/05 12:10 AM
                  Yes, I know it was written in 2000.Anonymous2003/02/05 11:42 AM
                    Yes, I know it was written in 2000.Paul DeMone2003/02/05 12:20 PM
              about Jim KellerAlejandro G. Belluscio2003/02/09 12:09 PM
                about Jim KellerDean Kent2003/02/09 12:40 PM
                  about Jim KellerPaul DeMone2003/02/09 01:00 PM
                  about Jim KellerDavid Wang2003/02/09 01:18 PM
                    about Jim KellerPaul DeMone2003/02/09 02:47 PM
                  about Jim KellerInterested in Illinois2003/02/10 10:11 AM
                    about Jim KellerDean Kent2003/02/10 11:06 AM
                      about Jim KellerAlejandro Belluscio2003/02/11 05:53 PM
                        about Jim KellerDean Kent2003/02/11 08:52 PM
                          about Jim KellerAlejandro Belluscio2003/02/12 10:06 AM
                            about Jim KellerInterested in Illinois2003/02/13 03:19 PM
                        about Jim KellerInterested in Illinois2003/02/11 10:35 PM
                          about Jim KellerDavid Kanter2003/02/11 11:24 PM
                          Taxation systemsAlejandro Belluscio2003/02/12 09:54 AM
                            Taxation systemsInterested in Illinois2003/02/13 06:23 AM
                              Taxation systemsAlejandro Bellusco2003/02/13 09:53 AM
                                Taxation systemsInterested in Illinois2003/02/13 02:47 PM
                                  Taxation systemsAleajdnro G. Belluscio2003/02/13 04:56 PM
                                    Taxation systemsJouni Osmala2003/02/14 07:03 AM
                                      Taxation systemsAlejandro G. Belluscio2003/02/14 05:13 PM
                                  Taxation systemsDavid Kanter2003/02/14 11:18 PM
                                    Taxation systemsAlejandro Belluscio2003/02/15 07:36 AM
          well written indeedhobold2003/02/03 01:40 PM
          E8870 ChipsetJosé Javier Zarate2003/02/04 02:19 PM
            E8870 ChipsetArcadian2003/02/05 12:54 AM
              E8870 ChipsetJosé Javier Zarate2003/02/05 08:13 AM
                E8870 ChipsetArcadian2003/02/05 11:49 AM
      Minor questionJosé Javier Zarate2003/02/04 02:24 PM
    well written indeedDean Kent2003/02/03 08:18 AM
      well written indeedhobold2003/02/03 08:36 AM
        well written indeedDean Kent2003/02/03 09:33 AM
          hear hear...Marc M.2003/02/03 11:16 AM
          well written indeedhobold2003/02/03 02:02 PM
            well written indeedDean Kent2003/02/03 03:48 PM
              well written indeedhobold2003/02/04 12:56 PM
    well written indeedMarc M.2003/02/03 09:19 AM
      BTW Paul, it was VERY well written... BUT... =)Marc M.2003/02/03 09:25 AM
        Ditto (NT)William L.2003/02/10 07:28 PM
  New Article AvailableJS2003/02/05 01:09 AM
  Changes in MPU design methodologies?Richard Stacpoole2003/02/06 04:46 AM
    Changes in MPU design methodologies?Paul DeMone2003/02/06 09:47 AM
      Changes in MPU design methodologies?doriangrey2003/02/06 11:41 PM
      Changes in MPU design methodologies?William L.2003/02/10 07:34 PM
        Changes in MPU design methodologies?Singh, S.R.2003/02/10 09:34 PM
          Watch thisSingh, S.R.2003/02/10 09:42 PM
  excellent article, just a nit or twomulp2003/02/15 11:11 PM
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