Forever is a long time. In practice there are wealthy people willing to pass vast majority of their wealth through generations.
Personally I don't think it is fair or likely healthy in the long term for the society to let vast majority of the income/wealth of wealthy and thus powerful people to go untaxed - even[1] if that income/wealth is not consumed.
[1] Actually it should be "especially if it is not consumed". In the old days there was a shortage of capital for investments indicated by relatively high interest rates. Nowadays there is shortage of consumption. But that to my understanding is a bit of a heterodox view, so I am just leaving it there.
> Personally I don't think it is fair or likely healthy in the long term for the society to let vast majority of the income/wealth of wealthy and thus powerful people to go untaxed
But this is already happening even with the current system that attempts to tax company profits, isn't it? My point is that taxing the person instead of the company would enable taxing the wealthy. There are already quite severe restrictions of using company assets for your personal benefit, at least where I live that is taxable as income.
I should amend how I expressed the idea: I never meant that companies pay no tax at all, only that they'd pay no tax on profit (which can be hidden for the yearly checkpoint by creative accounting). That leaves all sorts of tax categories still available for use (land, transactions, resource usage), which are much harder to hide or deny. A company making profit would be involved in some activity that would be taxable through these. Money on a bank account is by itself a bad medium to store wealth, as it's generally subject to 1%~5% yearly inflation.
Whether wealth (aside from income/profit) of individuals or companies should be taxed is a different discussion. Many countries choose to tax wealth only when it's in form of land or constructed property.
If we transform the taxation so that the income/profit of people and corporations is no more taxed, but the tax revenue is still somehow fairly collected, I am all in. It is just that typically when people propose stopping taxing corporate profits, they offer nothing to replace the tax.
One of my pet ideas is to stop taxing income/profits of limited liability companies completely. Instead make the the companies issue a certain percentage of their stock to the tax authorities annually. For public companies, Tax authorities just sell the shares in exchange. For private ones, the shares would be auctioned publicly.
Outcomes:
- No negative tax cashflows to companies. Ever.
- No need for creative tax accounting. Only ones left to fool with accounting are the owners of the companies.
- Strong incentive to simplify corporate structures. Any company owned by a company would add to tax burden of the ultimate owners.
(For private companies, it might be nice to allow them to ask to postpone the auctions for e.g. 5 years if they want to keep the control of the company but are short of cash to buy the stock from the auction)
Fundamentally it is not any different. In the current model, either the company can afford to pay taxes by cash without issuing new stock, or then it does not and needs to issue new stock, thus diluting current ownership.
In my model, either company can afford to buy back the stock from the auction thus keeping the company completely private, or then it does not, thus diluting current ownership.
(I personally would expect a tax rate of around 1% p.a in my model. If your company can't buy back 1% pa of its stock without needing to pay any other tax, I am not sure it is a healthy company)
Last, strongly ideologically, in my opinion limited liability is so massive benefit given to the owners by the society that I am not sure there is any reason to even have perpetual private limited companies. Either you grow up to public scrutiny of a publicly traded company or you do not succeed and die trying.
Would you accept the forced sale of 1% of your personal income-earning ability each year? You get to keep 100% of your 2021 salary iff you can outbid the highest bidder?
I do not understand why public ownership should be a prerequisite for anthropomorphic treatment of companies. A thing is a thing regardless of who owns it.
As for taxes, yes we all pay more. But we do not have our earning power attenuated each year because the government forces us to put ourselves on some incremental slave block.
Personally I don't think it is fair or likely healthy in the long term for the society to let vast majority of the income/wealth of wealthy and thus powerful people to go untaxed - even[1] if that income/wealth is not consumed.
[1] Actually it should be "especially if it is not consumed". In the old days there was a shortage of capital for investments indicated by relatively high interest rates. Nowadays there is shortage of consumption. But that to my understanding is a bit of a heterodox view, so I am just leaving it there.