> Now say I make $100k a year. I'd probably be paying $30-45k a year in tax (depending on the country). This is getting to the point where you're no longer getting enough value for your $/€.
I Disagree.
The money you're getting paid in is a construct of the government that you're paying taxes to. You wouldn't even be able to collect $/€ for your goods and services without taxes. So you'd have to barter and stockpile basic commodities in order to barter for other things that you need. Can you imagine buying an iPhone with corn or oil? Or collecting ad click through revenue in gold? There would size-able inefficiencies just because of the need to hold 'stuff' rather than an imaginary thing.
Furthermore the marginal utility of a government backing the currency that you use is proportional to your income. Someone living in relative poverty probably could provide for their basic needs without currency (think peasants or yeoman farmers scraping out a living, basically self sufficient, or tradesmen exchanging services for necessary goods... vs. a hedge fund manager).
I can't imagine someone making the equivalent of 1/2 million a year having an easy way of storing and maintaining that value (particularly the excess beyond what they spend) without a currency (or even being able to collect it in the first place). (Remember the markets are settled in currency and all accounting is done based on currency, you can't just invest in AAPL with corn).
I can't imagine a normal person owning an iPhone and buying apps from an app store under the hypothetical situation. It seems to me to have a very high utility to the individual at the top of the income chain. You are completely ignoring many of the benefits of having a functional government and a stable society with many consumers (whose consumption is supported by those tax dollars) who are able to consume because of the constructs put in place by a treasury and a tax structure.
I think you're underestimating the intangible value returned by governance. It is near non-finite.
So assuming governance and currency (we can agree these have utility?), taxes can be looked at as being closer to a hedge against inflation than anything else (that is, they prevent devaluation of the currency). As a thought experiment, imagine if the government weren't allowed to collect taxes AT ALL.
How would it fund itself?
Well it controls the treasury, so it would print money, and it would issue debt (bonds). It already does this, incidentally. Both of these things would devalue the currency. (Printing money means more in circulation (its easier to get... therefore worth less), whereas a bond would promise of a certain amount of money that I plan to print in the future). These can be treated as similar, at very least.
So the real (interesting) question about taxes is tax structure. If we assume a flat % tax, it is pretty close to the above devaluation scheme. If we assume a flat $ amount, it very quickly becomes regressive, disproportionately penalizing the poor a large percentage of their money, preventing them from having anything to spend at all. That's how you get a revolution.
With a progressive tax structure, those who can comfortably pay more, do pay more, those who can't don't. (All the way down to certain people being taxed negative amounts in certain situations).
All that said.
Yes, sure, the corporation should move to jurisdictions which are the most friendly to its tax status... it is a fiduciary responsibility to the shareholders, anything else and they are leaving money on the table. At the same time, powerful governments should pressure these corporations into giving them a cut of any business that they do under that government's jurisdiction. In fact, they have a responsibility to do this so that the government can continue functioning properly.
I Disagree.
The money you're getting paid in is a construct of the government that you're paying taxes to. You wouldn't even be able to collect $/€ for your goods and services without taxes. So you'd have to barter and stockpile basic commodities in order to barter for other things that you need. Can you imagine buying an iPhone with corn or oil? Or collecting ad click through revenue in gold? There would size-able inefficiencies just because of the need to hold 'stuff' rather than an imaginary thing.
Furthermore the marginal utility of a government backing the currency that you use is proportional to your income. Someone living in relative poverty probably could provide for their basic needs without currency (think peasants or yeoman farmers scraping out a living, basically self sufficient, or tradesmen exchanging services for necessary goods... vs. a hedge fund manager).
I can't imagine someone making the equivalent of 1/2 million a year having an easy way of storing and maintaining that value (particularly the excess beyond what they spend) without a currency (or even being able to collect it in the first place). (Remember the markets are settled in currency and all accounting is done based on currency, you can't just invest in AAPL with corn).
I can't imagine a normal person owning an iPhone and buying apps from an app store under the hypothetical situation. It seems to me to have a very high utility to the individual at the top of the income chain. You are completely ignoring many of the benefits of having a functional government and a stable society with many consumers (whose consumption is supported by those tax dollars) who are able to consume because of the constructs put in place by a treasury and a tax structure.
I think you're underestimating the intangible value returned by governance. It is near non-finite.
So assuming governance and currency (we can agree these have utility?), taxes can be looked at as being closer to a hedge against inflation than anything else (that is, they prevent devaluation of the currency). As a thought experiment, imagine if the government weren't allowed to collect taxes AT ALL.
How would it fund itself?
Well it controls the treasury, so it would print money, and it would issue debt (bonds). It already does this, incidentally. Both of these things would devalue the currency. (Printing money means more in circulation (its easier to get... therefore worth less), whereas a bond would promise of a certain amount of money that I plan to print in the future). These can be treated as similar, at very least.
So the real (interesting) question about taxes is tax structure. If we assume a flat % tax, it is pretty close to the above devaluation scheme. If we assume a flat $ amount, it very quickly becomes regressive, disproportionately penalizing the poor a large percentage of their money, preventing them from having anything to spend at all. That's how you get a revolution.
With a progressive tax structure, those who can comfortably pay more, do pay more, those who can't don't. (All the way down to certain people being taxed negative amounts in certain situations).
All that said.
Yes, sure, the corporation should move to jurisdictions which are the most friendly to its tax status... it is a fiduciary responsibility to the shareholders, anything else and they are leaving money on the table. At the same time, powerful governments should pressure these corporations into giving them a cut of any business that they do under that government's jurisdiction. In fact, they have a responsibility to do this so that the government can continue functioning properly.
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