Are there other ways to tax people fairly?

Question

I've heard Sweden now taxes businesses,not on income so much as how much it pollutes.Also is there such a thing as progressive consumpion taxes as well. I believe are tax system should be geared towards consumption,pollution and idle wealth,not people's income and active business investment

Answer 1

Property taxes are a fair system of taxation in principle because they are based on the idea that some fraction of national wealth should be invested for the public good each year. They can be realized as flat or progressive taxes depending on how the population feels about the concentration of wealth.

In the past, the only substantial wealth that people had (and could be tracked) was real-estate since it had to be registered anyway to have a firm title of ownership. As the forms of durable national wealth have evolved in time, the property tax system in many countries has not kept pace. Some, like Switzerland, do have general taxes on wealth. Because wealth is usually much larger than the income flows derived from it, the tax rates on wealth can be much lower (usually in low single digit percentages) than the rates on income.

A general tax on net-worth (assets minus liabilities) has the advantage of not being biased against transactions that improve the liquidity of markets or of discriminating against certain classes of assets (real estate) as compared to others (stock holdings). It can also eliminate double taxation on flows of money that cancel out.

In the modern computer age, they can also be relatively easy to implement. For reasons of liquidity, they can also be implemented so that they can be deferred (with interest) till a transaction occurs involving the property.

It also aligns the interests of the government with those of the people it represents --- both benefit when people's aggregate net worth (national wealth) increases.

Implicitly, such taxes discourage "idle wealth" because the tax-rate is the same whether the property is actively being used to generate further wealth or if it is just sitting idly. So people have an incentive to put assets to their best use.

In practice, wealth taxes can be supplemented with taxes (at higher rates) on consumption so that people feel that everyone pays their fair share as well as to discourage people from spending every penny they earn to avoid taxes.

Answer 2

Sweden also taxes individuals, not just businesses.

A progressive consumption tax would be close to impossible to enforce - how do you track what each individual buys? A flat consumption tax is possible.

And what is "idle wealth"? Do you really think that rich people have coffee cans full of money buried in their back yards? They have it invested.