In response to:

On Death Tax, the U.S. Is Worse than Greece, Worse than France, and Even Worse than Venezuela

Ned6 Wrote: Jul 30, 2012 11:56 AM
In theory, a VAT tax of 33.3% [$25 tax on core $75 cost]; a FairTax of 25% [$25 tax out of $100 final cost]; and a Flat tax of 25% [$25 tax on earned income and profits making up the $100 final cost]; all result in a final cost of $100. The $25 tax is always paid by the consumer of the product or service. In practice however, a shift from an income tax to either a VAT or FairTax will not result in $100 final cost, unless the embedded income tax portion of gross earned income is extracted first. Conservatively assuming that the ratio of earned income to profits is 4:1, and that the tax on profits will be un-embedded, but gross salaries will stay the same; the inflation-like effect on prices will be 26.6% [$95 cost plus $31.6 = $126.6].

Considering that every economic theory agrees that living standards and worker compensation are closely correlated with the amount of capital in an economy (this picture is a compelling illustration of the relationship), one would think that politicians – particularly those who say they want to improve wages – would be very anxious not to create tax penalties on saving and investment.

Yet the United States imposes very harsh tax burdens on capital formation, largely thanks to multiple layers of tax on income that is saved and invested.

But we compound the damage with very high tax rates, including the...

Related Tags: Death