Newsgroups: can.general
Path: utzoo!henry
From: henry@utzoo.uucp (Henry Spencer)
Subject: Re: Flat-Rate Tax
Message-ID: <1989Sep26.155329.15498@utzoo.uucp>
Organization: U of Toronto Zoology
References: <1989Aug26.214344.24140@utzoo.uucp> <1989Sep25.123029.20626@lsuc.on.ca>
Date: Tue, 26 Sep 89 15:53:29 GMT

In article <1989Sep25.123029.20626@lsuc.on.ca> dave@lsuc.UUCP (David Sherman) writes:
>What you're overlooking is that if there's no taxation at the corporate
>level, there is a very strong incentive to leave funds in the
>corporation, whether they are invested in bank deposits, the
>stock market or anything else.  This would create a bias to
>investment over consumption...

Comparing rates of investment, as opposed to consumption, here to those
in, say, Japan, this clearly is an area that could use some biases in
its favor.

>... It would also be inequitable unless
>you allow those earning income directly (not through a corporation)
>to defer taxation on all invested income as well...

Sounds plausible to me, although it might be necessary to exempt things
like small savings accounts simply to keep paperwork under control.

>... when you examine it carefully you realize it's much
>like the GST -- a pure tax on consumption (i.e., everything you
>don't save).

While I would be somewhat unhappy with this in a personal sense, given
that my current cash flow tends to go to consumption rather more than
investment, I would have to concede that a greater bias toward investment
is almost certainly in the long-term best interests of the economy.
-- 
"Where is D.D. Harriman now,   |     Henry Spencer at U of Toronto Zoology
when we really *need* him?"    | uunet!attcan!utzoo!henry henry@zoo.toronto.edu