Let’s Talk About Tax, Baby: Part 3

See Let’s Talk About Tax, Baby: Part 1 and Let’s Talk About Tax, Baby: Part 2.

A rule of thumb that I picked up somewhere along the way: tax the things you want to see less of, subsidise the things you want to see more of.

That paradigm is not one I particularly subscribe to any more, but it’s memorable, and can serve as a springboard for examining the subject.

Do you want people smoking? No? Tax cigarettes. Do you want people to drink alcohol? No? Tax alcohol.

If you don’t like people imposing their morals on other people, hopefully that last sentence got you seething. Chances are, this line got you instead, but no worries.

Do we want people in jobs and earning money? Yes? Then why do we have income tax?
Do we want people to own property?
Do we want people out spending money in the economy?
Do you want people getting enough light in their homes?
Do you want people to take away rather than eat in?

You can go through yesterday’s post and examine any taxes I may have left out, using the above framework. You can examine any taxes you happen to notice, and see whether they live up to the framework.

If it fails that test, then it shouldn’t be a tax. If it affects someone else, but doesn’t affect you (say, you don’t smoke and you’re talking about tax on cigarettes, or tax on the rich and you’re not rich), then in fairness you should refrain from supporting it.

What is left, I still would be hesitant about, but that would be a good start.

I think we’ll wrap up the tax posts with Part 4, tomorrow.

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