But let's look at how incentives change when these "double taxes" were removed:
1. No capital gain tax: Encourages speculation because speculation is "tax-free". Prices across commodities, properties, stocks and bonds will all rise, and may result in even more speculation.
2. No dividend tax: Encourages investment into companies who pay out high dividends because dividends are no longer taxed as much. Buying goods for the sake of capital gain would become less advantageous than buying goods because it pays out passive income that is tax free.
3. No corporate tax: Companies no longer store their money overseas as repatriating money from overseas no longer costs any taxes. Encourages investment by companies rather than hiring more workers, paying more wages, or paying out taxes, because further profit from investment is not taxed, but the other three activities are. Encourage creation of more companies (at least on paper).
4. No employee tax: Companies will be able to get more employee per dollar, and encourages companies to hire more employees because they can pay $100000 and the employee will now get $100000 instead of $60000. There will also be the effect of wage inflation; Every company wants to hire more employees.
Of all the double taxation that exists I advocate getting rid of (2) first.
1) Capital gains is not double taxation. You're only taxed on the gain, not the total value of the sale.
2) Dividends are only double tax because of (3).
3) This is actually double taxation. The same income is taxed twice, once when it is earned as profit by the corporation, then again when it is distributed as dividends.
4) Salaries are not included in taxable income, so you're not taxed twice.
But let's look at how incentives change when these "double taxes" were removed:
1. No capital gain tax: Encourages speculation because speculation is "tax-free". Prices across commodities, properties, stocks and bonds will all rise, and may result in even more speculation.
2. No dividend tax: Encourages investment into companies who pay out high dividends because dividends are no longer taxed as much. Buying goods for the sake of capital gain would become less advantageous than buying goods because it pays out passive income that is tax free.
3. No corporate tax: Companies no longer store their money overseas as repatriating money from overseas no longer costs any taxes. Encourages investment by companies rather than hiring more workers, paying more wages, or paying out taxes, because further profit from investment is not taxed, but the other three activities are. Encourage creation of more companies (at least on paper).
4. No employee tax: Companies will be able to get more employee per dollar, and encourages companies to hire more employees because they can pay $100000 and the employee will now get $100000 instead of $60000. There will also be the effect of wage inflation; Every company wants to hire more employees.
Of all the double taxation that exists I advocate getting rid of (2) first.