I’ve chosen to start with this topic, because even right after the election several parties still talk about the necessity of a tax reform in favour of the tax payer. Maybe they expect every tax payer to cheer up on that. But even if we ignore the so called debt crisis for a moment, a promise like this one still leaves crucial questions. What can be understood by a tax reform in favour of the tax payer? The easy and myopic answer could be: a tax reduction. But then we still need to know who this favoured tax payer is. And it is clearly not a homogenous everybody, because we individually pay different taxes in different heights. In this sense every serious politician would honestly tell us which voter is overreached and who is getting discriminated in comparison to the status quo. Such concrete information can of course not be found on posters during the election. And the announcement of a flat tax on income in favour of hard working people shows us that they either not know what the word “favour” means, or what a flat tax ceteris paribus would imply for the relative tax burden of “hard working” people. So I rather focus on declaring my own proposal:
I want affordability for the necessities for living at the expense of unnecessary comfort and wealth. That means I do not hesitate to admit that in return to the relief for poor and sparing households I have to tax wastefulness, abundance and excessive luxury. One way to do that is to charge individual consumption instead of income. And this is only one of the reasons why I want a big scale reform towards a direct progressive expenditure tax.
Another reason is that by charging just the purchase of consumables we would expect savings to rise. If these savings are used for investments this should imply economic growth. Of course such investments have to be correspondingly triggered but the first impression leads to the thought that the individual decision process is nudged in a sustainable direction.
In this sense also other forward-looking expenditure for like family, health or education should get even more attractive because they would reduce and avoid taxes. Thereby people could still decide day by day which lifestyle is worth the corresponding burden and are not principally charged for being productive or having a well-paid job.
This raises the topic of another advantage which would be the non-existing discrimination of production factors. It would be irrelevant whether the income is earned out of labour or capital. Once more: Instead of charging the source we would focus on the use. And latter seems to be a pretty good base to estimate what a person is able to give as well as obviously taking from society. So tax it!