VAT with 100% deduction places entire tax burden on the end consumer. Income tax aims to extract additional tax from entities that extract money from consumers for investors.
VAT could do a lot of the same things that I'm proposing (if the deductions weren't 100%) but is limited in scope. And because of that it has a lot of interfaces to other domains like real estate, import, labor, financial intruments. Interfaces that can be exploited to avoid paying taxes.
General purchase tax could replace all taxes and fees transfered from the markets to governments (and effectively goverment managed buckets like social security or public healthcare).
Taxes have this strong moral objection that they are punishment for creating value. Purchase tax could help with that by ostensibly being punishment for using up value not for creating value. It might also compose well with transition to stable state economy that will have to replace old economy based on unbounded growth.
Income taxes make everything less straight forward, more risky, more costly, just harder. Small companies are incredibly disadvantaged. If most/all income taxation could be avoided, it potentially translates to incredible productivity gains.
What are the reasons to tax corporate income? The usual reason is so that it doesn't spend the money on executive wages, parties, and so on. The less public reason is so that it doesn't extract all money to a foreign corporation through license/patent fees (dividends are taxed more).
We can do so much more today with the computers we have than the primitive taxation schemes of 1980s Europe. We already have the infrastructure to audit corporate spending and investments - let's just keep using that to avoid the lavish parties and otherwise not serving the shareholders as efficiently as possible. Let's cap wages at 200k - if you want more, get some stock options and share the risk. Any out of country value transfer (money, gold, financial assets...) is taxed 50% (each individual gets an exemption up to 100k/year). Add a 5% inflation rate to discourage cash hoarding.
Now the fun stuff - let's use Land-Value Tax and Progressive Value Added Tax - VAT with progressive rate based on item class and price. Zero rate on basic needs in raw form + everyday items like hygiene. Everything is calculated automatically using the country's E-Cash Register system - absolutely zero bureaucracy, everything is clear upfront and there is no forward risk created by taxation. And it's super hard to avoid taxes when they won't give you the new Lambo unless you pay right there and now.
Most EU countries already have all of the infrastructure in place. Though this scheme would work best in a borderless, continent-wide European state.
> The less public reason is so that it doesn't extract all money to a foreign corporation through license/patent fees (dividends are taxed more).
Purchase tax would fix it by taxing money "on exit" on foreign purchases of anything. This also works as a tariff without singling out any foreign country as a target for tariff.
> VAT with progressive rate based on item class and price.
Here's your bureaucracy. VAT classification is huge catalog that many businesses are trying to gamble to jump to lower tax rate. Creating it, updating it, adhering to it is a huge pile of decentralized and distributed bureaucracy.
What you are proposing is a spaghetti of solutions. Every interface between the parts and every solution itself is an attack surface for tax dodgers.
Genral purchase tax is unified framework on all transactions that can consistently extract money from the rich through taxing all their spending that intrudes on the markets only when you specifically wish to and gives you clear tool for intrusion in the form of tax credits for specific market actors for whatever reason you wish.
VAT could do a lot of the same things that I'm proposing (if the deductions weren't 100%) but is limited in scope. And because of that it has a lot of interfaces to other domains like real estate, import, labor, financial intruments. Interfaces that can be exploited to avoid paying taxes.
General purchase tax could replace all taxes and fees transfered from the markets to governments (and effectively goverment managed buckets like social security or public healthcare).
Taxes have this strong moral objection that they are punishment for creating value. Purchase tax could help with that by ostensibly being punishment for using up value not for creating value. It might also compose well with transition to stable state economy that will have to replace old economy based on unbounded growth.