Now, to fix the corporate taxes, taxes should not be a flat rate like they are. They should be adjusted for the cost of the corporation to society (build roads for commuters, police for protection, support of internet infrastructural, etc). We also need corporate taxes to compensate for consumption of natural or national resources.

]]>Math detour: if we take the first derivative of the natural logarithm of x, it turns out that d[ln(x)]/dx = 1/x . Rearranging the terms, this means that d[ln(x)] = dx/x. In practice you can treat the differential terms (e.g. dx) as deltas – changes in values – we wind up with dx/x = percentage change in x (e.g. a change of x=$1000 when x=$100,000 is a 1% change), and thus the change in the log of x equals the percent change of x.

]]>Of course, the whole idea of investment taxation is to tax “gains”. If they are unrealized, then they are not “gains”. Basically, this would distort behavior greatly.

]]>simple.

]]>An excellent argument for taxing unrealized capital gains annually. better yet, levy a net asset tax, the constitutional restrictions on direct taxation may or may not apply to real estate holdings (there are legal scholars on both sides) , but its irrelevant point. Personal property (including financial assets) clearly are not direct taxes. But it doesn’t really matter, for political reasons, any net asset taxes collected on real property would be rebated to the States anyway (the National Governors Association would issue a Fatwa declaring Jihad against Uncle Sam if it stepped on their property tax collections). So trade them a cut of net asset taxes at the same time Medicaid is federalized (or better yet combined with Medicare) on condition deposit current Medicaid state funding ($175 billion or so) is transferred to Medicare Part A trust fund.

Right wing (unbelievably right wing) commentator James Bowery had an interesting idea. Tie Net Asset tax rate to 3 month Treasuries. That would put the CBO on the horns of dilemma, how do they score something that would either zero out net interest cost or raise hundreds of billion in tax revenue or both )

http://mysite.verizon.net/res10kjcq/ota/others-papers/NetAssetTax_Bowery.txt