Jim Boswell Blog | Better than the 2.5% Value Tax | TalkMarkets
Executive Director, Quanta Analytics
Contributor's Links: Globanomics
Author of Globanomics. Jim has nearly fifty years of professional experience in the development of management information and analytical business decision support systems. Broadly disciplined with exceptional experience. Education includes an MBA from the Wharton School-University of Pennsylvania, ...more

Better than the 2.5% Value Tax

Date: Tuesday, July 13, 2021 9:34 AM EST

I have been thinking and i think it would be better to do some kind of progressive tax (in lieu of a standard 2.5%) on value.

The trouble with the flat 2.5% tax is that it actually punishes the "old line businesses" more than it does the "growth businesses".  Now that might seem like good policy, however, the growth industries are growing their "value" at rates substantially above those non growth businesses do.  That's why there is a price-earnings ratio between the non-growth and growth businesses.

I believe the growth businesses, which some are like monopolies, should pay more than there fair share of the combined total of value taxes collected.  These means you do some kind of proportionate taxation depending upon value growth rates to compensate for the price-earnings ratio differences between companies.

This is just a new thought and your people may have thought of this before.  But, i think something other than a flat 2.5% tax would be a better way to go.  It would also mean those companies that went down in value would not be taxed--and i think that is only fair.  Even if they are on the down side of things, they contributed something earlier and we should have compassion for that.

Hope this makes some sense to you.  If not pass it on to your financial people to think about.  I mention it now, because i would only talk about a "value tax" and not a "2.5% value tax" in case there was any thought to.  There is no reason to have to walk back talk about a specific 2.5% figure since it is likely the system would actually work different than that.

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Jason Green 3 years ago Member's comment

Makes sense to me.