For the reform of the taxation

" For the reform of the fiscalité" is a book of the economist French Maurice Allais appeared in 1990 with the editions Clément Juglar

This work includes/understands six chapters on a hundred pages:

1 - general principles of the taxation of a humanistic company and progressist.

2 - critical analysis, taking into consideration these principle, of the current taxations.

3- the draft of a taxation answering essentially its principles.

4- methods of the passage of the current taxations to the taxation suggested.

5- a summary answer to the principal objections addressed to this project of taxation.

6- the suggested tax reform and established truths

the taxation suggested to replace the current taxations rests primarily on three elements:

1- a capital tax sitting on only reel credit.

2- the appropriation by the only community of the profits coming from the creation of new means of payment by the mechanism of the credit.

3- a general and homogeneous tax on the value of the consumer goods.

Chapter 1: General principles of the taxation of a humanistic company and progressist

Went justifies the tax in the following way: “ the operation of any company implies costs which must be covered by sufficient resources…/… In fact the taxes paid by the households and the companies can be regarded as the remuneration of the services of all kinds that return the State to them and that only the State is able to return. ”

Seven principles concerning the tax.

1 - individualistic principles.

Within the framework of an democratic society and humanistic it is the man and not the State which constitutes the final objective and the essential concern. It is with this objective that the taxation must be subordinate.

The tax should not seek the equality of the conditions but that of the chances. It should not have for objective to be opposed to the inequality incomes when this inequality comes from the importance of the quality of the rendered services.

2 - principles of non-discrimination.

One can say that it is contrary with the principle of non-discrimination that the rate of the income tax of the taxpayers is all the more high as the services which they render have a larger value. In the same way it is contrary with the principle of non-discrimination as only are struck by the tax of the able companies whose benefit correspond to rendered services, and which those which undergo of the losses because of a bad management is exempted by it in all or partly.

3 - principles of impersonnality.

The tax must be impersonal. This principle means that its taking away should not apply should not imply searchs for inquisitorial type on the life of the people.

4 - principles of neutrality and effectiveness.

If the economic agents see their hard taxed benefit their incentive with a better management cannot be can only be decreased of as much.

5 - principle of “legitimacy”

The taxation must strike those of the incomes which cannot be regarded as “legitimate” i.e. those of the incomes which do not correspond to an actually rendered service. Such is for example the case of the incomes resulting from the secular increase in the value of the grounds, and particularly of the value of the urban grounds. Such is also the case of the undue incomes generated by the creation ex nihilo of currency and purchasing power by the banking system. Such is still the case of the undue incomes generated with the profit of the creditors in the event of deflation or deceleration of inflation, or the undue incomes generated with the profit of the debtors when there is inflation.

The following principle which only are technically justified and “legitimate” the incomes corresponding to an actually rendered service appears to correspond to allowed ethics more or less consciously by the political majorities of the XXe century, if relative and so subjective which can be the design of this ethics.

6 - principle of exclusion of very of any double taxation.

7 - principle of nonarbitrary and transparency.

The 2°chapitre is entitled: Current taxations of the European economic community.

The penalization of the creative activities and the not-taxation of the incomes not gained discourage the effort, penalize many useful activities and finally show losses of national revenue in actual value and consequently by reductions in standard of living.

As already underlined it in 1874 the Menier manufacturer: “ the income taxes strike the capital in formation and saving the formed capital. It represents a privilege for acquired fortune and a load for work… Being an obstacle with the accession of the producers and workers with fortune, they are in antagonism with the development of the richness and the social progress. ”.

In fact, that which saving is penalized. Adult it pays the income tax. Beyond of certain going up more it saves more it is penalized by the progressive imposition on fortune. Become old, it must pay again with the income tax of its saving, tax from which the improvident one is freed. When it disappears, the saving which it leaves with his children is again struck by the tax. Such a legislation penalizes the precaution and the individual responsibility, crucial factor a liberal and humanistic company.

To be equitable, taxation on the income should be proportional and nonprogressive. The manner simplest to carry it out is a direct tax on uniform rate on the value of all the consumer goods.

“ the idea that a company can never be freed from any inequality and any structure of class concerns the Utopia, but the existence of scandalous inequalities that of nothing justifies the rendered services is certainly intolerable. I am convinced that no company can survive a long time so too much of injustices are tolerated, but that it is the same if a levelling philosophy and nivellatrice ends up inspiring all the decisions ”.

“ the major danger to which is exposed the liberal democratic society, it is the demagogy. ”

Went fustigates then the tax maquis and the exorbitant cost of the management of the taxations: “ they are at the very least hundreds 2 million work hours which, with another system, could be saved and devoted to the production of a crowd of useful goods ”

One can, according to Allais, to relate to the French and European tax legislation of today the following judgment: “ excessive, complicated, expensive, ineffective, discriminatory, unjust, despoiling, generator of bad economic choices and fraud, often arbitrary, contradictory, incoherent and incomprehensible, demoralizing, abusive, oppressive, antisocial and antidemocratic, founded on mythologies as harmful as unrealizable, and whose major motivation rests on the demagogy and the concern of electoral profitability. This taxation is a ball which the companies trail. ”

The 3° chapter is entitled: outline of a taxation fulfilling essentially the requirements of a humanistic company and progressist.

The defects of the current taxations are so bright that he is nobody to defend them. It is thus necessary to reform completely.

“ This reform project tax is in fact inseparable from a overall concept of our life in society based on an market economy, the decentralization of the decisions and the private property, and liberal in the full direction of the term, i.e. as concerned of the safeguarding of our political freedoms as of effectiveness and equity. This project is not presented like a panacea, but like the least bad of the conceivable projects taking into consideration what the men are indeed and of the requirements a humanistic company and progressist. ”

tripolar Structure of the taxation suggested:

1- a tax on the capital sitting on the only physical goods, other than the credits, actions and obligations in particular.

2 - attribution in a state of the profits currently coming from the creation of new means of payment by the mechanism of the credit.

3 - a general and homogeneous tax on the value of the consumer goods.

This tripolar taxation would be accompanied by the suppression of the current taxes on the income of the natural persons, the companies, the successions and donations, and the assets and the appreciations.

1 - taxation

a) The capital tax would be consisted renewal fees of about 2% on all the physical capital other than any double taxation and of any exemption or discrimination. It would be primarily a tax of substitution of the income tax and income tax of the companies, whose installation would be progressive. Went regard that such a tax would ensure of the receipts of about 8% of the GDP (either approximately 50% of the current revenues from taxes).

b) in the second place the taxation suggested would imply the attribution in the State, and the State alone, of the incomes coming from the increase in the money supply. On the assumption of a growth of the real national revenue at the annual rate of 4% and with an increase moderate in the prices of 2% per annum, which appears advisable, attribution with the state of the incomes corresponding to the increase in the money supply would account for approximately 4,5% of the national revenue, that is to say approximately the totality of the current product of the graduated income on the income. (either approximately 20% of the current revenues from taxes).

c) in third place, a general tax on the consumer goods of rate uniform would not ensure the financing of the public expenditure - glazes by the capital tax and attribution the state of the exhaustive privilege of monetary creation.

Then Allais compares the various tax sunken formulas different from the various current taxes and its proposal.

Concerning the modes of enforcement of a general capital tax Allais considers that with regard to the grounds and the buildings there would be no difficulty with an imposition of type the liberal and noninquisitorial. The imposition would take place by good, without being concerned with personality of the owner, that this owner of a natural person or a company. Each good would be imposed according to the value declared by its owner without its other goods being taken into account.

2 - Went summarizes then its reform of the banking system and financial

It takes again here the various proposals proposed in “the world-wide crisis of today” in which it proposes the dissociation of bankings in three categories of independent distinct establishments:

- deposit banks

- banks of loans

- investment banks

“ in its principle such a reform would make impossible the task to carry out ex nihilo by the banking system and the short-term loan to finance loans of longer terms. It would allow only loans in the terms of maturity shorter than those corresponding to the borrowed funds ”. Went additions “ the effectiveness of the banking system would be strongly increased with such a structure…/… makes the advantages of the reform suggested of them would not limit itself to the return to the state of the exclusive benefit of monetary creation. They would make it possible to cure in a decisive way the major disadvantages of the current system of credit. ”.

Went justifies then its idea of capital tax:

“ whereas the graduated income on the income strikes indistinctly and blindness all the categories of incomes, the capital tax would strike only the ground rents and the pure interests. ”

“ the capital tax would be exigible that it or not returned effective there. ”.

“ By removing all the direct taxes on the labor incomes and the retirements, while imposing that the pure revenues, while making very difficult the maintenance of the situations monopolistic resulting from the land goods and real prisoners, the capital tax would be a powerful factor of equity. This tax would support the accession of able with the property and consequently with the economic capacity; it would make difficult the maintenance of the capital important in the hands of able would support the social advancement thus. ”

“ the graduated income on the income penalizes able supports unduly able by freeing them from the tax. It constitutes on all the levels of the company an obstacle to the social rise of the elites. It is a preserving tax and reactionary, who protects acquired fortune and compromises the constitution of inheritance for all those which lays out of other resources only that of their work. …/… On the whole in the fight necessary against the undue inequalities, the capital tax such as it is proposed represents a decisive element of economic policy ”.

In chapter 4, Went analysis the passage of the current taxations to the suggested taxation

Went proposes that this imposition of 2% on the physical goods is applied gradually, the tax being successively 0,5%,1%,1,5%, then finally of 2%.

For each taxpayer the global amount of the taxes paid with the title of the capital tax would be deduced from the graduated income on the income and the corporation tax by the taxpayers concerned. Beyond the tax paid by each contrbuable would be deduced from its other direct taxes.

The 5° chapter constitutes a “summary answer to some objections”.

Went answer the following objections brilliantly, concerning:

a) the capital tax:

-- the taxable product would disappear because of the fall of value of the durable goods

-- propensities to save and invest would decrease

-- the capital tax in only one country would be impossible to apply without an exchange control

-- the substitution of the capital tax with the income taxes, on the companies, the successions would be unacceptable for the holders of capital

-- the capital tax blamed of the acquired rights

-- while relating to the only real goods, the capital tax would be discriminatory

-- the capital tax applied without exception without exemption nor abatement would be antisocial

-- the taxation would not be progressive any more

-- the successions would not be imposed any more

-- the capital tax would be a measurement of the collectivist type

-- the capital tax would exert on the holders of capital goods an unbearable permanent threat

-- the suppression of the tax for the eyes on the income would be antisocial

b) the monetary reform project:

-- the system of the credit could not function any more

-- the system of the appropriations would not offer any more the same flexibility but today

-- box companies and private individuals would be less better used than currently

-- the reform of the credit would lead to penalize the recipients current of the system of credit

c) a general objection: European construction

Chapter 6 is a conclusion which begins with a quotation of Lippman Welterweights “the free city”

“ what in last analysis the liberals want, it is the advance of the true values carried out by men who observe, reason, meditate, invent, excavate and build, while endeavouring to organize the world to satisfy the needs for humanity. The laws, the constitutions, the declarations of the rights, courts, and the social doctrines are only means to achieve this goal while making it possible creative work to be carried out free of any arbitrary interference.

In fact productive energies of humanity launch a challenge to oppression. The movement towards the human emancipation and the revolt of those which plant and plow, dig and create, invent and build, explore and include/understand; they cannot work nor to collect the fruit of their work as long as they did not overcome those which exploit them, choke, and oppress their productive labor. ”

And Went additions “ This talk which precedes is based at the same time :

- on a thorough and undeniable analysis of the theory of the maximum effectiveness, monetary capital, risk, and phenomena;

- on the objective lesson which the history of our companies in the last centuries provides us;

- and finally on the design of an democratic society, liberal and humanistic in the line of Alexis de Tocqueville, Leon Walras, Vilfredo Pareto, Irvin To card-index, and of John Maynard Keynes.

Although some, taking into consideration my proposal, do not hesitate to regard me as a crypto-Socialist, that others describes me as sectarian liberal, as others still treat me completely “theorists” being unaware of realities, than others finally show me to ignore the fundamental lesson of the economic analysis, and although, to a large extent, these divergent judgments cancel the ones the others, can I say that I personally feel all the opposite of doctrinary, and that I measure perfectly the completely relative character of my design of a humanistic company progressist, and of its implications, particularly glance of the designs generally allowed of the taxation. ”

Went concluded “ finally more the dominant ideas are spread, plus them are to some extent enracinée in the psychology of the men. If erroneous that they can be, they end up acquiring by their simple and ceaseless repetition the character of established truth that one could not question without being opposed to active ostracism lobbies of all kinds. ”

“ But the pessimism of the intelligence is by no means incompatible with the optimism of the action ”.

“ Without any doubt it would be much easier to us to remove us today from the yoke of a taxation Malthusian which was not it recently for the companies of the east to get rid of the precise yoke of their totalitarian system ”

“ Our future to a large extent will be what we will do it ”

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