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Comment by colinjoy | Hacker News Reader

> They still take the same money, but we have to pay more, so that ...

… smaller businesses who cannot evade taxes quite as easily may compete on a more level playing field.

You argue that it is harder for smaller business to evade tax and easier for big business. So the playing field will be levelled by decreasing tax not increasing it.

> "It's easier for a big corporation to break rules, so the playing field will be leveled by reducing the rules"

You're tackling tax-evasion by closing loopholes and increasing consequences for tax-evasion.

Decreasing taxes has no meaningful impact on the practice of tax-evasion, it doesn't "level" any playing field.

> Decreasing taxes has no meaningful impact on the practice of tax-evasion, it doesn't "level" any playing field.

Is there anything that backs this up?

Ceteris paribus, I would be far more willing to dodge a 99% tax than I would be to dodge a 1% tax.

I understand what you mean, but even in a thought-experiment it means you would have to lower the tax to the point that it's less economic for companies to maintain an already-existing tax-evasion scheme than just paying the tax.

Those companies would then still not play by the rules and contribute to society accordingly, you would have adjusted YOUR rules to match THEIR sole interest (which might be based on a completely different motivation).

The question is then: Is your (dramatically) lowered tax-income then still enough to serve its intended purpose (maintaining public goods etc)?

I think it's logical that if you define a set of rules for a society to live in and some of its members are so powerful that they can circumvent the rules, abandoning the rules is not addressing your actual problem.

I reckon it is better to make the game fair for all by closing holes and punishing rule-breakers, instead of allowing the powerful players to set the beneficial rules for themselves.

But again, I think that's more of an interesting general exchange than a discussion about this parent-topic ;)

The only aim we started was what will give small companies incentive, where I argued lowering tax is better for them.

If your only goal is to get short term public good, just ban all small companies, inceltivize government backed/owned monopoly and tax them heavily so that profit is just marginal. You would get lot of tax revenue in short term, but it will destroy economy in the long term. And it is not just as a theoretical example, there was an entire failed political movement for this.

Obviously like everything in life, there is a fine balance in tax rate and this knob has lot of consequence.

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