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Why would that same rule not apply to other crime?

Yes. A lot of tax evaders who wouldn't even blink at a potential $500k fine would not take any risks if the were faced with real jail time. That means more tax revenue.

What do you mean by "economically expendable"?

Now that you personally find the already uber-rich Zurich city somehow being on the wrong end of tax deal is your own personal issue.

Personal anecdote - my friend is living in Zurich, commuting daily to Zug for work. But that's another story :)

The problem with taxation IMO is that it's caught in a vicious circle: companies / "the rich" are dodging taxes so the taxes need to be raised leading to more tax dodging and so on. Part of the problem is that tax fraud is often not punished in proportion to the actual value[0].

I don't think there's an easy solution, especially in a world that is as interconnected as ours is today.

Personally, I think income tax is a broken model because property is no longer a good indicator of wealth (it just encourages "investing" the money where it can't be taxed -- which comes with a threshold so high you end up hitting the middle and lower income households disproportionally).

Taxing the transfer of wealth more instead of its possession seems like a good idea, though. It might "slow the economy down", but with sub-millisecond stock trading being a thing I'm not sure this is a bad thing. It's not as if a huge income would be particularly useful if you aren't going to do anything with it anyway.

[0]: A recent case in Germany was Ulrich Hoeneß, the former president of the football club Bayern Munich, who was found guilty to have withheld nearly 30 million euros in taxes (after repeatedly admitting to much lower sums throughout the trial -- which to me sounds like obstruction, but what do I know). He was sentenced to three and a half years in prison, BUT an early release is extremely likely (so it's doubtful he will spend anywhere close to the full sentence behind bars) and after a mere six months he was already granted day release (meaning he can walk freely outside prison as long as he returns in the evening).

EDIT: Frankly, I'd be happy if income tax was replaced entirely by some form of transaction tax. It's far easier to reason about and far less likely to bite founders in the ass. In Germany most newly founded business go bankrupt in their third year because that's often the first time they not only have to pay tax on the previous years but also make advance payments for the current year, which can be deadly if you didn't make sure to put aside enough of your income to cover taxes (and accountants are expensive).

Now, what I'd like to see is each person's vote multiplied by the amount he pays in taxes (all taxes: property, sales, income &c.). That would be fair, and it'd give an incentive to pay up too.

I believe that countries want to survive as entities, and being fair is not necesarily the best course of action. If rich people pay more, but they don't do anything aggresive in response, that's ok. Surely most of the population will be happier - and, in return, won't rise up and kill the rich. If the amount of capital going out of the country starts being so aggresive that it is dangerous for the country, the country will end up responding.

What matters to me is if it optimizes for the welfare of society as a whole. And before you ask, I believe that alone is sufficient to prevent excesses like taxing higher earners to the point where they make less than lower earners, because people would in that case opt to earn less, and so it would in fact not optimize for happiness of society as a whole as it would reduce tax revenue despite increasing the perceived tax burden.

Whether the actual marginal tax rate is 99% or 1% is irrelevant to me in that context, if it achieves that goal (though I believe a marginal tax rate of 99% would be counter-productive, I do believe they could be substantially higher than most places today). I say that as someone who would be likely to deal with the effect if marginal tax rates went up.

As it happens, income/wealth is demonstrably only extremely weakly correlated with personal happiness once very basic needs are met (if you have housing, and food, basically), and as long as things are roughly as they used to or slightly better year over year. Steady improvement has a vastly higher impact on peoples happiness than absolute levels.

That, to me, makes it morally acceptable - pretty much a moral imperative - for a good society to structure taxes to maximize the return from higher earners over lower in order to reduce suffering for those with the least and to maximize the development of society as a whole. Not just because it would help those one the bottom, but because contrary to trickle down, trickle up actually works, and a trickle effect has a far more positive effect on happiness than sitting on a hoard of cash.

Setting marginal tax rates then becomes an optimization problem.

This was not about bankers. It was a boycott due to Nazis starting to do what Hitler had promised to do, to start his actions on the road to the Holocaust.

Yes, this kind of claims are typical of anti-Semitic nutjobs. I don't throw such accusations for no reason; I throw them because it is repugnant to claim that the Jews brought their misfortunes to themselves by this or that boycott or by being bankers or whatever. There are many Web sites that make a big deal about this "Judea against Germany". And it's mostly disgusting stuff.

It gets quite ridiculous sometimes, especially since 2008. Governments are looking for cash everywhere, and they don't mind challenging whatever comes their way.

It doesn't cost them anything to challenge arrangements, so why not try? At worst, they lose and they will have lost some time. Civil servants are being paid anyway. At best, someone pays up because they realise it's not worth the fight.

I read about a case here in Belgium where there was someone who wanted to move to Spain for non tax reasons. The tax administration levied an additional tax on some of his income, because they said his move to Spain was motivated by tax avoidance reasons. A judge ruled on the matter, saying they have no right to keep taxing someone who just wants to relocate, especially when it was pretty clear tax wasn't the motivation.

The fact is, they tried anyway, costing this guy tens of thousands in legal expenses. He was only granted a few thousand by the court as compensation.

> 1/ Shareholder and CEO. My company generates €1M in profit. I pay myself a salary of €1M, and pay a flat tax on my salary. The business pays no tax.

Right.

> 2/ CEO, but no shareholder. The company generates €1M in profit, and pays flat tax on that €1M. Dividends flow to shareholders, and they're taxed again?

Dividends don't magically appear out of nowhere; they're paid out of profits, just like a salary. (Some companies pay out the majority of their profits as dividends, others pay none at all.) They'd either get taxed at the business because they're not paid out, or taxed at the shareholders because they are, not both.

As much as I'd hate to point at it as an example of anything, think VAT, with its notion of "where was the value added", but on the income side, as "where was the profit extracted". Either a VAT-style sales tax (with less doublespeak) or a flat profit tax seems like a workable model. And much like VAT's presumption of paying sales tax unless you show that you bought something taxed, the presumption is that you're paying tax on every dollar of income/revenue, unless you provide evidence in the form of having paid that dollar to someone else who then paid tax on it (or who provided evidence that they paid it to ...).

Interestingly, that then means that if you take money out of the country and out of the economy, you get to pay all the taxes on it at that point. That seems like a nice side effect.

The structure ends up looking a lot like VAT, with a key difference: it affects all transactions, without requiring any kind of code defining taxable/non-taxable items. But apart from that, I think your questions just demonstrated that a profit tax effectively turns into VAT.

Half of the tax code for a flat tax on profits would probably end up being absurdly precise definitions of what "profit" means. (Then again, the other half, or the whole tax code for a flat tax on income, would probably end up being absurdly precise definitions for what "income" means.)

(To preempt the obvious response: yes, there are companies, such as the one-off shell companies constructed to make films, that intentionally construct their books such that they don't actually make any profit. However, that money has to go somewhere, and it'll get taxed there.)

That said, it wouldn't be the end of the world to just make it a flat (and much lower) tax on income rather than on profits. That'd be a much simpler system; it would, however, be much more of a drag force on the economy, like the current tax system. Hard tradeoff.

> 3/ What do you do with foreign companies that levy corporate tax, and then declare a dividend? Do you tax it again at the flat tax in the hands of the shareholder?

[I'm assuming you mean "foreign companies in a jurisdiction that levies corporate tax"?]

The situation definitely gets more difficult with a non-self-contained economy and multiple tax structures. It's a flat tax, so it shouldn't have a complex set of deductions and loopholes, especially that only apply to large multinational businesses. So yeah, I think you'd have to just ignore the foreign corporate tax, and treat the money paid as a dividend as income entering the economy.