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Sales-Tax Bias Against Turnover and Jobs
Mason Gaffney
[Rerpinted from GroundSwell, September-October, 2011]
Foreword
My thesis is that retail sales taxes, however "general" or
universal in their apparent coverage, tax capital for turning over;
turnover means replacement; and replacement sustains demand for labor.
Replacement does not just depend on sales, it anticipates them, and
thereby generates the consumer incomes that finance them: thus it can
take the lead in the otherwise circular and now vicious circle of
macro-economics in which employers wait for consumers, while consumers
wait for jobs. Turnover is measured by the sales/capital ratio, which
is highly variable among different firms, products, locations, stages
of the cycle -- and tax regimes, which economists influence. Sales
taxes depress it heavily.
Public officials at all levels feel major pressure to make jobs, as
they should. But how? We begin with the physicians motto,
primum non nocere (first, do no harm). This is not a mindless
grouch at all taxes, for we need public revenues, and some taxes have
positive effects. This is a rifle-shot at retail sales taxes. These
are a major source of state revenues today, they have grown fast since
about 1932, and many politicians and lobbyists and academic and
think-tank economists are agitating to raise them, and to add a
Federal sales tax or VAT.
The Prevailing Canon
Standard textbooks and learned papers tell us that a truly general
retail sales tax, unlike an excise tax, is neutral as between one
commodity and another. A statewide tax is also neutral between
locations, since it is the same in one town or region as another.
Those conditions are never approached in practice, but in the
sales-tax canon that merely means reformers should extend the reach of
the tax, as California is trying to do against Amazon today -- setting
a precedent that would apply to every State. Authoritative economists,
whether liberal or conservative, are rooting for California to win
over Amazon, and for years have been conditioning students' minds to
favor taxing interstate commerce. Thus, Buchanan and Flowers wrote "If
the tax is uniformly imposed on the sale of all commodities and
services, there can be no real shifting of resources from taxed
employments to nontaxed employments. The shift in relative prices
occasioned by the partial tax cannot occur under a truly general sales
tax" (1975, The Public Finances, 4th Ed., Homewood, IL, Richard
D. Irwin Inc., p. 399). Even Harry G. Brown, no fan of sales taxes,
wrote "if there is a tax on the production of all commodities and
services … there is no advantage in leaving one taxed line for
another line which is taxed to the same extent." (Brown, 1939,
p.254). Earl Rolph and George Break, who bend toward agonizing
agnosticism on most issues, commit to this view (p.117). So does
Harold Somers, a little less guardedly (pp. 17, 26). Bernard Herber
(p.254) chimes in cautiously, citing other work by Friedman, Musgrave,
and I.M.D. Little. David Hyman finesses the question of forward vs.
backward shifting as he segues seamlessly from a "consumption tax"
based on income less saving to a retail sales tax (2005 pp.617-26).
Charles McLure, mincing no words, wants Congress to outlaw " ...
the ridiculously unfair and distortionary de facto exemption of
interstate sales by mail-order houses" (source?).
The extreme outcome of such reasoning is Somers' implausible advice
to the California State Legislature that a tax on gross sales is the
same as a tax on net income (p.27). We return to this later under "The
Mill Effect". Here we just note that there is another part of the
canon, The Ramsey Rule, saying that sales tax rates, to be
allocationally neutral, should not be uniform at all, but inversely
proportional to elasticities of supply and demand. The writer has
addressed this issue elsewhere (2009, pp. 52-53 ), quoting A.C. Pigou:
"If there is any commodity for which either the
demand or the supply is absolutely inelastic, the formula implies
that the rate of tax imposed on every other commodity must be nil,
i.e. that the whole of the revenue wanted must be raised on that
commodity."[1]
That reasoning leads straight as a guided missile to levying taxes
EXCLUSIVELY on the value of land, because its supply is absolutely
inelastic. Whether Pigou knew what he was saying we may never know,
for he was guarded and cautious and indirect and often obscure and
coded, like so many academics fearful of witch-hunters. His Chapter
XIV, "Taxes on the Public Value of Land", favors such taxes
but is more tempered, even timid.
Meantime, modern academics manage to square the circle by ignoring
Ramsey's Rule, or misquoting it, having it apply only to demand
elasticities, omitting supply elasticities, even though these are the
more important part of the original rule. David Hyman's treatment,
changing from one edition to the next, is too Protean to pin down.
Jonathan Gruber contrives to cite the rule correctly but then turn it
upside down (p.588) first by omitting supply (which he has just
included), and then by "balancing" it with the broad-base
rule, offering no rationale. John Kay purges supply from the rule,
turns it into a case for a poll tax, rejects that, and by a path
obscure concludes by favoring levying a tax uniformly over a broad
base. The notable exception is Joseph Stiglitz who, consistently,
often writes in favor of taxing land values.
Modern writers deplore the exemption of "services" from the
sales tax base. These writers and teachers refer in their contexts
only to labor services, ignoring the service flows of land or capital.
This is not from ignorance: they know that the "service-flow"
of an owner's home has long been included in NIPA as a form of income,
income consumed by the owner- occupant as the real estate yields it.
They just blank that out when it comes to taxing services to the "final"
consumer (Anderson, p.252). This attitude suggests a bias among
economic authorities - a bias self-perpetuated over time by the
selective processes familiar to anyone whose brain remains intact
after traversing the echo-chambers of graduate training in Economics.
This bias even got to Harry G. Brown, leading academic Georgist of
about 1920-50. Brown published that "wages are a much larger part
of the total product of industry than is either interest on capital or
rent of land" (1939, p.256) - a standard line used to support "broad-based
taxes" in lieu of taxes that zero in on land rents, the kind that
Brown championed. (For a detailed refutation of this view, see
Gaffney, 2009.)
Sales taxes in the U.S.A. are not "general"; lawgivers do
not intend them to be. Sales taxes apply by law only to sales of
personal property, i.e. the lawgivers knowingly exempt that other kind
of legal property, real property, meaning LAND and anything affixed to
it. They exempt real estate sales, debt service, rent, sales
commissions, crop shares, royalties, bonus payments for leases,
imputed consumption of owner-occupied grounds, gains in value, gifts,
bequests … almost everything to do with land, which the law
treats quite separately from personal (movable) property. (An
exception is the tax on hotel and motel rents, presumably in the
belief that tourists bear the tax and do not vote here.) On top of
that many tenures to natural resources are not even real property, or
any kind of property in the law, but licenses, e.g. to appropriate
water, and not subject to any tax.
An exception is when a producer of "tangible personal property"
uses the time- consuming services of land to add value to the goods,
i.e. to convert the untaxed service of real property into taxed
personal property. However, when one uses land-service directly, as
for parking, riding to the hounds, shooting, golfing, housing,
waste-disposing, yachting, or exhausting aquifers to water lawns,
there is no sales or other "consumer" tax. Standard texts
and authorities ignore and thereby accept this loophole, silently
telling readers to conform with the custom, to take it as dogma,
time-honored and regular. Thus Rolph and Break, who refer to sales
taxes only as "commodity taxes", say that "optimal
pricing refers to price relations among products only …" (n.
15, p.120).
No State, to my knowledge, sales-taxes interest on consumer loans,
e.g. on buying cars on time, and the dealer retains title to secure
payment (Somers, p.11). The legal tax base is simply the invoiced
price when the buyer takes possession, even though interest may add
50% to that price.
Sales of arms and supplies to the U.S. Government, to be used up in
warfare, are also exempt.
John Due, a standard authority, wrote in 1963 that the Feds have
preempted the income tax base, so the States "are virtually
compelled to turn to sales taxation" (p.296) - no mention that
they might turn to property taxes, as they did from colonial days to
1930 or so. Actually, the retail sales tax is a recent interloper in
western fiscal systems. "The sales tax existed …
intermittently, in various European countries to about 1800, but in
the 19th Century it played no part in the fiscal development of the
important nations, … " (Shoup and Haimoff, 1934, p.811;
National Industrial Conference Board, 1929, pp. 163-66). Professor Due
did not note how states may also, besides property taxes, impose
severance taxes, carbon taxes, franchise taxes, fees for using state
property like water (falling, ground, and surface), commercial fishing
licenses, or other means of raising revenue from land and natural
resources.
Neither did Professor Due note that millions of parcels of rental
property, commercial and industrial property, and vacation and other
extra homes of the most affluent belong to people who live and travel
and consume out of the state or the nation. From a worldwide viewpoint
they may (or may not) pay sales taxes elsewhere, but it belies Due's
dictum that each State is "virtually compelled to turn to sales
taxation". On the contrary, turning to property taxation would
close the gaping hole of absentee ownership, which sales taxes do not.
It would also attract droves of buyers from nearby states, as Delaware
and New Hampshire do so successfully (Sullivan, 2011).
Due also writes (p.295) that taxing residential rents is unfair to
tenants because there is no tax on the imputed rent that owners pay to
themselves -- no mention that we could balance taxes fairly by taxing
the latter instead of continuing to exempt the former. Anderson's and
Due's views seem to reflect the profession's blind spot on matters
pertaining to land, or tacit approval of raising sales taxes to avoid
taxing land or its rent.
Some economists speculate that any tax on or shifted to workers,
whether as such or as consumers, may make them work harder and longer.
It is called a "backward-bending supply curve", caused by an
"income effect" (Somers, p.27), a bloodless way of
describing putting mothers and children and cripples and students and
the aged in the labor force - thus combating unemployment by lowering
pay rates. Most economists choose examples revealing that they would
apply the idea only to labor supply; many, like George Stigler of
Chicago and Robert Rector of The Heritage Foundation, tell us this is
good policy, that the minimum wage and union scales are too high
anyway and everyone deserves a "right to work" for less.
Prof. Jack Stockfisch (1954) even applied it to owners of capital and
the supply of investment, but this has not caught on. Prof. Nicolaus
Tideman has correctly applied it to landowners with respect to a tax
on land values, but not otherwise, which makes sense since sales
taxes, and most (but not all) other taxes, lower returns on productive
capital and drive investors into buying land as a long-term store of
value, like gold -- a point that Herdershott, Follain and Ling have
recognized ((1986). Hendershott, Patric H., James R. Follain, and
David C. Ling, Real Estate and the Tax Reform Act of 1986 (December
1986). NBER Working Paper Series, Vol. w2098, pp. -, 1986. Available
at SSRN: http://ssrn.com/abstract=227265).
Sales taxes are said to fall on "consumption", and so to
encourage "saving", but one searches in vain for any general
principled definition of "consume" or "consumption"
in the sales tax literature. Shoup and Haimoff (1934) are among the
few who at least try to define key terms, but lose us in a thicket of
minor technicalities, legalisms and ambiguities. Tax simplifier and
lawyer Bernard Wolfman wrote in 1969, "If the statute were
simpler, and spoke more in principles, the courts would feel a broad
mandate to enforce the law and honor the intentions of lawgivers"
(obit, The New York Times, August 31 2011). General principles are
what economists should supply, what the present canon lacks, and what
we seek here. (Cf. also Gaffney, Vampires, L&L)
What does it mean to consume land, for example? Perhaps the unwritten
assumption is that we cannot consume land because it does not wear
out, but we certainly can consume time slots of it, and like the
lawyer and doctor, time is its stock in trade. Matter and energy and
space cannot be destroyed, but lost time is lost forever. If we
convert 160 acres from growing walnuts to golfing, or from pasturing
cows to sheltering foxes to chase or birds to shoot, or riparian land
from landing food-fish to harboring yachts, we are re-allocating the
land from production to having its time consumed for the owner's
pleasure, right? So to make sense of sales taxation we must change
existing literature and its paradigms, which now lead us as by a ring
in the nose to ends selected by an apostolic succession of authorities
steeped in what may be false doctrines. We must think the matter
through afresh, with our own minds.
The Mill Effect
In this paper I take the above as too obvious to labor further, and
focus on a more subtle but deeper and more general matter: how sales
taxes penalize and slow down the turnover of capital, and the
frequency with which a given capital is reinvested to make jobs. John
Stuart Mill, with his philosophical bent, looked much deeper than
modern writers on sales taxation, and pointed out a systemic bias
inherent in the tax.
"… if there were a tax on all commodities,
exactly proportioned to their value, there would, ….. as Mr.
M'Culloch has pointed out, be a 'disturbance' of values,… owing
to … the different durability of the capital employed in
different occupations. … in two different occupations … if
a greater proportion of one than of the other is fixed capital, or
if that fixed capital is more durable, there will be a less
consumption of capital in the year, and less will be required to
replace it, so that the profit, if absolutely the same, will form a
greater proportion of the annual returns. To derive from a capital
of £1,000 a profit of £100, the one producer may have to
sell produce to the value of £1,100, the other only to the
value of £500. (I.e., where capital is less durable, you must
sell more gross to get the same net profit.)
"If on these two branches of industry a tax be imposed …
the one commodity must rise in price, or the other must fall, or
both: commodities made chiefly by immediate labor must rise in
value, as compared with those which are chiefly made by machinery. …
" -(Principles, Book V, Chapter IV, "Of taxes on
commodities", pp. 504-05).
How memorable is the word "Disturbance", 150 years before
Darth Vader in Star Wars sensed a "Disturbance in The Force"!
In Mill's and M'Culloch's usage, "The Force" is value as
determined in a market before or without taxes based on gross sales.
Mill hid this light under a bushel, by offering just one example of a
small difference, arithmetic only, and easy to overlook in passing,
which is what later standard economists have done. We should, rather,
set this light in a tower on a hilltop as a beacon sending its gleam
across the wave to save the foundering ship of state.
Harold Groves, a clearer expositor than Mill, makes the point in a
simple table (p.113). "Store A is engaged in a trade which has a
very slow turnover, such as the furniture business; Store B is one
with a rapid turnover, perhaps a meat shop".
|
(I) |
(II) |
(III) |
(IV) |
(V) |
(VI) |
| Store |
Operating
Capital |
Gross
Sales |
Sales/
Capital |
Profit
Before Tax |
Tax @ 5% |
Tax/
Capital (%) |
| A |
$30,000 |
$30,000 |
1 |
$300 |
$150 |
0.5 |
| B |
$2,000 |
$100,000 |
50 |
$200 |
$500 |
25.0 |
The sales tax, which is based on Column (II), gathers much more from
B, the meat shop, than from A, the furniture store, because of B's
higher turnover and greater volume. B's little capital of $2,000 turns
over 50 times and is taxed 50 times a year, while A's $30,000 turns
over and is taxed just once. Groves uses this table for another
purpose, but it serves to make Mill's point as well.
Again, compare a parking lot with a cafeteria. Suppose both to be
taxed on gross sales, including services. The inventory of fresh food
in the cafeteria is taxed daily, as it sells out and turns over. The
payrolls are taxed daily too, for they add to the gross value of
sales. The value they add to the purchased stock of food is capital,
too: "working capital". Or, if one prefers to ignore capital
of life so brief and so small a claim on the final product, the sales
tax is simply a tax on labor. The gross sales of parking services, at
the other extreme, include no turnover of capital at all, unless
perhaps a minuscule Capital Consumption Allowance (CCA) on the paving
and striping.
What Mill means by "capital" is clear from his memorable
saying, "Capital is kept in existence from age to age not by
preservation but by continual reproduction". For a mnemonic, call
it the "Millwheel Principal", a superior ancestor of modern
macro-economics that later writers have obscured and then lost
completely behind the veil of money. Capital is not a specific
concrete good, like a chair in the furniture shop. Rather, it is a
quantum of value that we can, and normally do, keep existing by using
the cash from sales to "meet the next payroll", as they say,
to replace the chair. It needn't be an identical chair, or any chair
at all, for capital in this transition is totally fungible in form and
location.
Illustrations and Analogies
Within each business there are also differences among kinds of
capital. In a retail bakery, for example, there are pies and
pie-shelves. The pies come and go, perhaps several times a day; the
shelves last for years; the ovens for decades; the buildings even
longer; the sites forever. Many a needy widow with hardly any capital
has earned her mite by baking, while renting the site, building and
hardware. Her sales/capital ratio is high in contrast with that of the
landlord, and orbital in contrast to, say, Georgia-Pacific or
Weyerhaueser timber corporations.
The case is even clearer when we compare two uses competing for the
same land. The one with more turnover pays more sales tax per dollar
of capital invested. The tax drives away capital that turns over fast,
and reallocates the land to capital that turns slower, or to uses
requiring less capital, or no capital at all, like the parking lot. As
to the lot itself, it never turns over in the relevant sense of
wearing out and being replaced. Curiously, Harry G. Brown, a stern
critic of holding land idle, as well as of taxes with excess burdens,
does not connect his two goals in one consistent system (1939, p.
254). He does not allow that sales taxes inhibit using land most
intensively. His mentor Irving Fisher may have confused him.
Chemists have a vocabulary for it, too. Land in production is like a
chemical "catalyst": it facilitates a process without
disappearing into the product. Its "quantum of value"
remains in the land. Working capital is, at the other extreme, like a
"reactant": its corpus and its quantum of value go into the
product. That means they get sales-taxed with each turnover -- the
basis of the Mill Effect.
Physiologists have a name for it, too: what is metabolism but the
turnover of protoplasm in cells? One could elaborate, and find
analogies from other sciences, but the point is made, and will be made
once more below with Dorfman's essay on hydraulic engineering.
Difficulties, Solutions, and Measures
"Fixed" (durable) capital is a mixed story. The corpus of
fixed capital as a catalyst does not get sales-taxed, only its income
plus a little extra for depreciation get sales-taxed. Separating the
catalyst from the reactant in fixed or durable capital is a trifle
less simple than with working capital, but only marginally so. The
basic mathematics of finance tells us exactly how to divide the
product between interest, the net income of capital, and depreciation,
which corresponds to the recovery or turnover of capital (and is
labeled a "Capital Consumption Allowance" (CCA) in NIPA). We
do not repeat the mathematics here, but lenders, mortgagors, bankers,
and I.R.S. agents use it every day. So do millions of innumerate
consumers who buy on the installment plan, taking the mathematics on
faith.
A unit or "quantum" of fixed capital embodied and frozen
into, say, Hoover Dam, or grading building sites, or land-fill in
shallow water, or a tunnel, or The Pyramids, or The Brooklyn Bridge,
or the marble cladding of Nelson Rockefeller's Parthenon in Albany,
turns over so slowly that its net product or service after O&M is
mostly pure income. That product or service as a tax base, however we
measure it, includes little recovery of capital. Too often, indeed,
there is none at all, thanks to engineering megalomania coupled with
the "irrational exuberance" of land speculators and "earmarking"
politicians who subsidize them.
As to land, this never turns over. Its ownership may turn over many
times, but that is an entirely different meaning of "turnover":
it entails no depreciation and ultimate replacement of the lot, and no
routine recovery of the original purchase price through a CCA (Capital
Consumption Allowance). In a rational market, land is priced so high
that its cash flow is just enough to cover interest on its price, with
nothing left over for a CCA. In a rising but still rational market,
indeed, interest on the price is greater than cash flow by an amount
equal to annual appreciation. In a market with "irrational
exuberance", which comes along every 18 years or so, interest
often exceeds the sum of cash flow and appreciation, as we learned so
well in 1990, promptly forgot, and went through again in 2008.
Many economists disregard The Mill Effect by assuming, too blithely,
that sales taxes are all shifted forward to "consumers".
Even if that were 100% true it would certainly depress demand for the
overtaxed items. Most economists today share some, at least, of the
paradigm of Buchanan and Flowers wherein sales taxes are shifted
backwards to factors of production. This view hails back to Harry G.
Brown (1939). Earl Rolph, crediting Brown, also may have seen things
that way, although Rolph's hedging style makes his writing hard to
fathom. Many of us now hew to the Physiocratic doctrine that All Taxes
Come Out of Rents (ATCOR). Either way, sales taxes create "A
disturbance in The Force" -- a massive and basic disturbance. To
fuss over trivia, while missing the Mill Effect, would be to strain at
gnats while swallowing a camel. For examples of such straining see
Shoup and Haimoff, Somers, Rolph/Break, and almost any popular text on
public finance.
Many texts on public finance compare a retail sales tax favorably
with a "turnover tax", since the latter taxes every
transaction up to and including the retail stage. Thus they dispose of
"turnover" by giving it an entirely different meaning than
that used by Mill, and used here. They criticize a "turnover tax"
(as sometimes used in Germany, and in the former Soviet Union) for
taxing the same capital several times, "in cascade", as it
moves from owner to owner in successive transactions through the "stages"
of production. They then criticize how firms may avoid it by
integrating vertically. Fair enough, but then they dust off their
hands as though done, leaving us the retail sales tax, imposed at only
one "stage" of production, as though it were free of taxing
turnover.[2] Thus they purge The Mill Effect, the "Disturbance in
The Force", from modern fiscal economics.
One of the few mainline fiscal economists to address Mill's kind of
turnover was Carl Shoup (1948). Shoup, with Vickrey, did monumental
public service in redrafting the Japanese tax code under MacArthur'
reign, and warrants respect. Shoup's work is of limited value to us
here, however, for five reasons. One, he writes of turnover only in
connection with the corporation income tax, not the sales tax. Second,
he alternates between using "turnover" as the
sales/taxable-income ratio (p.326) and then the ratio of sales to "total
property", closer to Mill's meaning (pp. 327 and 328), but
confusing readers. Third, he digresses into details of corporate
organization that distract us, and perhaps Shoup himself, from the
main themes, the general economic principles at issue. These are what
concerned Mill and should concern us. Fourth, he writes that
differences in turnover ratios only cause tax bias if they are "in
the same industry" -- i.e. inter-industry bias is of no account
(p.328). The last belief is so indefensible I will not labor the
obvious.
Fifth, Shoup inexplicably backs away from drawing any practical
conclusions, pleading lack of data (p.328), implying a grant request
is coming. That is infra dig. One does not need any National Bureau
data and tedious analysis to observe that capital in the baker's pies
turns over about daily, or 365 times a year, while capital used to
reforest cutover lands in boreal climes may take over 70 years, or
26,000 times as long as the pie.
Some economists see nothing but insoluble problems in measuring or
even conceiving of the lifetime of a simple capital item, and even
worse problems with the average lifetime of a collection of
heterogeneous items. The matter may be made to seem hopelessly
complex, it is true, and a battery of economists always stand ready to
oblige.
Fred Foldvary, and some other "Austrian" thinkers, solve
the problem by describing specific concrete embodiments of capital as
"capital goods", while the word "capital" standing
alone means the quantum of value. This quantum of value is relayed
from one concrete capital good to another with each turnover (cycle of
liquidation and replacement). In this relaying the capital becomes
completely fungible in form and composition and location. Fungibility
is a concept that most economists grasp and teach, although some
resist, or quibble over the idea of capital as a quantum of value --
something more obvious to accountants, however, and, as we shall see,
to hydraulic engineers.
Hydraulic physics and engineering provide a simple solution, ably
expounded by Robert Dorfman in an article I cannot praise too highly
(1959). Dorfman whimsically calls it "The Bathtub Theorem",
and properly acknowledges Knut Wicksell's priority with his "grapejuice
model", although Dorfman's model is more general. The average
transit time of a molecule of liquid through a reservoir is basically
the flow/fund ratio: in economic terms, the sales/capital ratio (p.353
et passim). For the lady baking pies and selling out daily the annual
ratio is 365. For the boreal forester the annual ratio is 1/70. Both
figures may be modified slightly for elegant variations on the main
point, but the difference of 26,000 times illustrates the Mill Effect
so starkly, why bother with more? For doubters and masochists Dorfman
provides plenty of equations, but ends them delightfully saying "It
is nice that this elaborate calculation is really unnecessary"
(p.372).
Dorfman does not treat land separately, which is a fault. Neither
does he analyze sales taxes and their effects. This writer (19xx) has
tried to supply the lack (19xx, pp. xxx-xxx). For now it is enough
that we can measure turnover simply, and it varies hugely among sales-
taxable items and firms.
Professor William Vickrey favored me by contributing a general
mathematical model published as an Appendix to my "Tax-induced
Slow Turnover of Capital", showing how "Yield Taxes"
(sales taxes on timber harvests) slow down average rotation periods.
He equates average tree life with the sales/capital ratio simply by
inverting the order of integration -- a neat trick for most of us, a
simple trick for him (1971?, p.??). It was consistent with his
lifelong efforts to tax capital gains as they accrue, following the
Haig-Simons definition of income.
Summary
We are left with this. Jobs depend on turnover. Turnover is measured
by the sales/capital ratio, which is varies hugely among different
firms, products, locations, stages of the cycle -- and tax regimes.
Elected officials control the last, and we as economists influence
elected officials. Sales taxes, rampant and rising in our times,
depress turnover heavily, and so depress demand for labor -- both the
number of jobs and their pay rates. Property taxes have the opposite
effect, and so may some aspects of income taxation. We do not here
address how both property and income taxes may be modified for the
better, although they may and should be. Our main point here is that
sales taxes (and their twin, VAT) are among the worst possible choices
when the objective is to make jobs and raise pay rates.
BIBLIOGRAPHY
Bibliography to be added, along with ideas inspired by critics and
other commenters
- A.C. Pigou (orig. 1928) A
Study in Public Finance. 3rd Ed., 1947, rpt. 1949. London:
Macmillan & Co. Ltd., p. 105
- While they are at it, Buchanan
and Flowers want to tax people for "consuming leisure",
a euphemism that includes being involuntarily unemployed. The idea
goes back to Chicago's Henry Simons (1938). Buchanan and Flowers
do not call this a poll tax, for they disapprove of such negative
euphemisms as being "emotive terms". Yet they do not
suggest taxing idle or underused land or capital for taking
leisure, suggesting a bias against labor. One has to wonder what
social philosophy imbues them and their disciples in the "Public
Choice" school.
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