7. A fair tax system is the most important condition for self-government

A fair tax system needs three necessary features in order to reach three aims.

  1. The first important feature of a fair tax system should be the aim to burden the expenditures for machines for production with nearly the same taxes than the work for production.
  2. A second characteristic for a fair tax system should be the aim to impede the accumulation of the property of machines.
  3. And the third aim of a fair tax system should be the feature to avoid the separation of economic performance from the property of the company.

Are theses aims only a vision?
Without a fair tax system these aims will be only utopian visions. For capitalistic and communistic lawyers and legislators are such aims not realistic. For capitalistic lawyers the usual necessary professional outlays are not part of the tax base. They calculate only the net income as a tax base for the income tax.
Now it' s time to explain the first important feature of a fair law system. In order to burden the expenditures for machines and professional outlay like the work, it is necessary to broaden the tax base. In this case it' s necessary to calculate the gross economic income. This is possible, if the social benefits for the people are not subtracted from the gross income but from the tax amount. The social benefits for people without a handicap should be like a minimum income. A financial system which concedes everybody a minimum income without further conditions should also burden all people with the same tax conditions, without supplementary conditions. Then the tax base can be calculated without any exemptions, because it is identical with the gross income.
Now it' s necessary to explain the gross income. The gross income includes all professional outlays. To describe the true gross income it is easier to account the costs which are not part of the gross income than the parts of the gross income. The gross income is the same than the gross value added. A definition is more evident with the subtraction method. The gross value added or the gross income are the gross receipts through the gross sales of an economic subject without the costs for intermediate goods purchased.
In the trading the intermediate goods are only things which were buyed for saling. And in the industry the intermediate goods are row materials and semifinished products for new products. Raw materials and semifinished products for means of production are not intermediate goods. The expenditures for electric power or other energy or for water consumption, for cleaning or guarding the offices and buildings or expenditures for advertisings are not intermediate goods and can' t be subtracted from the gross value added.
This explaining statement is important, because in the capitalistic invoice system it' s not usual to differ the true gross value from the strange value added of other suppliers. In capitalistic invoice systems it' s usual to calculate the expenditures for maintenance of the means of production together with the true intermediate goods. Therefore the expenditures for maintenance for the means of production and the expenditures for small means of productions are not burdened with tax like the expenditures for intermediate goods. In the capitalistic balance sheet the maintenance for the means of production are accounted with intermediate goods, although they are part of the gross value added of a firm. The gross income for all as tax base is therefore the first feature of a fair tax system.

The comparison of the alternative invoice systems
The tax base of the income tax is the main difference between capitalism and the self-government market economy. The diagonals represent linear tax tariffs and the curves stand for a progressive tax structure.

The second fundamental characteristic of a just tax order should be the personalization of every income and their direct taxes. All income is generated through the power of natural persons. And all income is destinated for the consumption of natural persons. Every economic performance has it' s origin in the work of natural persons and not in legal entities. Therefore all earned money will be distributed at the end to natural persons and not to juristic persons. The true creators of income are in every economy system subjects and not objects. In the consequence in a fair financial system the creator of income and the debitors of taxes are individuals and not industrial groups.
But the personalization of income and the direct taxes is not possible with a linear tax rate. Although linear tax rates were founded many thousands years ago, a linear tax system is not sufficient for a moder, fair and adequate economy.
That means the only alternative for a linear tax rate is a progressive tax rate.
It' s evident that the accumulation of property is the reason for the accumulation of income. The impede of concentration from property of companies has two advantages. One important advantage is the impede of income through property. That means it' s much more difficult for the owners to gain huge property income. The other important advantage will be the impede from the concentration of power. In politics this condition is called democracy. Democracy is the opposite of monarchy and of dictatorship. In the economy it seems to be only a dream to realize democracy. But if we want keep private property in the economy and if we also want avoid the concentration of economic power and the centralization of the means of production, we need a progressive tax system.
In capitalism the tax amount, a company dues his government does not depend from the ownership of a company. In case the the capitalistic company has only one proprietor, the company has to pay the same tax as if the firm has thousand shareholders with identical values of their shares. But in a just tax system every shareholder has to pay a progressive tax for his income, because the income of the company is only the total of the incomes of the shareholders. Hence the taxes a company must pay to the government must be the total of the taxes which the shareholders have to pay to the government.
It' s easy to understand, that in a progressive tax system the total of tax amounts calculated from many small incomes is lawer, than the one progressive tax amount calculated from the total of all incomes, that means the whole income of the company. The total of many small incomes of many subjects represented through the shareholders is identical with one income of one object represented through the company. Their tax burden would be identical if the tax structure is linear and without tax allowance.
This means in a optimal tax system the firms keep the chance to save tax debt if they maximize the number of the shareholders. Consequently the maximization of shareholders leads to minimization of tax burden. At the other side the minimization of the shareholders leads to maximization of the tax burden.
In repetition, the personalization of the incomes and the tax burden is the second elemantary feature of a fair tax system.
Last but not least we consider the third fundamental characteristic of a sustainable and well-balanced tax system. The direct tax on income is the most important tax of all thinkable taxes. That's why financial justice is beginning and ending with a correct structure of direct taxes.
In the first feature we learned that the tax base must comprise the whole income generated through work and rents. And later in the next step we have seen that the tax structure must be progressive and not linear.
Now we should know that the personalization of economical income from the companies is only possible to people who work in the company. This fact does not mean that the public administration has to control if a shareholder does work enough or not enough for his company. It is sufficient to control the whole income of the shareholder, because every shareholder receive two incomes.
One income exists in form of the individual income for personal consumption. And the other income consists as a part of the company income for the maintenance of the company.
In case a shareholder leave his company as a worker, he will also lose his rights and duties as shareholder. Then he gets no more income and so he has no more to pay taxes. But this order has an exception. Only in case of liquidation of a firm the old shareholders gain back their rights for a limited time, in case their parts of the firm were not depreciated. That' s why all the shares of a firm in a self-goverment market economy imly their individual market value. However, this shares does not have a value for all speculators of the world who want gain profit and privileges without any effort. The market value of the shares in a fair economy exists only for the workers in the company. Only the active members of a company who earn their individual income from their firm have the chance to reduce the total tax burden of their company. This option of tax reduction is possible until all workers of the firm possess exactly the same part of their company.
Through minimization of employed workers the management has the chance to minimize tax burden. Now it' s no more profitable that the companies establish groups, trusts and holdings. Only natural persons and no legal entities can be recognized as shareholders and gain their tax privileges.
The shareholders will elect their chairleader and an additional board similar to a capitalistic supervisory board. The executive body and the board of the shareholders are the competional authorities in big democraciated companies. Only through cooperation the authorities have the chance to work successful for their company. In the other case, in case of failure, every authority has the right to advance the next election of an authority. In case of a dispute about an essential question for the company the representative authorities have the option to put the vote to the shareholders.
These are only the main characteristics of a fair tax and money distribution system. Many consequences of this system are not integrated in this introduction. Although the mathematical description of a progressive tax structure is not complicated, it is not part of this introduction.
The essentials of a fair credit system, the elements for well-balanced social laws, the rules about optimal privatization and socialization of the economic sectors and the best solution for the political separation of powers are not topics of this introduction. The consequences for calculating the national accounts and the true economic power of a national economy and the secrets of a stable currency policy are also parts of a holistic economic and social system. The script with clear and logical answers to all this questions is only in german language avialable. It is complemented with many graphs and diagrams.

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