The tax man’s dilemma, an infinite decision tree grounded in reality:
Assume you’re the anthropomorphization of government. And you have a decision to make: You need to decide the ideal tax rate for businesses.
In your society, corporations reliably make 5% returns on investments, accounting for inflation. That money is reliably reinvested, although not necessarily in the same corporation.
How should you tax those returns in order to maximize total utility? You may change taxes at any point. Also, you’re the anthropomorphic representation of government—you are, for all intents and purposes, immortal.
Assume a future utility discount rate of less than the investment return rate, and assume you don’t know the money-utility relationship—you can say you weigh the possibility of future disasters which require immense funds against the possibility that money has declining utility over time to produce a constant relationship for simplicity, if you wish. Assume that your returns will be less than corporate returns, and corporate utility will be less than your utility. (Simplified, you produce no investment returns, corporations produce no utility.)
The tax man’s dilemma, an infinite decision tree grounded in reality:
Assume you’re the anthropomorphization of government. And you have a decision to make: You need to decide the ideal tax rate for businesses.
In your society, corporations reliably make 5% returns on investments, accounting for inflation. That money is reliably reinvested, although not necessarily in the same corporation.
How should you tax those returns in order to maximize total utility? You may change taxes at any point. Also, you’re the anthropomorphic representation of government—you are, for all intents and purposes, immortal.
Assume a future utility discount rate of less than the investment return rate, and assume you don’t know the money-utility relationship—you can say you weigh the possibility of future disasters which require immense funds against the possibility that money has declining utility over time to produce a constant relationship for simplicity, if you wish. Assume that your returns will be less than corporate returns, and corporate utility will be less than your utility. (Simplified, you produce no investment returns, corporations produce no utility.)