If intangible exchanges account for a large share of the economy and even
larger share of human activities at large, does the basis for taxation
need to be redefined. If yes, how?
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From Rishab Aiyer Ghosh:
The principle of taxation is based on the assumption that economic externalities
need to be paid for by government, funded by taxation. However, when people
provide work without monetary payment, they are effectively implementing
a policy of taxation (of themselves) and public spending (on themselves).
Hence, the basis for taxation, if it is redefined, should be in order to
narrow the scope of taxation rather than to broaden it. Intangible economic
activity should be taxed only intangibly – which it is, in effect,
simply by providing a public service. On the other side, intangible exchanges
may be a way to reduce tangible public spending and taxation by
governments by encouraging a reliance on voluntary services driven by intangibles
of the cooking-pot, and of reputation.
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