Which tax is the best?

Question

in your opinion, which is the best tax and explain why, (in relation to economics)

haha and no, "the one i dont have to pay" is not the answer : P

Answer 1

It depends on the purpose of the tax.

If the purpose is simply to generate revenue for the government, a progressive income tax is best because it acts as an automatic stabilizer for the economy as a whole. Say the economy goes into a depression, then as income for individuals falls, a lower percentage of that income is taxed, weakening the depression.

If the purpose is to correct an externality, a direct tax on the good itself will help cover the social costs of the good.

If the purpose is to fund projects that only help a specific group of people (say people who use roads), then a tax on something like cars or gasoline will help pay for road work. That way individuals who don't use roads don't have to pay for them.

Answer 2

The exise tax.  When implemented correctly, it increases the marginal cost of a good to match the social cost of a good, so that producers and consumers, and not innocent bystanders, have to pay for the damage done by the product.  In fact, once you take the social costs into consideration, it doesn't even have a deadweight loss; on the contrary, it maximizes surplus.

Answer 3

I am not an economist and I am sure there has been research on this or something related to this, but in the absence of other answers I'll take a swing at it.  

The best tax is one that is proportional to consumption, particularly luxury spending.  It would have to encourage production.  It should encourage saving and investment.

I suggest a property tax structured to tax luxury homes at a higher rate than either small homes or business property.

Answer 4

The kind of tax that is sort of flat and stuff.  I think it may be called a flat tax?  It is such a simple way of taxing people it must be the best.