For every problem there is a solution which is simple, elegant, and completely wrong.
So here's my attempt:
1. Remove subsidies including tax writeoffs like depreciation. Either an asset brings value or it doesn't.
2. Tax revenue not profits. Either you make a profit selling a thing or you don't. Fancy tricks like buying an item from a fully owned subsidiary and selling it at a loss to compensate for profits from services is not realising the value your services and products bring to the economy
3. Change the paradigm from employees serve the company to companies serve the employees. Companies are a way to insulate participants from economic risk of a capital-intensive activity, not a way to structure tax affairs.
> One potential problem with a GRT is its impact on high-volume, low-profit margin businesses, for which the tax can represent a high percentage of potential profits. Another potential problem is that a GRT favors businesses that conduct most operations in-house over businesses that purchase intermediate goods and services from other firms, since the tax is imposed each time a business purchases inputs from an outside firm. (This latter problem is called “pyramiding.”) Illinois can address both of these problems, however, by allowing businesses to subtract the cost of goods purchased from other companies from the gross receipts subject to the tax.
Which, whether you call it a deduction or a simplification of the way corporate income tax is currently based on profits now, brings us back to square one.
>Remove subsidies including tax writeoffs like depreciation. Either an asset brings value or it doesn't.
Are you familiar with the reason the concept of depreciation exists in tax law? Because profits are what the government is trying to tax. Contra your point 2, it makes no sense to tax revenue in a way that ignores expenses. You'd be taxing two businesses the same, whether or not those revenues were just eaten by expenses.
But once you're taxing profits, you need a sane model of what constitutes business profits, and which handles more than the (very atypical) case of "buy a block of stuff, then sell it for more". At any given moment, a business has inventory and capital equipment, which is not completely used up, nor sold. How should that affect profit?
When you say "don't allow depreciation writeoff", then you're saying one of two things, neither of which maps to a good model of "how much profit is this business making".
You're saying either:
1) Any capital good should be booked immediately as a pure expense. That would imply that businesses can forever defer taxable profits simply by spending all profits on such equipment. "Oops, don't owe taxes -- again -- because we bought another robot. Sorry!"
2) Any capital good should be completely non-deductible as an expense. This would mean that one class of expense somehow "doesn't count" merely because it happens over years rather than the moment you buy it (e.g. wear-down of a saw vs purchase of electricity).
Depreciation schedules do not exist as some giveaway-subsidy for capital good purchases, but to recognize the economic reality that the truth is somewhere in the middle; that a capital (durable) good does not immediately decrease profits, but does function as an expense over a longer span of time.
In an ideal world, we would have an auction to get the market value of each used capital good to know how much value the business lost as the capital good lost its value. But this would be horribly expensive and convoluted, so businesses are allowed to assume a certain schedule. The harm of such an approximation is minimal; any discrepancy between the schedule value vs the true market value is realized as income or loss when the good is sold.
tl;dr: Depreciation is not a subsidy, but a recognition of the true effect of capital good usage on a business's book value and therefore taxable quarterly profits.
Late edit: Disclaimer: not an accountant, just my understanding of the logic behind depreciation in tax law.
> Tax revenue not profits. Either you make a profit selling a thing or you don't. Fancy tricks like buying an item from a fully owned subsidiary and selling it at a loss to compensate for profits from services is not realising the value your services and products bring to the economy
You mean, make Apple a Chinese company because being an American one is no longer viable? A VAT would be more reasonable, as it taxes value actually added at each point in the system, rather than a flat tax on each point in the system as you are proposing.
Meat industry would collapse due to 1. Daily foods like steak, bacon, eggs, milk would get extremely expensive leaving the population to lousy unsatisfying vegetables.
Might solve the obesity epidemic :) Might also cause riots because people are not used to eating yucky foods like vegetabables.
Vegetables in the sense of wheat, peanuts, and such? Sure (but since these things will get processed, so I wouldn't hold out that it helps with our obesity).
Vegetables like kale and broccoli? No way. The ratio of labor and land required per produced calorie for these kinds vegetables is far too high. In addition to existing farmland, we would need to convert large amoutns of existing natural environments areas like forests into farms.
But back to your point, why would the industry collapse? Wouldn't prices just increase?
Well, given that the majority (more than 80%) of land is used for growing grass, wheat, soybean and corn for cattle there's no fear for vegetables.
Although soy grown for human consumption is not popular now, it's the most efficient legume there is. More protein than a steak.
This went a little bit off topic, although my point was that removing subsidies on food makes things tricky. Given that in some parts of US burger price is halved if not 20% of what it should be due to subsidies on water and corn and soybean etc.
So here's my attempt:
1. Remove subsidies including tax writeoffs like depreciation. Either an asset brings value or it doesn't.
2. Tax revenue not profits. Either you make a profit selling a thing or you don't. Fancy tricks like buying an item from a fully owned subsidiary and selling it at a loss to compensate for profits from services is not realising the value your services and products bring to the economy
3. Change the paradigm from employees serve the company to companies serve the employees. Companies are a way to insulate participants from economic risk of a capital-intensive activity, not a way to structure tax affairs.
Edited for formatting