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Notes -
FairTax as the fairest tax
The concept of a market as a business fascinates me. It's a business that's a container for other businesses.
The ur-example is a hair salon in a strip mall (business apartment). The manager of this strip mall business (who may or may not be the proprietor/owner of the business) rents one of the suites to the proprietor of this salon. The salon in turn furnishes each of the salon booths and rents them to the individual hairdressers, each one an independent contractor. This salon has a single payment system where the money is divided between this hairdresser and the salon, but any tips you give the hairdresser are theirs to keep. (This example is not how all salons operate.)
In this example, is the hairdresser paying the salon a booth rental out of the total cost of the haircut, or is the customer paying the salon a fee for getting a haircut there instead of having the hairdresser come to her home and cut her hair in the bathroom?
I've decided it makes the most sense to call the salon's cut a "market fee", a part of the price which the customer pays but the hosted business doesn't get to keep. It's a true three-way transaction, not a pair of two-way transactions.
So how does this become a conversation about taxes?
Three simple models of taxation
Philosopher Robert Nozick famously came up with a way to philosophically justify private property in a society, but failed to find a way to justify taxes, which derive from private property, other than the sheer necessity. (His Anarchy, State, and Utopia is a magnificent book.)
(Please note, whichever model of taxation you prefer or use internally, modern-day taxes can be seen as any or all of these. This is a simplistic philosophical model.)
In cases 1 and 2, the obligation of the nation's people to pay taxes is based on what other people want (1) or need (2), and only respects personal property if there are safeguards in place, and only while the king or the people respect those safeguards.
The FairTax is a Market Fee form of taxation which automatically respects private property by only taxing business transactions, and by allowing anyone to resell property that has already been FairTaxed once without ever paying tax on it again. It even builds in a dividend for the people, the owners of the national market, equal to the taxation they'd pay at the poverty level, making the government free on the net calculation for the poor.
In these sort of platform marketplace systems like scamazon, ebay, and salons, the legal opinion of the platform is clear.
You have a transaction with the seller, and the platform is simply providing payment processing and other services. If you have a dispute the platform is not a party to the dispute, though they may step in and send the money back. The seller pays a separate fee to the platform for the services.
It gets fuzzier for things like uber and grubhub, because of the highly dubious connection between what you pay and what the sellers get though.
Did you know that modern supermarkets often have the company delivery workers stock and face their product? The wide world of markets is so much larger and fuzzier than simple selling platforms.
I had many of these philosophical realizations when I saw how a flea market operates. There's an entry fee for the customers, and a booth rental fee for the vendor. At the Expo New Mexico (nee NM State Fairgrounds) flea market for example, there's a flat $25/day fee for the vendors. This, and the membership fee at Costco, helped me realize a market can charge both the customers and the vendors, getting some revenue from either the expectation of economic activity or the consummation of same.
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