tax on capital

["James R. Olson, jr." <jhavok@xxxxxxxx>]

At 01:30 PM 6/1/03 -0700, John O'Donnell wrote:
> The tax is progressively proportional to the value of the corporation and
>independent from the rate of production. It must be paid regardless of how
>much is produced and therefore unit [i.e. -- marginal] cost of production
>can be reduced by producing more which implies that prices will be lowered
>to increase demand.

OK, got it.  It's essentially a fixed cost of production, since it doesn't
change with the volume of production, and since it's based on capital value
of the production facility, it would tend to favor those methods that are
less capital intensive per unit.  That would favor labor intensive methods,
good for employment.

Basing it on market cap would tend to favor debt over stock, since debt can
be paid down, whereas market cap will (in general) rise with the success of
the company.  It would also tend to be a disncentive on renovation and
upgrading, since facilities that have completely depreciated would be tax
free.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

  Warning!  This communication monitored by the Federal Office of Total
  Information   Awareness.  All statements deemed disloyal or dangerous
  will be logged for appropriate action.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx