Increasing the tax burden: What should a liberal economist think?

The announced increase in the tax burden in the United States is worrying some investors. Is it a concern? This question leads us to ask what a liberal economist should think about taxation. We believe five ideas are important. Even a liberal economist believes that the absence of international tax coordination, which leads to a continuous reduction in tax on mobile factors of production (and mobile tax bases), known as a race to the bottom, is inefficient. A minimum global level (21% in principle) for corporate earnings tax is therefore a good idea. A tax that is not distortionary is normally the most efficient. This is the case for example of a flat tax on GDP (all income). Corporate social contributions and production taxes seem to be t he taxes that create the most negative distortions for productivity and employment. A tax distortion can be deliberately created to offset an economic problem, an anomaly or an externality. Reducing corporate social contributions on low wages is justified, in order to reduce unemployment among low-skilled workers, as is taxing CO 2 emissions. A liberal economist normally thinks that reducing income inequality by reducing primary inequality (before redistribution) via an increase in the employment rate is better than reducing inequality via redistribution and taxation. Finally, for a liberal economist, taxing rents is also justified: abnormal earnings that result from monopoly positions or , currently, monetary rents: capital gains that do not result from effort, but simply from expansionary monetary policies. Finally, a liberal economist would normally prefer: A flat tax on all income at a reasonably high tax rate coordinated internationally; Exemptions or additional taxes to offset structural problems (unemployment among unskilled workers for example) or externalities; Additional taxes to tax rents.