In a free market, the absence of legal restrictions on the exchange of the property rights of assets, or on other types of economic agreements, means that tax payments are semantically compatible with certain types of taxes-for example, taxes not conditioned on the execution of any economic activity, such as wealth taxes.
What happens if one of the quantitative variables increases while the rest of the variables remain constant? If so, the only semantically possible result is that the tax revenue would also increase.
This shows us that tax revenue is not only determined by the rates of certain taxes but also by other variables such as the quantity of taxes, the number of taxpayers and the value of each individual tax base, the frequency of tax collection, and the effectiveness in law enforcement.
Regarding the value of each tax base, this variable can increase due to various factors: a decrease in the quantity or value of exempt incomes, an increase in the quantity or value of tax-deductible expenses, or an increase in the value of the economic variable on which the tax is applied.
If tax revenue decreases in a country but the GDP value decreases at an even-greater rate, the value of the tax-to-GDP ratio will be higher.
While the maximum marginal tax rate to which a taxable income is subject may differ from its effective rate, in the case of businesses, tax rates can exceed 100 percent of net profits if-due to a tax regulation-certain expenses and costs within the income statement cannot be considered deductible.
As explained earlier-because both surpluses and deficits can exist-state spending and tax revenues, as variables, are semantically independent.
https://mises.org/wire/forget-alleged-social-contract-taxes-are-coercive
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