Flat Tax

Do you think a flat tax of =~17% would solve alot of our economical problems?

There is a democratic village-state with a single business with a boss and 99 workers, they drive a short distance to the nearby town to buy goods and services they can't get in the village.

The boss earns 90% of the income, so the workers vote to tax him 50% to pay for social programs, after the election the boss simply factors in the value of the free things the workers get from the state and lowers wages to competitive levels, the workers know if they move to the town they will get higher wages but lose the equivalent gain in wages in social programs and the union doesn't call a strike because wages are competitive. There is little change in standard of living, however the village must now pay an accounting firm in the town to organize their social programs and extra taxes.

Next election the workers notice that taxation has no effect on income distribution and figure that the amount of GDP the state controls is the only way to redistribute wealth. So they raise tax to 100% and have the state manage people's salaries and decide how much to invest in the business, the boss is fond of the village and decides to stay and work as a bureaucrat doing much the same job as before, the workers are also model citizens and work just as hard even though they get the same amount of money regardless of how productive they are, the state is also highly moral and free from corruption, even Chomsky comes to visit and declares the village to be proof that socialism works. Nah not really, the boss and some mid-level managers are demonised by people who don't understand the significance of technology in a modern economy and are replaced by populist politicians wholly incompetent at the task who subsequently abuse their position as much as they can knowing no one has any alternative to the state, the workers work as hard as they always have initially but don't put any effort into improving their skills and slowly corrupt into freeloaders, Chomsky claims this is all due to a conspiracy by capitalists to make the village fail.