I would like to propose here a reasonable taxation system, which actually makes sense, and it can actually be implemented, not just a wild Libertarian dream.
Of course the Best Tax System is a No Tax System, but we probably won't get that anywhere in the near future but we could get a more reasonable one, perhaps.
Before I propose my solution to it let's enumerate what kind of taxes there are in your average Western country:
List of Taxes
- Income Tax (which could be subdivided):
- Payroll Tax
- Capital Gains
- Property Tax:
- Estate/Land Tax
- VAT/Sales Tax
- Import Tax
- Commodity Tax (precious metal,oil,etc...)
- Vehicle Tax
- Green Tax (on hazardous materials,recycling, etc..)
- Unhealthy Tax (additional taxes levied on tobacco,alcohol,etc...)
- Inheritance Tax
- Social Security (pension, unemployment, work insurance,etc)
- Healthcare Tax
- Business/Corporate Tax
- Inflation of the local currency (after all it goes directly into Govt. Bonds via Central Bank activity)
- Mandatory Insurance (car, property, business ,etc...)
Now this racket can add up to 70-80% of your income being taken away maybe even more. Now I don't have to stress out why this is a bane for humanity, but if we want to sort these things out in a reasonable way then we actually have to select which taxes actually make some sense, while others are just ludicrous.
- It is my opinion that the Income Tax, as it is, has to be eliminated entirely. There is no question about it, it makes no sense to take away the productivity of a worker.
The Laffer Curve is bullshit, and I am not just saying that because I have Libertarian aspirations, but because it actually makes no sense. I don't know what kind of shill invented it, but I can demonstrate to you that there is actually no positive effect of the Income tax.
Role of the Income Tax?
Ok so what would be the role of an Income Tax? Perhaps a progressive Income Tax which set's different rates for different income brackets. Well the role of that would be to create social equality (which is a wrong goal by itself). Well then why the hell do you have Inheritance Tax then?
If you are concerned that ruling families will pass over their wealth from generation to generation until they engulf the Earth (which is impossible in a free market, Monopolies are created by the Government), then you set an Inheritance Tax.
If your goal is to create equality now, then why are you taxing the poor? And if you want to tax the rich, then isn't the business tax for that? I mean most money is made through corporations, what is the point in taxing the wealthy again after they take out their money from the corporation?
So if you are concerned about wealthy family monopoly, then you set an Inheritance Tax and eliminate the Income Tax.
If you want to tax the wealthy then you set a Corporate Tax, but eliminate the Income Tax for the wealthy brackets.
It makes no sense to tax 2 times and it's just so disgusting that I can't even find words to describe it.
What Else
Ok so the Income Tax needs to be eliminated. What else doesn't make sense?
Well the VAT/Sales Tax doesn't make sense either. While I agree that some products should be taxed higher like alcohol, tobacco and in general probably unhealthy stuff.
But to tax food and water? Are these politicians fucking morons? How the hell are we "fighting poverty" if we have a 20-25% VAT tax on food and water, which most poor people desperately need?
They are complete morons, the VAT tax as it is has to be eliminated as well. You could perhaps keep the taxes on unhealthy stuff, but not on general items.
I also don't agree on putting taxes on electronics. The prices of computers are going down sharply, but these morons are increasing the taxes on them just to cash a few bucks on it.
It is disgusting to see such an exploitation of the free market. While the free market naturally creates deflation, the political system is so corrupt that it increases the taxes on it, so the general consumers won't feel the cheapness, and then blame the high prices of the free market. It's disgusting.
Now look some computer parts do have hazardous materials in them like mercury, arsenic and other heavy metals. So a good recycling system is definitely needed, perhaps funding research to actually replace these particles with something more healthy.
But just taxing and looting everything on every single product you buy is disgusting. Especially if it's a VAT tax on health services like the dentist or a gynecological consultation.
The Government is not helping your health by making your health consultations 30% more expensive!!
Import Taxes
While there are some arguments that protectionism saves local businesses so it would be good if imports were discouraged and only local products were encrouraged...
I think this is stupid Nationalism, and it makes no sense. Okay it could work for food, all countries could produce their own food, so it might make sense to tax foreign food imports.
But that's pretty much it. Wonder why there are no High Tech Computer Chip Manufacturers in Albania?
Well it is because to create a computer chip you need resources from all over the world that are only found in a few countries like USA,China,Russia,etc…
If you were to ban or discourage imports, you would literally end up like Venezuela or Cuba or North Korea, which have embargoes on them.
So I am all for Free Trade, and I mean real free trade not this Corporate TPP kind of Copyright/Patent Cartel that we have right now.
A true Global Free Trade would also mean abolishment or relaxation of some of the strict IP Laws, which are disastrous for developing countries.
So it’s not just that import taxes should not exist, but neither should some of the IP Laws either.
Environmental Taxes
I am a friend of the environment so I might agree to some restrictions and taxes on some of the commodities.
It is no doubt that the fossil industry creates massive pollution, but it’s not just that, even the gold mining is also pretty bad for the environment and the local wildlife.
And these taxes are not even that big, it’s like 2-3%, I think that can be tolerated if you own or invested in these things. It is the cost to offset the harm they are inflicting on the environment.
I own gold and I own a car, but I would really like to see my grandchildren not have to wear gas masks if they go out to the street and don’t have to drink from a water filtration system due to the polluants that are dumped into the river.
So it would be nice to see a Green Earth.
Inheritance Tax
So the main justification for the Inheritance Tax is to curb “Elite Families” from passing their wealth down from generation to generation. But they do it anyway through offshore schemes, and actually most people that are affected by this are ordinary average citizens who’s parents that just passed over have saved up some wealth.
So your parents die and they worked hard all their lives to have a nice little house with a beautiful garden, debt-free, and some cash in the bank.
Well you can’t get the house until you don’t hand over half of it to the Government, so what happens is that most of the time, they have to sell the house, and pay half of it over, or they take out a mortgage to pay off the Government.
It’s really disgusting. Hard working people saving up for their children, and then half of it is taken away.
It’s really hard for me to justify any taxes, because I can’t, but if you really must make a case for an Inheritance Tax, then it must be progressive.
Like no Inheritance Tax under 100,000 EUR. Sure if a bankster dies and he has to give up half of his gold vault that he earned through interest rate manipulation and fractional reserve banking, sure maybe he can handle that, but I don’t think it’s reasonable to take away the legacy of a hard working family from their offsprings.
Social Security
Well in it’s current form the Social Security system is a Ponzi Scheme. It has a stupid premise that new taxpayers will always come and pay into the system. New investors pay out old investors, a literal Ponzi Scheme.
Which is hard to imagine given that jobs are scarce, and people barely earn anything, not to mention that the inflated Stock Market can crash at any moment, and the Bond Market in which most Pension Funds are invested are scams as well.
The best returns currently are in cryptocurrencies.
While it is very good to save up for your old age, in my opinion it should be done in crypto.
I can easily see a blockchain based decentralized (not Government run) Social Security system in the future.
Both the Stock and the Bond market has to be left in my opinion, they are unsustainable and if people hold assets in these in the long term they will be wiped out.
Healthcare
Again this shouldn’t be Government run either. All monopolies are corrupt. So naturally a healthcare monopoly will be inefficient, expensive and of low quality. Government run healthcares like the hospitals in Communist Cuba where you literally have cockroaches in the surgery room and brown water flowing from the tap, and are not the Socialist Utopia that people imagine.
A private healthcare system is of high quality. It may be expensive, but trust me if not for all these taxes, people could afford it.
If the problem is the cost, then you should let the free market out of the bag, and turn the costs down, just as with the electronics industry.
You’d probably have healing pods by now, like in those Sci-Fi movies, if Capitalism would be in charge of the healthcare system. And it would be so abundant like computers.
People really have to understand that only Capitalism creates technological innovations.
Property Taxes
I personally have no problem with the concept of a property tax. You are either sovereign, which means that you are your own “State”, which means that you have to take care of the defense of your own property, which might be very impractical. I mean you can’t have your own army regiment to defend your 20 acre farmland.
So some kind of collective defense is needed, perhaps an entire city or just a neighborhood would organize their own defense and protection.
So naturally Property Taxes are to fund:
- Emergency services (paramedics, firefighters, community police, wildlife services,etc..)
- Military
- Community events (festivals, things like decorating the place for Christsmas,etc..)
I do not include here the Government Education. I know that currently Property Taxes fund the Schools too.
Well I don’t agree to a Government run Education System, it’s the same issue as with healthcare. It’s horrible, ineffective, a total waste of time, and it actually has a nefarious goal. It is meant to indoctrinate and enslave people, and not to empower them with knowledge and teach them how to be a free and successful people.
Business Taxes
I don’t know how exactly this should be made more appropriate, but this would perhaps be the bulk of the income of the Government, so it should be the size of what the Government should be.
If the economy would take off, then we would not need a lot of waste that the Government is spending on, so this could be reduced as well, but this would be reduced the last. First we need to sort out the other stuff.
I think a healthy Business Tax should be between 5-10%, perhaps lower after the economy really takes off.
Inflation
Well this is obvious. Fractional Reserve Banking has to end. So cryptocurrencies should be the de facto money.
Still you have demurrage of the system. The system has to be sustained somehow, so you have cryptos that are sustained by transaction fees, and you have cryptos that have no coins limit and endless inflation (Ethereum, Doge, etc…), funded through the block rewards.
I think there is some corruption there. For instance in Bitcoin you pay an enormous fee, but the miners are also funded by the block rewards. This is bullshit, it should be either or, not both.
So it is my opinion that whichever you choose it should only be one. In Steem, you have an inflation based demurrage, while in Bitcoin, after 2100, you will have a TX fee based one. We shall see which one will perform better.
However thank God you don’t have fractional reserve system here. But don’t trust centralized exchanges, they might be running their own ponzi schemes.
Mandatory Insurance
Looks I am not a fan of coercion, but until people become responsible adult beings and not childish monkeys, some of their behavior has to be steered away towards responsibility.
I suspect the Government Education system is at fault here, that indoctrinates people into obedience and doesn’t teach people how to be critical thinkers, free successful and responsible people who are based on reason and logic.
Whatever the cause is, people do make mistakes out of an irresponsible behavior, and some of those mistakes can be fatal from a financial point of view.
So having an insurance on your home, your car, your business and even on your health should be there, especially if you have a low cash flow financial situation.
You make a traffic accident and you owe 60,000$ to the victim or you go to jail… Well nobody can pay that up upfront, but the insurance system could.
And if you are a responsible driver, then the insurer will lower your monthly rate, so you will be incentivized into responsibility.
Again it should be the school’s job and your parents job to teach you that, but at least this way you get another chance if you make mistakes.
The problem with insurance is that it has to be transparent. An insurer can’t insure a bank that is engaged in fraudulent fractional reserve ponzi schemes, that is why in 2008 many insurers went bust.
So before we can have a transparent insurance system, we have to have transparency in the activities as well.
Conclusion
So this is my opinion about the tax system. Again it would be preferable if there would be no taxes, but that is a far distant reality and we need to deal with the present situation.
I think my tax system would be much less burdensome, it would actually create positive incentives, and can actually be implemented if there were enough Libertarian support behind it.
So the Tax System would look like this:
- Property Tax:
- Estate/Land Tax = 2-4%
- Commodity Tax (precious metal,oil,etc…) = 2-4%
- Vehicle Tax = 2-4%
- Green Tax (on hazardous materials,recycling, etc..) = 5-10%
- Unhealty Tax (additional taxes levied on tobacco,alcohol,etc…) = 20-30%
- Inheritance Tax = progressive, no tax under 100,000 EUR, scaling tax above that up to 50%
- Business/Corporate Tax = 5-10%
- Mandatory Insurance (car, property, business ,etc…) = rates allocated by your risk level
And the Government really has to itemize it’s budget, so each tax category would only fund their respective projects, and if there is no more money, then that thing can’t be expanded.
This is to make things self-sustainable, limited and “financially quarantined”. We don’t need deficit spending.
So the Government must restrain it’s spending below it’s income, and should funnel the difference into a Sovereign Wealth Fund from which’s profits can be used to fund further research and development, grants ,etc…
Let me know in the comment section what do you think about this proposal.
Sources:
https://pixabay.com
It makes sense. Would be better than it is today, but I really don't like scaling taxes. I think it's important to follow the principle of both the law, and taxes being the same for everyone. No matter how much you work, gender an so on.
Or else, it acts like a punishment for being successful. One thing is the tax, another thing is the unequality to the law morally.
In Norway we have several very destructive taxes when it comes to income and wages.
On top of the normal income tax, the business pays 14,1% of the workers sallary in "employers tax". This tax is acctually 0 in areas the goverment regard as difficult to stay in business. Remote areas.
If you have two jobs, the second job will be taxed 50% no matter what (with the additional "hidden" 14,1%.)
We do have a high income scaling tax dirtranslated to "top tax" on high annual sallary.
As one could wonder; tax on alcohol and sigarettes (unhealthy tax) are ment to make us smoke less, drink less and so on. Especially when it comes to the employers tax I think one could ask if this tax is ment to make businesses employ less? Because when it comes to the other taxes, it is pretty obvious that their effect is that people wont work as much as they would have otherwise.
Myself, I am a fan of flat tax on the path to no taxation.
Well if we want to be morally consistent then there would be no taxes at all.
But my article talks about a practically achievable and better solution compared to what we have now, not an ideal moral one which might never come.
If you haven't read my article, I have said that I would prefer the abolishment the income tax entirely.
I only made a case for a progressive inheritance tax, if some people were concerned that some of these noble families could amass huge fortunes by passing down their wealth over the centuries.
If that is a concern then an inheritance tax is needed, but only for the very rich, not for ordinary people.
Other than that, everything else should be as low as possible.
And if there is no income tax, then nothing is stopping people from achieving huge fortunes. Perhaps with an inheritance tax giving some of it back, since their offsprings might not deserve the huge fortune since they did nothing to achieve it, to sort of restore balance.
To open for scaling taxes of the richest is to some extent saying those that claim the richest has to be taxed more are right. Don't know if it is a term in english, but in Norway we say; equality to the law. This is a very good principle as it is also removing bureaucracy in the tax system.
I did read your article.
When it comes to "rich people death tax" it is in reality not needed. It is acctually pretty rare even in todays society that the kids are able to hold the capital in many generations. There is multiple reasons for this happening. There is obviously some exceptions to this but those that has been able to teach the offspring good culture and economic understanding should be awarded of successfully tranfering good knowledge and learning to their decendants.
I agree with you. That is why I wrote that paragraph in a hypothetical tone.
It is obvious that the spoiled kids of rich parents will waste their money away no time. So the balance can be restored naturally, doesn't have to be taken away forcefully.
The offsprings of a succesful parent will never be as good as he is, even the IQ levels even out over time. So whether through excessive partying, chasing women, or just pure bad investments, he will guarantee to lose most of the fortune of his parents.
If you really think about it, there is actually no reason for taxation at all. If it's not moral then it's most likely not logical either.
The only reason I wrote this post is to just provide an intermediary roadmap, until we really get to a voluntary society.
You can't get from A->B immediately, so some of it can be scaled down in the meantime.
But in the end the free market will be a zillion times more efficient than any centralized monopoly system.
Agreed. Hey, it's not our money anyway unless it was stolen :)
There is another perspective: countries are people farms. The oligarchy is composed by those in the deep state and some corporations. Their objective is to impoverish so we are forced to sell what we have at low prices or/and be it selling property or our time. Then the tax model is set up to prevent people from retiring while they are still useful. In this perspective tax policies are too good.
Presidents and Prime Ministers are from the oligarchy group. Candidates are made fun of when they are genuinely democratic, and they don't get into government. The one who writes the rules during play wins the game.
It's fun to think about, but states grow themselves. It's their thing.
Even if you achieved this, it'd be a twisted, vicious counterfeit version inside 10 years.
We can organise to do important things without attacking and threatening each other.
When you plant that seed, that it's occasionally justified at a very small level, the eventual garden full of weeds is inevitable.
Remember, everyone thinks they're a minarchist.
They just want the state to do the few things they consider important.
I agree on the fundamental issues, but still the Government has te be shrinked somehow. You can't make it go away overnight, that will result in total chaos.
But with a decent taxation system and a really informed population that does strive for liberty and personal responsibility.
Then over a couple decades the Government can be pushed back into a minimal size, perhaps to zero.
But it can't happen instantly.
Here's a reasonable tax system for you...
An opt-in tax or you could call it volunteered tax.
In this system the only person's who get taxed are the ones that voted for what-ever tax is proposed - and only for the taxes they voted for.
If some celebrity thinks it's a good idea to have a 90% income tax, good for them. Their income will be taxed at 90%. Or a business owner wants to pay 10% VAT, let them pay that. Everyone else who didn't want to vote for such a tax don't have to pay a cent.
Essentially every person should decide for themselves what a fair tax rate - and fair type of tax - would be for them.
I'm about 999% (Yes, one thousand percent minus one) sure that no government on Earth will ever want to adopt a system like that - because almost no-one will pay taxes...
But one can dream at least...
It is a nice proposal, but it's not reasonable.
In the current political climate we will never have a voluntary society. The best we can hope for it to tackle some of the worst political mistakes that we inherited from our parents and grandparents.
I am very optimistic about blockchains, I think it can eliminate a lot of corruption and make things more clean.
But even with the best efforts, it might take centuries until we really have a decent voluntary society.
It takes a lot of time and effort to build up the free market, and to defend it, since every parasite wants to cash in a buck on other people's successes.
Like I said, no one would go for a system like that, we can only dream about it.
I don't think that is the right approach, I don't think freedom has to be drilled into people's heads.
It has to come naturally from within, so society, perhaps over time, will be shaped to be more voluntary.
We already made a lot of progresses in the past 1000 years, so it is an ongoing phenomena.
If the free market is let out of the bag, then eventually it will replace all ugly monopolies, and by then nobody in their right minds would choose the monopolist over the competitor that brings quality service for a cheap price.
The only thing that needs to be done at that point is to defend it.
The more valuable the economy it is, the more parasites it will attract. That is the big issue.
Thanks for your work as well! Followed @profitgenerator
There is another perspective: countries are people farms. The oligarchy is composed by those in the deep state and some corporations. Their objective is to impoverish so we are forced to sell what we have at low prices or/and be it selling property or our time. Then the tax model is set up to prevent people from retiring while they are still useful. In this perspective tax policies are too good.
Presidents and Prime Ministers are from the oligarchy group. Candidates are made fun of when they are genuinely democratic, and they don't get into government. The one who writes the rules during play wins the game.
Well people have a long history of oppressing others, even themselves and their environment. So what can we expect...
I enjoyed this, thanks