matt | June 10, 2016
In talking with people about taxation being theft, the argument of “but we need taxes to pay for roads” (aka, the OMGMAHROADS! argument) often comes up. I’ve even had folks say, essentially, that “taxes are the price we pay for civilization”. The goal of this post is to articulate a plan where we can have civilization similar to what we do now, without it being supported on a foundation of violence, coercion and theft.
Since state laws vary, I will just contain this discussion to federal taxes, since they are common across the US.
If taxation is theft, then:
- The government may not collect income, property, excise taxes, or any other taxes which result in a seizure of “owned” property if taxes are not paid.
- The government may collect “usage fees”. For example, the government owns the roads, and can legitimately charge you for their usage. This is analogous to the electric company charging you for the line maintenance in addition to the electricity they sell you. Previously, these fees were collected with gasoline taxes, because the technology wasn’t there to charge people based on road usage. However, we now can do something akin to “EZ-Pass” but writ large. This is voluntary because, if you do not want to pay the tax, you can elect not use the service/utility/etc. However, while this is definitely a topic worth discussing in general, I will not discuss it further because it starts to get out of scope.
- By the above definitions, the government may conceivably collect “sales tax” on non-essential goods, because, if you don’t want to pay the tax, you could not purchase the goods. However, I will not put those in my plan because, to me, that pushes the edge of “voluntary”.
- The government may not take out loans as this represents a tax on future generations. Just as I cannot take out a loan and expect my children to pay, the government cannot take out a loan and expect future generations to pay. A possible exception here is “in time of war”, where the threat is so dire that there could conceivably be no future.
- The government may not play “the inflation game”. Assuming the current central bank and fiat currency model (again, another topic) the government may not inflate the currency supply except at a specific, predictable rate. For example, “the money supply expands and contracts at a rate equivalent to GDP growth and shrinkage”. This is because inflation is a hidden tax on savings, and therefore immoral, but you also want your money to supply to grow with the size of your economy in order to keep price stability (so that, absent market forces, etc. a chocolate bar is always $1, for example).
Plan A (the simple one)
Given the above constraints, we make the following changes:
- We eliminate the mandatory income tax.
- There are no tax returns, because paying taxes is not required.
- There are no deductibles, because there are no tax returns.
- At the same times where you would currently fill out a W-4 (basically, when you take a job and whenever you like thereafter), you fill out a similar form which states how much money your employer would withhold from your paycheck (percentage or dollar value) and those are remitted to the government.
- They do this already, so it is not an increased burden to them.
- They would not send out a W-2 because you don’t need it, because there is no tax filing. So, in all, it makes their lives easier.
- Self-employed folks can still pay quarterly, as they do now. Or yearly. Or whatever. It’s voluntary, so it’s not required.
- As happens now, money goes into the general fund and is apportioned off by the government to appropriate agencies via the conventional budgeting process.
- How will the government be able to operate if they don’t know what their budget will be ahead of time?
- They’ll have a good idea of what it will be, because they’ll have the receipts from Q1-Q3 to, in Q4, do the budget for the next year.
- Businesses deal with this variability all the time.
- What about Social Security?
- This deserves its own discussion, because Social Security reform can happen with or without the above. But, the super short version is “we make it voluntary except for a transitional period where some people will be forced to pay into it in order to pay off all of the people who have paid into this Faustian Ponzi scheme their whole lives”.
- What about Medicare/Medicaid?
- Now comes out of the general fund. I’ve never understood why it was under a separate line item on my paystub anyway.
- What about disability?
- Buy your own disability insurance if you want to, otherwise don’t. The government shouldn’t force you to do what is in your best interest, nor should it compete with private disability companies and unions.
- But we won’t collect the same amount of money we collect now.
- Then we’ll get exactly as much government as we are willing to pay for, and no more. The economics of “how much something costs” are totally divorced from the conversations these days, so people vote for the sun, moon and stars, and then complain at being taxed somewhere in the 60% range.
- I’ll pay, but other people won’t (the free rider problem).
- Do you really have such a low opinion of your fellow citizens?
- In reality, I think that most people who pay taxes now still would (though maybe not as much), and some rich people would pay more (and have said that they think their tax rate should be higher. This gives them the opportunity to pay more).
- What about corporations?
- I see no reason why the corporate tax couldn’t be replaced with a voluntary contribution either.
- But they spend the money on the wrong things!
- See “Plan B”, below, for an option which addresses this.
Plan B (the more complicated one).
So, this one takes Plan A and:
- Works the same way if you don’t care (puts all your money in the general fund)
- If you do care, you can file a separate form which works like a 401(k) election, and allows you to distribute your tax dollars according to your personal preferences as to where the money should be spent. You check the boxes for the things to which you want to give money, and fill out a percentage of how much you want to go into there. Must add up to 100%.
- How will program X get funded?
- Either out of the general fund or as a result of specific allocations.
- But most people don’t like program X, so it won’t get funded!
- If people don’t like it, why is it being funded now? (Hint: I bet someone donated to someone else’s political campaign!)
- Won’t this remove politician’s “power of the purse”?
- You say that like it’s a bad thing.
- Seriously, yes, a bit. On the one hand, they won’t be able to give out benefits to their friends, but, on the other hand, they won’t be able to clamp down on government agencies by limiting their budgets if the public specifically allocated them monies. However, the public would have to do that, and the main reason congresspeople investigate government agencies is because of their constituents pressing them to do so. Look at the Snowden revelations. If something like that happens and people like what those agencies do, they would get more money. If not, then they would get less. No congressional input required – it’s the most direct form of governance and oversight.
- All that choosing sounds complicated.
- No more than doing your taxes is now.
- You can also just use the default and kick it to the general fund.
- This is doing to lead to government agencies spending tons of money on advertising to get people to spend more on advertising in order to get the people to give them more money.
- Maybe, but they’d spend less on lobbyists (which is who they pay now so they can get more money) while at least being more straightforward and transparent.
- But then all these hippies wouldn’t fund the military and the terrorists would win!
- Maybe some hippies wouldn’t fund it, but I’m sure there are enough folks who believe in a strong military that they’d be willing to specifically check a box and earmark a ton of their contribution to the military.
- But then no one would fund the roads!
- I bet more folks would fund the roads than the military.