Monday, 5 March 2012

A Society Without Mandatory Tax

Hi guys, welcome to Orygyn!

So now that we've gone over the meaningless and seemingly endless argument over whether tax is theft, let's actually do something constructive. Let's contemplate the merits of taxation. How I want to do this is to pose a series of questions that I generate from my own examination of a hypothetical society without mandatory taxation.

First, government. Tax funds government. Government in turn funds the military, roads, emergency services, and, in most developed countries, healthcare. Now if mandatory taxation is immoral for whatever reason, the logical alternative is voluntary taxation. So now we have a system where people can pay tax if they want to, but they never have to. We now need to determine the conditions under which tax will be paid.

I walk into a supermarket, do my shopping and bring my items to the checkout. One possible method of taxing people would be a simple question asked by the cashier: "would you like to pay VAT?" The ideal person who's informed as to what tax is, where it goes, and understands the importance of the services the government provides will say "yes". However, there's already numerous problems with this scenario. How many people meet the ideal? What if you don't have much money? What if, like right now, there's a recession, or a general period of economic hardship? Even the homeless are refused by the majority of people, can anyone expect a less needy group of people to get even that much with much slower transactions (people walk by a homeless person, maybe 1 per second, people queue at the supermarket, if you're very very lucky, 1 person per minute)? I would reject this approach then, as it seems unworkable.

Instead, let's say that roads, emergency services, hospitals, the military etc. would be paid the same way they would be paid if a business owned them. Roads would be toll roads, the emergency services would be paid by you if and when you need them, you would either pay hospitals directly or implement the insurance option that the USA are using. Frankly, I'm lost as to how the military would be paid. Let's start with roads.

There's an immediate problem with tolls. All you need to do, as a driver, is to avoid the roads which have tolls on them. On large roads such as motorways (freeways) or dual carriageways, there are relatively few so you may be able to put a toll on all of them, but what about towns and cities? There are thousands of roads in towns and cities so it would certainly be impractical to toll every single 1. No-one would like having to stop at every single toll. If you don't toll every road, a toll must cover a few roads and it becomes a question of whether enough drivers would choose to pay the tolls to cover all the roads in the town or city or simply plan their routes to avoid them. This, then, would seem impractical.

What about a taxi-like system? You install every car with a meter that activates automatically on start-up. There's an upper limit on the meter and you have to pay for your mileage before the meter reaches that upper limit. This could be done at a petrol station for convenience and the money would be given directly to the government. I don't see this working either. First, a competent enough amateur mechanic, electrician, engineer etc. could disable the meter, although it could be argued that a competent enough government would notice when such a thing has happened. That would result in an Orwellian system where every car is monitored by the government though. The other problem is that it's no different to a customer paying VAT. If you're going to argue that it's theft to pay VAT on your items, even though you hand over the money yourself but that's irrelevant because you have to pay VAT to buy anything, it must also be theft in this scenario. If you want to use the roads at all, whatever you drive must be installed with a meter. The alternative is walk to work, which is OK if work is close, but what if you have to commute? The system would also push up the prices of public transport. All in all, I don't see this catching on.

I don't want this post to be long so I'll stop there with roads.

How about emergency services then? This could be done along the same lines as health: have your home and life insurance pay the emergency services. The problem here though is something I don't need to think about because it's already happening in America with health: the insurance companies are denying people insurance on the basis of them having a pre-existing condition. The exact same conditions could be used to deny you life insurance, and a house that is perceived to have too great a fire risk could be denied home insurance. There are a significant number of people arguing against universal healthcare in America but regardless of that, the insurance method has proven to be unworkable as millions are being denied insurance because of pre-existing conditions. Still, off the top of my head, I can't think of a better way that doesn't involve mandatory taxation.

Regardless of the huge problems I've presented already, there is still the issue of how we fund the military. We never come into contact with them on a regular basis. This is a stretch, but the only thing that comes to mind is corporate sponsorship. An existing business voluntarily gives a certain amount of money to the government to fund the military. It could really be used to fund anything paid for by the government. There are a few problems with this though. Without tax, there is no incentive a government could give the business to donate this money beyond their own encouragement, and so the amount donated might not be enough. The military's size would be adjusted to account for this, but what if it's still not large enough? It makes the government far more vulnerable to lobbying and so the military might be used to serve the interests of those businesses.

An anonymous libertarian commented on my post "Taxation: What's the worst thing it can be?" They said that taxation on property and on non-essential material items is fine because you can avoid having to pay such tax without being faced with a Hobson's choice and that there's an implicit understanding that having such rights is contingent upon the country's ability to defend itself. This is a far more reasonable position, although it will still mean a significant reduction in governmental income. It would be impossible to say where cuts would be made, but the important thing is that they will. Certain essential services might not be sustainable.

In conclusion, if you posit that mandatory taxation is immoral, it falls to you to posit a society that can function well without it. This alternative has to be practical and humane, otherwise however much you want the current society to tend towards your ideas, it will not have any chance of doing so. I've written this post pre-empting demands to "think about it myself and I'll see how it can be done". You can't say I haven't tried. My last post on tax was criticised for being "long winded" but I'm just being thorough. If people fail to understand my shorter answer, I have to spell it out so that they do understand. I've done so much of the work I expect from you for you. It is only fair at this point that I ask people who believe that mandatory taxation is immoral to come up with solutions to the problems I've posited where I couldn't. I've thought about it from your perspective for a week, you've almost definitely had your opinions on the issue for far longer. You should be more adept at developing a workable libertarian or anarcho-capitalist society than I am. So let's see what you guys can come up with. In all sincerity, good luck!


1 comment:

  1. Hello,

    My response to this post is somewhat long so I posted it on my blog: