On Taxation and a Workable Strategy

[Badnon Wissenshaftler]

I'd like ideas on the elimination of taxation moving forward.


Now, though of course I like the idea of elimination of taxes, the issues stand:

Are we to still have a Federal Government?
Are we to still have an America?

I understand there will be anarchists out there who will simply say "no", and I understand that. But I don't think, for the life of me, that as a society, we're anywhere near the abolition of state. Why? We started out pretty decently with the advent of America, and were closer then. Most people were more independent, self-reliant, and quite frankly, more courageous and had more grit. We've moved further from "statelessness", not towards it.



Also, taxation is theft. I get it.

BUT, if the answer is "yes", which I believe it has to be, while we walk the social paradigm back from the brink of hopelessness, how could the federal government be funded?

There is the Fair Tax, which seems like a top replacement strategy for the income tax, except that I think it would, perhaps, be more onerous than the current income tax for most of us. If you've never investigated:

"It would require the repeal of the 16th Amendment, and it would disband and defund the Internal Revenue Service (IRS). A 23% sales tax is regressive because it impacts the poor the most. To make it more progressive, the Fair Tax Act proposes that all Americans receive a monthly “prebate," which would be equal to the 23% tax on the monthly cost of living at the poverty level. According to the Department of Health and Human Services, the poverty level for a family of four was $24,600 in 2018, so the prebate would be $5,658 a year."

https://www.thebalance.com/what-is-t...effect-3305765

My problem is this: This might seemingly backdoor something much more pernicious than even the Income Tax. It might just necessitate that the Feds track each and every purchase made by anyone in the US. Think about it.

Now, some have proposed the simple elimination of the Income Tax, altogether.



Those who advocate for the abolition of the income tax, yet still believe we can fund a Constitutional government (which is possible), say the revenue would come from other areas such as tariffs, property taxes, consumption taxes, such as what you see here:




But I propose this: Within all of these taxes, something insidious stirs. That is, the Federal Government keeping a tally of everything you own, the transactions you make, and what you earn.

I have a different idea.

How about an actual flat income tax, and that's it. And not a flat rate, but a flat sum. I propose that anyone making more than poverty level pays, let's say, $2,500. That's regardless if you are a CEO or a waitress. Sound unfair? Well, a CEO pays the same as a waitress for a gallon of milk, a gallon of gasoline, and the same for any identical good or service. So, given that they should receive the same "protection" (military, etc) for their taxes, why don't they pay the same for this "service"?
If there are 140 million employed Americans above the poverty line, this would bring the gov't a sum of $350 billion a year, which I would contend is enough to have a plenty powerful military, as well as provide for a Constitutional federal government.

Paying down the national debt and making payments on the interest to that debt is quite another matter, of course. Many might suggest that the Fed "get bent", as it isn't "our" debt, as we didn't sign a damn thing. Fine plan, but good luck with that, of course. Jo Jorgensen has proposed selling off the governments assets to pay down the debt, which is an idea with merit.


The most important ramification of the above plan is that the gov't no longer will have the power to meddle in the affairs of the populace using taxes as a weapon, or a "king-maker". The only thing they would need to know is if an individual makes above or below what is considered "poverty level". For most people, this would save them thousands a year in taxes, and many people tens of thousands. Also, with zero in "corporate taxes", businesses the world over would flock here to do business. Want to level the field with China? Forget their endless subsidies. Those will only be their undoing. But I digress...


Now, on to the lively discussion!

[Badnon Wissenshaftler]

TL;DR:

I propose an actual flat income tax, and that's it. No other taxes/tariffs. And not a flat rate, but a flat sum. I propose that anyone making more than poverty level pays, let's say, $2,500. That's regardless if you are a CEO or a waitress. Sound unfair? Well, a CEO pays the same as a waitress for a gallon of milk, a gallon of gasoline, and the same for any identical good or service. So, given that they should receive the same "protection" (military, etc) for their taxes, why don't they pay the same for this "service"?
If there are 140 million employed Americans above the poverty line, this would bring the gov't a sum of $350 billion a year, which I would contend is enough to have a plenty powerful military, as well as provide for a Constitutional federal government.

[Sonny Tufts]

If there are 140 million employed Americans above the poverty line, this would bring the gov't a sum of $350 billion a year, which I would contend is enough to have a plenty powerful military, as well as provide for a Constitutional federal government.

Since interest on the national debt is $378 billion for FY 2021 you'd be in the hole from the start.

[tod evans]

TL;DR:

I propose an actual flat income tax, and that's it. No other taxes/tariffs.

And how do you intend to enforce such an edict?

Government "workers" draw from the kitty instead of actually producing and marketing something and you'll most certainly need more of them in order to implement the collection of, and punishment for, non-payment of, your proposed tax....All this means an ever expanding pool of tax-ticks which as we're seeing only causes problems.

Much better to cut spending, ALL spending! Then try to figure out how to pay for what's required.

Wars overseas aren't required, social programs aren't required, the "Just-Us" system as it stands isn't required, subsidies and all of the associated "workers" who manage these programs are not required..

Let's talk about fair.............Ask those who produce exactly which government services they are willing to provide financial support for and then make the support dependent on government providing said services at the agreed on price.

When the tax-ticks wear suits-n-ties they're no better than those who languish in squalor.

Government is too big and it doesn't represent any specific group of people well, so instead of trying to fund what's broken maybe try redesigning/shrinking government before funding.

[r3volution 3.0]

I propose an actual flat income tax, and that's it. No other taxes/tariffs. And not a flat rate, but a flat sum.

The cost to society of a tax is the revenue received plus public administrative costs (e.g. salaries of IRS employees) and private compliance costs (e.g. what a company pays its tax attorneys and accountants). The goal should be to make taxation as efficient as possible: i.e. reduce administrative and compliance costs as much as possible in relation to revenue generated. E.G. A tax that generates $100 billion and costs $1 billion is better than a tax that generates $100 billion and costs $5 billion, as it the overall cost to society is $4 less for the former than for the latter. That's $4 billion worth of land, labor, or capital which can be used for some other, more productive purpose: e.g. the people spending their days browsing the tax code are released for other, more productive work.

What kind of tax is most efficient? It certainly isn't income tax, which has appallingly large administrative and especially compliance costs (hundreds of billions per year!). Your suggestion, a capitation tax, is vastly more efficient. There's no compliance costs at all, other than perhaps checking the .gov site to find out what the current year's sum is going to be, and the administrative cost should be low as well, especially is the sum is small and there's no much incentive for evasion. The only problem with capitation tax is that there's a pretty low limit to how much revenue it can generate and, depending on the particulars of the time and place, that limit might be too low to fund even a minarchist government. The limit is defined by how much the poorest people can pay. Now, there could be exemptions, e.g. for people without fixed residence, which would allow the sum to be increased, but that reintroduces some administrative and compliance costs (i.e. the cost of figuring out who does and does not get this exemption). Real estate tax is similar: extremely efficient so long as a fixed rate tax will generate enough revenue (less efficient if you have to introduce exemption or graduated rates). When neither real estate nor capitation in their pure forms alone can yield enough revenue, an option would be to combine them, allowing each to remain a lower rate, but overall generate the needed revenue.

[Badnon Wissenshaftler]

Since interest on the national debt is $378 billion for FY 2021 you'd be in the hole from the start.

That is part of the conundrum as addressed in the unabridged version of my post. Possible solutions, to summarize, are to tell the Fed to "get bent", which might turn out to be a bit uncivil?..

Or, perhaps, the best idea is to sell off the governments assets to pay off the debt as well as can be done.

[Badnon Wissenshaftler]

And how do you intend to enforce such an edict?

Government "workers" draw from the kitty instead of actually producing and marketing something and you'll most certainly need more of them in order to implement the collection of, and punishment for, non-payment of, your proposed tax....All this means an ever expanding pool of tax-ticks which as we're seeing only causes problems.

Much better to cut spending, ALL spending! Then try to figure out how to pay for what's required.

Wars overseas aren't required, social programs aren't required, the "Just-Us" system as it stands isn't required, subsidies and all of the associated "workers" who manage these programs are not required..

Let's talk about fair.............Ask those who produce exactly which government services they are willing to provide financial support for and then make the support dependent on government providing said services at the agreed on price.

When the tax-ticks wear suits-n-ties they're no better than those who languish in squalor.

Government is too big and it doesn't represent any specific group of people well, so instead of trying to fund what's broken maybe try redesigning/shrinking government before funding.

Your concerns are also, at least somewhat addressed, in the unabridged version of my post.
I happen to agree with your thinking. My proposed "solution" is only viable after a significant amount of redesign and shrinkage of the government.

[tod evans]

Your concerns are also, at least somewhat addressed, in the unabridged version of my post.
I happen to agree with your thinking. My proposed "solution" is only viable after a significant amount of redesign and shrinkage of the government.

I'm in for redesigning and shrinking government so long as the redesign removes power and the shrinking involves both personnel and budget.

[Badnon Wissenshaftler]

The cost to society of a tax is the revenue received plus public administrative costs (e.g. salaries of IRS employees) and private compliance costs (e.g. what a company pays its tax attorneys and accountants). The goal should be to make taxation as efficient as possible: i.e. reduce administrative and compliance costs as much as possible in relation to revenue generated. E.G. A tax that generates $100 billion and costs $1 billion is better than a tax that generates $100 billion and costs $5 billion, as it the overall cost to society is $4 less for the former than for the latter. That's $4 billion worth of land, labor, or capital which can be used for some other, more productive purpose: e.g. the people spending their days browsing the tax code are released for other, more productive work.

What kind of tax is most efficient? It certainly isn't income tax, which has appallingly large administrative and especially compliance costs (hundreds of billions per year!). Your suggestion, a capitation tax, is vastly more efficient. There's no compliance costs at all, other than perhaps checking the .gov site to find out what the current year's sum is going to be, and the administrative cost should be low as well, especially is the sum is small and there's no much incentive for evasion. The only problem with capitation tax is that there's a pretty low limit to how much revenue it can generate and, depending on the particulars of the time and place, that limit might be too low to fund even a minarchist government. The limit is defined by how much the poorest people can pay. Now, there could be exemptions, e.g. for people without fixed residence, which would allow the sum to be increased, but that reintroduces some administrative and compliance costs (i.e. the cost of figuring out who does and does not get this exemption). Real estate tax is similar: extremely efficient so long as a fixed rate tax will generate enough revenue (less efficient if you have to introduce exemption or graduated rates). When neither real estate nor capitation in their pure forms alone can yield enough revenue, an option would be to combine them, allowing each to remain a lower rate, but overall generate the needed revenue.

Thank you for your insight and for giving the idea a name in "capitization tax". I'm a scientist, not a political theorist, so I don't know a great deal of this nomenclature.

As far as funding a minarchist government: Russia's tax revenue for 2020 stands to be around $365 billion, and they plan to spend around $314 billion, according to this:

https://www.rbth.com/business/331534...an-budget-2020

Now, I know we have roughly twice the population, but much of what Russia's government is doing probably would not be considered "Constitutional" by our standards. To summarize, I think $250 billion for a military is quite adequate (excessive), which leaves $100 billion for "other", in my example. Also, this is simply the Federal Gov't I speak of here, which leaves the states to collect their own revenue.

[r3volution 3.0]

Thank you for your insight and for giving the idea a name in "capitization tax". I'm a scientist, not a political theorist, so I don't know a great deal of this nomenclature.

As far as funding a minarchist government: Russia's tax revenue for 2020 stands to be around $365 billion, and they plan to spend around $314 billion, according to this:

https://www.rbth.com/business/331534...an-budget-2020

Now, I know we have roughly twice the population, but much of what Russia's government is doing probably would not be considered "Constitutional" by our standards. To summarize, I think $250 billion for a military is quite adequate (excessive), which leaves $100 billion for "other", in my example. Also, this is simply the Federal Gov't I speak of here, which leaves the states to collect their own revenue.

I'd say that's about right.

Here's an estimate for "other" that you might find interesting:

The grand total is then $171 billion per year, which is a 97.5% reduction from current non-defense spending, or about half of what is spent annually on interest on just the federal debt. What does this mean in term of taxes? The value of all residential and commercial real estate in the US is estimated at $33 trillion and $16 trillion, resp. A real estate tax of slightly more than one-third of one percent would fund this minarchist government. That would be comparable to the lowest property tax rates in the country at present. Alternatively, a capitation tax of about $522 per year would suffice.

http://www.ronpaulforums.com/showthr...all-Government

[Sonny Tufts]

Real estate tax is similar: extremely efficient so long as a fixed rate tax will generate enough revenue (less efficient if you have to introduce exemption or graduated rates).

A federal real estate tax would be a direct tax that under the Constitution would have to be apportioned -- i.e., the revenue collected from each state would have to be in proportion to its population. But since real estate values aren't distributed among the states by population, the result would be different rates in each state, with landowners in value-poorer states paying a higher rate than those in higher-value states. This would make such a tax politically difficult if not impossible to enact.

[Badnon Wissenshaftler]

I'd say that's about right.

Here's an estimate for "other" that you might find interesting:



http://www.ronpaulforums.com/showthr...all-Government

So, I was wrong. You said 'capitation' not 'capitization'. Whoops.

I discovered through the omniscient Wikipedia that capitation taxes are both a biblical phenomenon and mentioned in the original Constitution, unlike the income tax:

Article 1, Section 9: "No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken".

Also, I discovered that another somewhat equivalent name for this is a "poll tax", though that seems to be used for other schemes, such as actually making people pay the tax AT the polls, before you vote. Why this reminds me of a song from my youth, and look, this video is a bit reminiscent of recent times:



Looks like they weren't following the "captitation-tax-only plan", haha. Also, possibly not excluding sub-poverty citizens, though I'd have to check on that.

[Badnon Wissenshaftler]

@jmdrake

Again, I'm still dizzyingly busy, but I'd like to invite continued discussion here.

The most appealing portion of the tariff / user-fee idea comes from what you said here:

Nobody puts a gun to your head and tells you that you must buy from an import / export cartel. You can buy local or you can travel yourself and buy tariff free.

Also, I see the point of paying for protection of the trade routes, and opt for cargo ships bristling with .50 cals.



Now, in the fantasy land in which any of this is accepted in place of the leviathan government and it's omnipresent tentacles, tariffs would be much easier to "sell" because it is perceived to be happening to someone else. There is psychological appeal.

I also have much less of a problem with tariffs if they're low and broad-spectrum. Selective and punitive tariffs are to be abhorred, and such is my aversion to excise taxes as well.

One of the first taxes in US history was Hamilton's tax on whiskey, and it reasonably resulted in the Whiskey Rebellion. After all, why the f**k should whiskey producers solely be saddled with paying down all the debt of the Revolution? Because "that's where the money is"? It continues everywhere to this day, with taxes being selective and punitive. Yes, legalize marijuana, but "tax the hell out of it!", some say. And, of course, the best way to avoid such taxes and tariffs is to be politically connected. Do well enough at that, and other people's tax money flows to you not from you.

Now, perhaps it would be happening to someone else, if one does as you've said and dodged the tariffs by buying locally. Attempting to buy more locally is something I've done, with ever increasing difficulty, for many years.

I agree about China's slave labor and apparently so does the Orangeman. I think people have a moral obligation not to buy from $#@!s, not that I've been perfect in that endeavor. Like you, I also bought N95 masks a little while back. From eBay, these 3M masks carry the "Made in the USA" label, or more accurately, "Made in the USA of US and globally sourced materials". Hopefully that's close enough. (Also, for the record, the purchase was made so I could have masks for protection during various general labor tasks, not for Coronamania 2020)

That said, what if the "buy local" idea caught fire? What if everyone really did start buying more locally? That would mean that tariff revenue would plummet, and the feds would be hurting for cash (Oh nooo!).

One appeal towards the capitation tax is that it could be implemented in a way in which Congress would have to make a budget ;o and announce that budget, and then tell everyone in the nation what they were expected to pay. A bloated budget would then piss people off, in a way that today's complex tax system obfuscates.

Now, another thing you said:

Cartels are typically led by groups of individuals. Still corporations fought for the right to be treated as a collective. But I'm all for doing away with corporate personhood.

Well, yeah. Along with that, a capitation tax would treat everyone as individuals. No special treatment. No loopholes and lawyer assisted dodges. That said, taxes would still be far less.

Is a capitation tax tyrannical? Is it wrong to tax someone just for being alive and above the poverty line? Also, is it a regressive income tax?

Well, I'm by no means rich. Maybe lower middle class, and I busted my arse even to arrive here. But I'll tell you, I pay several times $2500/year in income taxes in recent years, and if were suddenly to have to only pay $2500, that would be f**king PROGRESS, my friend, not regression, and the majority of working people would agree. Of course, it would seem even more appealing to only be paying seemingly distant and nebulous tariffs, so I'll give you that.

Now, worthy of note is that, according to this, someone in Arizona, making minimum wage ($12 here), would be paying $2500 at the current income tax rate, only working about 35 hours/week ($21,500/yr). So, anyone working full time here would already be paying more.

Taxation seems pretty tyrannical, period, but there are ways that make it seem less so, or make it less so, usually to some. Yes, I don't want to be taxed for being alive. I'd probably just rather wait for a Red Dawn scenario that never arrives, but perhaps I'm being foolish.

I'm sure I have a bit more to say, but, speaking of working, I must get back to doing so!

Quickly, I don't have problem with a "user fee" arrangement, though, if so many things the gov't does were privatized, that would be exactly the state of affairs.

[jmdrake]

@jmdrake

Again, I'm still dizzyingly busy, but I'd like to invite continued discussion here.

The most appealing portion of the tariff / user-fee idea comes from what you said here:



Also, I see the point of paying for protection of the trade routes, and opt for cargo ships bristling with .50 cals.

That would be way cool!

Now, in the fantasy land in which any of this is accepted in place of the leviathan government and it's omnipresent tentacles, tariffs would be much easier to "sell" because it is perceived to be happening to someone else. There is psychological appeal.

I also have much less of a problem with tariffs if they're low and broad-spectrum. Selective and punitive tariffs are to be abhorred, and such is my aversion to excise taxes as well.

One of the first taxes in US history was Hamilton's tax on whiskey, and it reasonably resulted in the Whiskey Rebellion. After all, why the f**k should whiskey producers solely be saddled with paying down all the debt of the Revolution? Because "that's where the money is"? It continues everywhere to this day, with taxes being selective and punitive. Yes, legalize marijuana, but "tax the hell out of it!", some say. And, of course, the best way to avoid such taxes and tariffs is to be politically connected. Do well enough at that, and other people's tax money flows to you not from you.

The whiskey rebellion was indeed a travesty. On marijuana I don't get the "Don't legalize it because it will be taxed" crowd. Everything gets taxed. I think the perfect should not be the enemy of the good.

Now, perhaps it would be happening to someone else, if one does as you've said and dodged the tariffs by buying locally. Attempting to buy more locally is something I've done, with ever increasing difficulty, for many years.

Yes. Because we've adopted government policies that reward exporting manufacturing. About the only thing the left and the right seems to agree on is cutting taxes on imports while increasing taxes and regulations on everything else. It's like the "lead paint" scare from a few years ago. Even though all of the lead paint toys came from China, only U.S. manufacturers were burdened with lead paint testing regulations.

I agree about China's slave labor and apparently so does the Orangeman. I think people have a moral obligation not to buy from $#@!s, not that I've been perfect in that endeavor. Like you, I also bought N95 masks a little while back. From eBay, these 3M masks carry the "Made in the USA" label, or more accurately, "Made in the USA of US and globally sourced materials". Hopefully that's close enough. (Also, for the record, the purchase was made so I could have masks for protection during various general labor tasks, not for Coronamania 2020)

February - July was a crazy time period. Masks were like paper gold.

That said, what if the "buy local" idea caught fire? What if everyone really did start buying more locally? That would mean that tariff revenue would plummet, and the feds would be hurting for cash (Oh nooo!).

Don't throw me in the briar patch Mr. Fox! (Brer Rabbit).

One appeal towards the capitation tax is that it could be implemented in a way in which Congress would have to make a budget ;o and announce that budget, and then tell everyone in the nation what they were expected to pay. A bloated budget would then piss people off, in a way that today's complex tax system obfuscates.

You're assuming that we also take away Congress' ability to raise the debt ceiling.

Now, another thing you said:

Cartels are typically led by groups of individuals. Still corporations fought for the right to be treated as a collective. But I'm all for doing away with corporate personhood.

Well, yeah. Along with that, a capitation tax would treat everyone as individuals. No special treatment. No loopholes and lawyer assisted dodges. That said, taxes would still be far less.

Corporations aren't about taxes. They are government constructs that protect individual's assets from liability. I'm pretty sure you get that. My point is corporations derive a specific benefit from the existence of government that individuals don't get. Should they not pay something for that benefit? I also look at copyright law and patent law. Those are government created monopolies that cost money to enforce. If corporations want the government to do something for them.....?

Is a capitation tax tyrannical? Is it wrong to tax someone just for being alive and above the poverty line? Also, is it a regressive income tax?

Well, I'm by no means rich. Maybe lower middle class, and I busted my arse even to arrive here. But I'll tell you, I pay several times $2500/year in income taxes in recent years, and if were suddenly to have to only pay $2500, that would be f**king PROGRESS, my friend, not regression, and the majority of working people would agree. Of course, it would seem even more appealing to only be paying seemingly distant and nebulous tariffs, so I'll give you that.

Now, worthy of note is that, according to this, someone in Arizona, making minimum wage ($12 here), would be paying $2500 at the current income tax rate, only working about 35 hours/week ($21,500/yr). So, anyone working full time here would already be paying more.

Okay. I ran an H&R block tax calculator. Someone making $25,000 a year ($4,000 more than your hypothetical example) would owe an estimated $638. That's without any dependents or any other deductions. So.....why should such a person have any motivation to go along with your $2,500 capitation tax? (See; https://www.hrblock.com/tax-calculator/)

Taxation seems pretty tyrannical, period, but there are ways that make it seem less so, or make it less so, usually to some. Yes, I don't want to be taxed for being alive. I'd probably just rather wait for a Red Dawn scenario that never arrives, but perhaps I'm being foolish.

I'm sure I have a bit more to say, but, speaking of working, I must get back to doing so!

Quickly, I don't have problem with a "user fee" arrangement, though, if so many things the gov't does were privatized, that would be exactly the state of affairs.

User fees FTW!