Citizens of Earth, I have a vision. Not an apocalyptic vision of massive solar coronal ejections bringing civilization to its knees, nor the dystopian diatribes I am so prone to level against the creeping doom of neo-socialist fascism. Nay, this vision is one of shining light, an elusive nova in my mind leading me down dark paths where others fear to tread. Finally it settles on the far horizon of my consciousness, resting over a lowly manger in which my philosophical savior lies - cold, naked and barely formed, but radiating a world-changing potential. Perhaps I exaggerate.

My vision, which likely is not nearly so new as I'd like to hope, given the virtual impossibility of having an original thought in a world where information is so pervasive, is that of a world (or at least a country) without taxation. Let me be clear from the outset - this concept is riddled with practical and philosophical holes, and is still little more than a slimy pupa in my mind, biding its time until it bursts forth as a butterfly of unparalleled magnificence. But incomplete and perilous as its present state may be, I proffer it here in the hopes that the collective wisdom of the blogosphere might prove to be just the heady mix of hormones my brave little changeling needs to complete its metamorphosis.

The concept itself is simple enough, born from having spent the better part of my formative years watching the nascent internet community experiencing the growing pains that accompany any awkward youth.

Within the mix of free content, soulless corporate flotsam, and epic innovation, there exist those foolhardy souls who persist at the sufferance of others. They offer some service, whether a webcomic, instructive video, or merely senseless blathering, and in exchange hold out their hands across the interweb, a bowl labeled “Paypal” grasped between their trembling digits, begging alms from those who would support their good works. The frightening thing is that this is often very effective.

Indeed, this method of virtual begging is so effective that non- profits like charities and political campaigns have made digital freeloading into big business. Clearly, they are onto something.
Though to the modern mind this may seem of little import, I am fascinated by the fact that the apathy of the average American can be pierced by little more than a simple request for an online donation in exchange for the perpetuation of an ostensibly worthy cause. They have stumbled upon some truly Deep Magic.

If this can be so effective for raising funds for causes as mediocre as artists and church picnics, let alone political campaigns, my logic said, then what on earth are we doing paying taxes anymore? And yes, it was logic that led me here, not some wild flight of fancy - allow me to clarify.

Taxes, at their most basic, serve two functions. At least historically, they are primarily a means for a governing entity to raise funds. Their corollary function, which in recent times I would argue is beginning to take precedence, is as a tool of social engineering. Now, as someone who believes strongly in the constitution and the wisdom of our founders, I initially hesitated at the thought of revoking one of the constitutional powers afforded government. At the same time, however, it is certain that our founders would not have imagined the world we live in today. Instant communication, widespread infrastructure, even the size of our population are all staggeringly advanced beyond what our founders had in mind. This is not the world for which the constitution was written.

Now, before you tear into me, let me be clear; I believe most everything in the constitution is durable even today, including taxation. What makes me comfortable making this proposal is that my idea can only serve to weaken government, not to strengthen it. And a change to the constitution that affords more liberty to all Americans is unlikely to be a bad thing.

The idea then, if you haven't figured it out already, is to eliminate taxes in favor of direct donations, made at any time in any dollar amount desired by the citizen. The idea would have to start small, at the level of municipalities, school districts, that sort of thing.
Indeed, at this level many communities are already not far removed from direct begging, the only difference being that public schools and small towns beg for votes in favor of levies or bonds (which become taxes), rather than for direct donations (sometimes it even does reach the level of direct begging!). The citizens of those small towns and school districts, depending on their belief in the quality of stewardship their money has received in the past, are more or less willing to vote to raise their own taxes. The problem is, once taxes are imposed, it can be difficult or impossible to repeal them. After all, who would vote to decrease funding for the children?

The answer, I think, is to make government, eventually at all levels, sing for its supper. Not just once every couple years when the voting cycle comes around, but constantly. This would require that government spending be more transparent, that funds for one purpose cannot be borrowed for another purpose, and that government bookkeeping be more readily accessible to the public and more audit-ready. It would also require a significant learning curve on the part of the voter, as I believe the donations should not be to a general government slush- fund, but should be line-item contributions to the causes individuals feel most worthy. This means that if you like using public roads, you ought to be donating to the fund for your public roads, so too with national infrastructure, defense, education, the list goes on. If you like having it, you'd better be donating to it or it might go away.

Inevitably, as the public gets acquainted with this new way of doing things, they would find parts of their government running critically short of funds. Ideally, the parts that are worthy would be rescued from the brink by concerned voters, while those that are not truly valuable to the voting public would waste away for lack of funding.
You can see where I'm going with this I think, so let's summarize the rest.

A few issues and potential objections I'd like to address, to acknowledge the realities of this situation, in friendly point-by-point format.

This plan may mean the majority of Americans would make few or no donations at all...
While I recognize that this may be true, especially early on, I truly believe that those government functions that cannot be replaced by the private sector or discarded entirely will find the funds they need.
Government will have to be leaner and smarter, but that's fine with me. Besides, most Americans in lower-income brackets, who presumably would be least likely to make significant contributions already pay little to nothing in taxes. In my plan, if a lower-income American can't afford to pay anything in taxes, but has, say, a child in the military, they can contribute all they can afford directly to the military, and need not give anything else.

Budgeting is impossible without general estimates of cash inflows.
Government would be able to estimate the levels of cash inflows based on historical data after a few seasons. Furthermore, I envision governments developing budgets based on estimated costs for programs and projects, then posting those budgets online. Much like any other fundraiser, the public could see in real-time how close a given department of government is to meeting its budget. This creates accountability. If the government is regularly meeting its budget requirements and is unable to complete projects on-time or without excessive cost overruns, you can bet the people will take notice if they contributed that money directly from their own pockets.

The existing tax structure is more effective and reliable.

Nonsense. The existing tax structure is built primarily around arbitrary determinations of fairness and various social engineering projects. Tax compliance costs are huge, and otherwise law-abiding individuals are tempted to become criminals to avoid the absurd and excessive taxation schedules that confront every American who makes more than a couple thousand dollars a year. The economy will improve as Americans can pay themselves and their creditors before they pay Uncle Sam. Private enterprise will have a bigger place in providing community services. Of course, the lawyers and accountants of the tax industry will be righteously irritated, but that's alright. Tax folks are usually pretty smart, they'll find other work.

There are more points and counterpoints I've thought of, many of which you will likely think up as well. As such, I will leave my rant here, and turn over my infant brainchild to your tender mercies. Be gentile, new ideas are fragile, but I believe this one is robust enough to warrant discussion, even if the practical challenges involved with eliminating and replacing the tax code are staggering.

1 comment:

Ben Wheat said...

While your idea is intriguing, I'm forced to point out two things:

1. It is well nigh impossible that it will ever be adopted
2. A baseline minimum of some kind of taxation has to be maintained in order for this to work

On point 1, conservatives and libertarians have been hammering away at the federal income tax for decades to no avail; the government won't give up its favorite privilege, that of direct taxation.

On point 2, your plan could work if we maintained a fixed, ultra-low sales tax that brought in enough revenue for the federal government to keep the lights on in critical areas (defense, infrastructure, etc). Anything beyond that could be subject to the government dancing for nickles, so to speak, in order to fund additional initiatives and programs. This minimum revenue would also allow the government to intelligently formulate its budget from year to year, one of the pitfalls you address in your article.