There's only one sort of sensible taxation. This is taxation that people
willingly pay. Correction. Individuals may not willingly pay all of such a
tax but it's much more difficult to evade than anything based on income or
even "busyness" like the Tobin tax. And it's fairer, too. It only affects
those who can afford to pay it. It doesn't let very rich individuals get
away with low taxes or even Scot-free in many cases.
It's a form of taxation which the Medieval Church used to employ for
hundreds of years -- a great deal longer, we might remind ourselves, than
nation-state governments have been employing income taxation. And,
considering that all the advanced governments are already in a state of
advanced debt, how long are nation-states going to be able to continue in
their present form anyway?
I give the present sort of top-down, pyramidal, super-tribalistic form of
government about 50 years at the most. Long before then they'll have
started to subside into much weaker governances engaged in day-to-day
practicalities rather like towns councils in the UK or cantons in
Switzerland, or state governments in the US states.
This forecast is more or less proved already. The white populations of
Western Europe and the United States have been declining for decades now.
How can they possibly afford to have more than 2.4 replacement children and
buy the average stock of currently fashionable status consumer goods for
their home and work harder in order to pay ever larger tranches of their
incomes to their governments? Answers on a postcard, please.
In a conspiracy which populations of indigenous white populations are only
just cottoning onto, senior politicians and civil servants have been
contriving for decades to get more non-white people into their countries --
legally or illegally and all contrivances in between. Immigrants have their
genetic benefits for a host country, of course, but that's not the reason
why they're being allowed in. Non-white immigrants work harder (for a
generation or two anyway), they have more children (for a generation or two
anyway), and thus they will be able to pay more income taxes to keep
governments and swollen civil service afloat. Phew! What a relief!
It will only be short-lived, of course. But at least, it will see the
senior politicians and civil servants through for the rest of their careers
and their retirements. By 2050 -- or 2100 at the very most -- their
successors will have exactly the same problem as now. But by then the whole
world population will be in decline. Billions of people in the undeveloped
world will be dying of starvation (cost of nitrogenous fertilizer,
irrigable freshwater and the purchase of good agricultural land by the
West) and indigenous populations of the advanced countries will be in even
more precipitous decline than now.
Strangely enough, the only sensible form of taxation is, in effect, the
temporary strategy that the Greek government has been forced to adopt in
recent weeks in its desperate need to balance its books over the next few
years. It probably won't succeed in this instance because the political
resistance will be far too great and, besides, the government won't be able
to apply it comprehensively enough because there won't be enough civil
servants who will remain incorruptible and energetic enough during the process.
So what is the Greek government trying to do? It is counting domestic
swimming pools. And two- (or three- or four-) car garages. It is assessing
the size of houses. And their gardens. And second homes. And their yachts
in the local marina. In short, it is saying to millions of prosperous
middle class Greeks who declare only working-class size salaries and pay
only modest income-tax: "How is it that you can afford all these things on
such a low income?"
As already suggested, this won't work. A government can't change the
existing culture so radically without provoking the most tremendous
resistance. But it could have worked -- and very smoothly, too -- had
England continued to develop the window tax which was instituted in 1696
(The Act of Making Good the Deficiences of the Clipped Money). (And
goodness knows we have enough clipped money these days what with central
banks' interest rate antics and, more recently, "quantitative easing"!) It
was a very fair Act, too, being proportionate to wealth. Householders paid
two shillings per year on their property, and then a further two shillings
per ten windows above a threshold of ten windows.
Of course, the majority of the population couldn't afford a house with even
five or six windows so they didn't qualify for tax at all, But the
middle-class, the upper middle-class and, above all, the owners of stately
homes with hundreds of windows didn't at all like this highly equitable tax
so it was soon stopped. Despite the opposition of some middle-class
intellectuals with 'human rights' concerns about privacy, income tax came
in with a whoosh and has been built on ever since.
Of course, the Medieval Church didn't assess swimming pools, or even
windows, or even property itself because none of these had any monetary
value at all for most of the Medieval Ages. They were never bought or sold
with money. Valuable though they truly were, they were simply possessed or
not possessed, and inherited or not inherited. (And due to the law of
primogeniture, the Medieval Church usually ended up with a great deal of
valuable estates anyway when the strictly male line died out -- as it
always does after a few generations -- the last male without sons leaving
his possessions to the Church in order to shorten his stay in Pergatory.)
So what the Church tax inspectors would do wherever it held sway in Western
Europe was to carry out spot checks inside people's homes and note what
valuable ornaments or furniture happened to be there. Or the necklaces that
the lady of the house was wearing. Or the number of horses, cows, sheep or
pigs that the male possessed or the amount of grain in his barn. Or the
stock-in-trade of the craftsman. All these were bought and sold with money.
People who had these could obviously afford to pay the Church Tax.
It can't be a property tax or a wealth tax because rich individuals can
have this salted away in all sorts of places around the world. But it could
be a sales tax. And it could be applied to everybody because everybody
between the age of 30 and retirement has something to sell, even if it's
only muscle-power. And the rich would be delighted to pay for the seller's
sales tax of $10million on a $100million Rembrant painting -- or even for a
pile of rubbish that passes for art these days -- because it is only part
of the status kick he's receiving by buying the painting (and letting it be
known publicly, of course).
And to encourage the rich to continue buying status goods then the sales
tax should be a flat tax. And corporations (being legal persons) would also
pay the same rate of sales tax. It would actually mean a complete
replacement of the miscellany of taxes paid at present by a greatly
enlarged value-added tax or sales taxes that already exist. The present
rate of VAT in the UK is 17.5%. As a straight replacement as of now a
universal sales tax would probably have to be about 50% but this would
rapidly slim down as vast numbers of civil servants and other professionals
who make a parasitical living out of the present taxation tangle emerge
onto the job market looking for worthwhile jobs.
Such a sales tax wouldn't come about easily or immediately because it would
vastly accelerate the taxation competition that's already going on between
nation-states by way of tariffs and corporate tax rates. It's relatively
low key at present -- albeit very important -- and mainly affects the
location strategies of large corporations, but a sales tax would vastly
increase the migration of a whole new slew of talented people who are much
more mobile than head offices.
A sales tax would bring to the fore something that nation-state governments
dread. It would have them all increasingly fighting one like dogs -- in
just the same way that Microsoft, Google, Apple, Nokia, Motorola and
several Chinese firms are fighting for supremecy in the mobile phone
marketplace. Nation-state politicians and civil servants have no experience
of that sort of fighting -- superb though they might be at artillery
warfare which, of course, brought them into existence.
So we won't have a universal, flat-rate sales tax for a while because
nation-states will know that they'll all be weakened and many will go to
the wall, just as happens in commerce. But by that time, whatever
pretensions they have about themselves at present, they'll be spent forces
any way. The really important economic decisions are not being taken by
governments any longer (if they ever were) and we are now in a world of
specialized networks. By not sorting out their present taxation systems and
producing something both fair and simple, governments are only postponing
what is going to happen anyway.
Keith
Keith Hudson, Saltford, England
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