The only sensible form of taxation would be a proportionate tax on
the property each of us displays to the public to show the status we
claim or, if a notch or two higher, the status we aspire to. Also,
because all of us, with very few exceptions, voluntarily buy the most
expensive clothes, or car(s) or home(s) we can afford at any
particular time, it would be impossible to evade. Even those whose
incomes are a total cypher to the taxation authorities but who live
in grand houses in beautiful locations and drive expensive cars, and
are suspected by the police of being master criminals (at least 200
in England alone, for example), are quite as normal as the rest of us
in wanting to display the social status they consider themselves to disserve.
Because the public as a whole defines the culture in which we live,
and because each of our possessions on public display has a specific
value according to the value system of that culture, then a
'public-visibility' tax is by far and away the fairest, too. It is
the most 'democratic' if you wish. This form of taxation goes back a
very long way. In the original so-called democracy of ancient Athens,
citizens contributed taxes to build monuments or acqueducts or to go
to war according to the number of slaves they possessed and be seen
working the vineyards or toiling in their galley-ships and workshops.
It's no longer the case. We now have a system in which the rich and
powerful, using clever lawyers and accountants, drive a coach and
horses through the statutory tax system which catches most of us. At
some threshold income level an inverse square law applies -- the more
your income, the less proportionate tax you pay.
The same system is actually nonsensical at bottom because 999 people
out of 1,000 don't realise that, under existing tax law, they're
expected to keep paper documentation of every permanent item they
buy. If they ever come to sell the item at a profit then they must
also obtain further documentation and declare the balance to the
authorities who will promptly apply a tax. Something similar was
actually carried out in parts of Medieval Europe when the local
Bishop's tax assessor would enter your house unannounced and count
the ornaments on your shelves or the pots and pans in your kitchen.
Today, this implied obligation is largely overlooked. Many
comfortably-off people buy and sell antique furniture and silverware
which can realise substantial profits with no more than a handshake
and raw cash to signify the transfer.
More recently, however, the taxation authorities, at least in
England, have become worried by the much larger number of people who
have taken to buying and selling many more modest items through eBay
using PayPal. Working from home, many make quite a tidy income from
this, and certainly don't reveal it for taxation purposes. Because
the ingress of PayPal's currency into a person's account is via
electronically recordable money on a credit or debit card there is,
in theory, a way in which the authorities could get at an
individual's income. But this would be an enormous task and take
governments' computer systems to whole new levels of ineptitude.
But what about smart new money via smartphones? This intrigues me.
It's already the case that a smartphone can be used to pay for an
item in a shop by merely passing it over the barcode of the item.
What when smartphones will be able to transfer money between
themselves? Several more primitive person-to-person transfer systems
were tried 20 years ago but the trials didn't reach threshold or
there was some technical inadequacy. However it's now well within
reach. In this way a great deal of business could be done, and
profits made, without the authorities knowing. Will the authorities
clamp down on this? Will they be able to?
It's doubtful. Using a deep enough level of encryption, and once
started with sufficient investment capital, then there is no more
likelihood of governments being able to prevent a new invisible
currency coming into existence than they have at present in
extinguishing the hard drugs industry (in realistic terms, never --
as long as hard drugs are illegal). It may well be the case that
various mafiosa chiefs (among whom there is often mutual honour and
assistance) could actually be the very individuals who would initiate
a secret new currency, starting between themselves at high level and
then pushing it downwards among their lesser distributors. From
there, there is no reason why the new currency shouldn't percolate more widely.
How could this be done? Quite simply. Start the same sort of bank
that got the industrial revolution going in England. If the new
secret currency was known, and trusted by its users, to be always
redeemable by current orthodox money at convenient locations then it
would certainly become popular in due course because it wouldn't be
taxable by the authorities. Individuals would keep 'two books' as it
were -- the orthodox money on which he is taxed and the additional
money which, once redeemed, could be spent without the authorities
knowing anything about its origins. Who could tell how large such a
new currency could grow, or how much taxation would be lost?
And where could the initial 100% bank reserve of orthodox money come
from? The mafioso bosses would certainly be a good source. One such,
recently arrested in Mexico, had $200 million in cash in his house.
This would probably be insufficient investment to set aside as a
secret bank's reserves. But there are plenty more master criminals in
the world and, for status reasons, they'll all be contactable with
one another in exactly the same way as legitimate business people
compare and contrast their statuses at various events such as at the
annual jamboree at Davos.
There's only one way that a tax-avoidable currency system could be
prevented (disincentivized) in the era of the smartphone and onwards,
and this is by way of a tax on one's 'public possessions'. I
recommend this as something to be thought about. The number of
extremely rich people who live in ordinary houses and drive bangers,
such as Warren Buffet, are very rare indeed. But, just to give
another exception to the rule I'll mention John Ellerman who was, at
around 1900, probably the richest man in the world for a period when
he owned half the coal mines of England, hundreds of breweries,
thousands of other businesses and half the commercial shipping fleet
of the world. He would have given the Morgans or the Rockefellers a
good run for their money. He lived even more ordinarily than Buffet,
in a semi-detached house in the seaside town of Worthing. His
neighbours hadn't the faintest idea that he wasn't other than a City
of London clerk who took the train every day. But the Buffets and
Ellermans of this world are rare birds indeed. Your local
master-criminal will have one of the most attractive (and most
taxable!) houses in the neighbourhood.
Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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