Let's assume, for the sake of argument, that we cannot avoid a government and a state. Let us set aside all concerns of morality or justice, or the economic inefficiency of monopoly.
The issue of funding this government, on a permanent basis, comes up against the need to economize scarce resources. In fact, the state is in competition with every other states for subjects and capital goods, and, by assuming that it is a shareholder-owned corporation, behaves competitively. That means it will try to create the most value of any other state. This value is weighed as the cost of living in this state, the cost that the government imposes in order to protect its subjects.
As the government is a monopoly on the production of security, the most economic form of taxation must reflect the cost to the state of providing security. The most basic factor in this cost is how much wealth you need to protect. Surely it is more expensive to protect a large estate than a pennyless man, as the pennyless man will only seldom come under attack. This is why it is more expensive to insure large properties than small ones; the premiums paid out would be greater.
This means that the essentially economic, or "fair", tax system is a direct property tax on protected wealth. The people who propose sales taxes as economically efficient taxes are wrong.
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I think the property tax is a good idea, as long as it is a flat tax that is non-progressive, in order to maintain the fairness a libertarian system demands.
Also, when you talk of this property tax, do you exclude all other taxes? Is this the only tax you think necessary? I don't think any other taxes are necessary if the government's sole role is to provide protection of property and liberty. Besides, government's don't need professional armies. The system existing in Switzerland of a national militia composed of around a third of the country (2 million people) with an annual training session seems like a much better idea, especially if the government doesn't pursue any aggressive foreign policies.
They only have a budget of 1% of GDP spent on the military.
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Fred Furash:I think the property tax is a good idea, as long as it is a flat tax that is non-progressive, in order to maintain the fairness a libertarian system demands.Also, when you talk of this property tax, do you exclude all other taxes? Is this the only tax you think necessary? I don't think any other taxes are necessary if the government's sole role is to provide protection of property and liberty.
Also, when you talk of this property tax, do you exclude all other taxes? Is this the only tax you think necessary? I don't think any other taxes are necessary if the government's sole role is to provide protection of property and liberty.
I am not looking for fairness or anything else other than pure economy. What kind of price for the production of security gives people the incentive to economize on vulnerable goods? Only a property tax does that.
libertarian:The state cannot estimate the cost for the protection of anything. Instead, the state should only collect assets from criminals proprotionally to the damage caused by the criminal. Security should be provided by private agencies but the government should prevent any security agency form conquering the world. The government should use private defence to prevent other pviate defence agences from conquering the world.
Monopolies know the costs they incur to produce goods. They do not know if a competitor could do it at lower costs, but they know their own costs.
Your idea of making criminals pay for the damage they cause is good economically, but it cannot provide for all security. Not all resources may be recoverable. The threat of invasion must be defended against. If crime is low, there will not be many resources to defend against invasion.
Fred Furash:I think the property tax is a good idea, as long as it is a flat tax that is non-progressive, in order to maintain the fairness a libertarian system demands.
Property tax seems like the most un-libertarian tax of all. Why should someone have to pay the state to be allowed to exist on their land? What if you lost your job and didn't have enough money to pay your property tax? Than the state might want to use eminent domain (theft) to take your property to make up for lost taxes.
At least with a sales tax a person (more likely a family) could in theory quit their jobs, start a small subsistance farm to eat freely , and live independently while not have to worry about the state coming after them for not paying taxes for the "privilege" of owning land even though their not bothering anyone else.
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Property taxes, as mentioned earlier, are truly evil. It jacks up the price for all real estate. It hits the poor particularly hard, as it not only means fewer jobs but more expensive rents.
Voluntary taxation would probably be the "best," but then it might be breaking your rules, because taxes by definition must be extracted by force.
Stranger:This means that the essentially economic, or "fair", tax system is a direct property tax on protected wealth. The people who propose sales taxes as economically efficient taxes are wrong.
The people who use efficiency as a criterion for judgement of tax system are wrong. A price is a communicator of information, nothing more. As such the 'best' tax system is not one that is most 'efficient' but one that most honestly reflects the true cost of the operation of the government relative to other options people might be spending their money on. What that system would be is arguable, what is guaranteed is that the state would oppose the institution of any such system for the very reason that it would honestly reflect the cost of its undertakings.
Also the state can't measurably, and therefore neither consistently nor reliably create value because it is divorced from the profit loss test. As such all it can do consistently is add to the capital value of its realm through coersion.
It seems to me allowing the government to collect even solely from criminals is detrimental almost as much as property taxes would be. With criminal offenses being it's only form of revenue wouldn't the government have that much more reason to expand the definition of a crime?
xahrx:The people who use efficiency as a criterion for judgement of tax system are wrong. A price is a communicator of information, nothing more. As such the 'best' tax system is not one that is most 'efficient' but one that most honestly reflects the true cost of the operation of the government relative to other options people might be spending their money on. What that system would be is arguable, what is guaranteed is that the state would oppose the institution of any such system for the very reason that it would honestly reflect the cost of its undertakings.
Evidently it would. The point of the exercise is not to create a perfect state but to elaborate a counter-argument to the fair-tax and flat-tax people who believe that income taxes are the most just system of government financing.
Denouncing the income tax as a system that unfairly protects the rich and punishes the poor would also be effective at taking the populist claim away from the left.
J.C. Hewitt:Property taxes, as mentioned earlier, are truly evil. It jacks up the price for all real estate. It hits the poor particularly hard, as it not only means fewer jobs but more expensive rents.
Your fewer jobs claim is false. The job market is irrelevant to property costs.
The fact that it would raise rents is not meaningful in itself. For all we know, higher rents may be more efficient if it reduces the cost of providing security.
BWF89:Property tax seems like the most un-libertarian tax of all. Why should someone have to pay the state to be allowed to exist on their land? What if you lost your job and didn't have enough money to pay your property tax? Than the state might want to use eminent domain (theft) to take your property to make up for lost taxes.At least with a sales tax a person (more likely a family) could in theory quit their jobs, start a small subsistance farm to eat freely , and live independently while not have to worry about the state coming after them for not paying taxes for the "privilege" of owning land even though their not bothering anyone else.
The idea that the absence of a property tax allows people to go back to subsistence farming directly violates the principle of an economic tax. We want people who lose their jobs to get another job and continue to participate in the division of labor, not to return to peasantry. Sales taxes provide a disincentive to divide labor and hurt productivity and the accumulation of wealth.
Stranger:What is the most economic system of taxation?
Taxes on negative externalities, especially physical ones (such as air polution).
Decentralized power would be a good start. It'd be awesome if the greatest power resided w/i counties instead of at the fed and state level. If there's an average of 70 counties per state, that's 3,500 governments to choose from. It'd be a LOT easier to escape a bad government if you had 3,500 to choose from instead of 1.
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The need for government protection is not proportional to the person's wealth. If wealthy enough, the person can hire his own security guard; on the other end of the spectrum, the desperately poor may need protection from being enslaved. Property tax inevitably gets in the way of capital accumulation; income and sales tax inevitably get in the way of division of labor; tax on "externalities" (i.e. fines and fees or more appropriately called "sin tax") inevitably turn the political process into a police state looking for things and behavior patterns to penalize . . . All of these proposals induce a political drive to raise tax on "someone else."
A more fair tax system that doesn't involve violence or the threat thereof to enforce would be going back to the "no taxation without representation" principle: political representation should be tied to tax contribution. In addition to the one-man-one-vote, there perhaps can be 20% more votes auctioned off to willing tax contributors every election cycle; then polling can begin with potential vote total that is 120% of eligible population total. All laws (besides the Constitution that includes the election process) and regulations made during this election cycle expire/sunset at next election. Those who want to influence other people's lives would have to pay for such influence, and thereby fund the state in the process. There should not be any other source of state revenue. If nobody decides to buy any of the 20% extra votes, the majority decision wouldn't be worth the paper it's written on for there wouldn't be any government resource to enforce anything, there goes the threat of majority tyranny in a democracy.
JimS:The need for government protection is not proportional to the person's wealth. If wealthy enough, the person can hire his own security guard;
Of course they may produce goods themselves. That is not the point of the exercise however. Is it more expensive to protect more property than less property? Of course it is. Then the cost of protection must scale with how much property is being protected.
This is not about finding out what people can do to protect themselves, but about finding out what a government, a monopoly on protection, can do to achieve maximum economy in the production of protection. You need a bigger army to protect a wealthy city than a poor one, for example, as the wealthy city will attract more predators all else being equal. This is true at the individual level as well.
libertarian:Direct taxes on property would cause distortion. People would build stronger buildings and hire security agencies just to get a tax cut.
This is intended. If people build stronger buildings and hire security agencies, then they are economizing on protection.
libertarian:The government cannot calculate how much cost it needs to protect
Of course it can. That is not what the economic calculation problem is about. The economic calculation problem is about economizing in a system where prices are forbidden. The government can set a price for protection and clear the market this way. This price is monopolistic and may be too high from the point of view of the consumer, but it is nevertheless economic from the point of view of the producer.
Stranger:Is it more expensive to protect more property than less property?
Not necessarily. A million-dollar house probably requires less protection than half a million dollars worth of gold (which weigh about 50lbs and fits in a shoe box)sitting by the side of the road.
Stranger:You need a bigger army to protect a wealthy city than a poor one, for example, as the wealthy city will attract more predators all else being equal.
But all else are not equal. There are myriads variations. In fact, wealthy cities often got wealthy precisely because once upon a time it was relatively easy to defend the place without a huge standing army. For example: Manhatten being built on the tip of an island, Amsterdam and Rotterdam were protected behind the Dutch Water Line, London was protected from the rampaging continental European absolutism by the English Channel, Hongkong and Singapore were chosen because they were islands . . . so was Venice, protected behind a marsh. People have been careful about where to store their wealth for millenia :-)
There's another problem with taxation on wealth: individuals then would have to publicize how much wealth they have (or run afoul of "tax evasion"). The declaration itself is inherently dangerous, especially when it comes to things like the shoe box full of gold worth half a million dollars.
By economic, I suppose you mean a system that provides the greates production and fairest distribution relative to cost. The most economical systems are voluntary, which would not satisfy your tax requirement. Even if we ignore the fairest distribution part, the greatest production at the lowest cost would require competition, and would then be voluntary.
The fact is that there is no most-economic system of taxation anymore than there is a most-economic system of violence - all forms of violence ultimately cost more than they yield.
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