I

Totality

About five years ago, I gave a talk sandwiched between Tipper Gore and Dan Quayle on the electronic world, in 2050. After some consideration of the fact that I was sandwiched between a Democrat and a Republican, I made up something I thought could give both sides of the fence something to think about. The talk was on how we could do away with all taxes. My favorite form of taxation is taxation with No Taxes at all. Sadly for me, in those days before the Internet, the audience was largely dumbfounded. They thought I was crazy, but that's OK. I'll try again with this book. Now that the Internet has blossomed a bit, us geeks get more attention.

When I hear a Republican say to lower taxes, I say No Taxes! Period! When I hear a Democrat say more money for government services, I say go for it! You can have more! You can have your cake and eat it, too! Interested? Here's what we have to do:

We have to do away with all printed and coined money.

Just the United States could do this, in order to get rid of all U.S. taxes. Everybody who has dollars and cents goes to their bank and exchanges their physical cash for electronic cash. You have four months to trade all your real cash in exchange for your federal electronic cash. While the exchange program continues past the four-month deadline, physical cash is now outlawed for transactions. How does that sound?

You pay for things electronically over the Internet with your credit cards, or with handheld Internet appliances, like telephones and pagers. Thankfully, transactions can be made anonymous so the government can't know it's you. Your privacy is perfectly protected. The government can know that somebody, or perhaps a company of a certain sort, paid a certain number of dollars to pay for a certain type of thing: like a car, some lettuce, legal fees, college tuition, or a donation to a church. The government can know what they need to know, but they won't know that it's you or your company buying or selling the stuff.

By fiddling with the books, the government now grants itself a certain percentage on the electronic transactions. The people who exchange money for goods or services don't have to add or subtract anything. There are No Taxes. No Taxes at all. The government just prints itself some additional federal electronic money for the government to spend. The percentage created is on transactions selected by Congress with advice from economists and government accountants. The selected transactions might even include gifts to non-profits with no harm to you or I. It won't be huge a huge percent, maybe 8%, because there is a lot more control over monitoring the amounts of money actually paid, and for what.

If you, too, are now firmly convinced I'm crazy, consider how weird taxes are today. Income tax has the seller paying a tacked on percentage of the actual price directly to the government. Sales tax has the buyer paying an extra percentage to the government. Real estate tax has you just paying tax for the right to own something. The fact is that government has to manufacture this extra money in order to pay itself! How weird is this? Why doesn't the government just manufacture some money for itself based on monitoring the transactions directly, and take out the middlemen, you and me? What's the difference really? It prints the money it needs to support the tax payments anyway.

No Taxes would do away with us mortals having to report the details of our lives to the government! How much does the government get with No Taxes? They get as much as they can get away with.

The government is always a competitor for our goods and services. They simply have to watch how much competition they create.

In wartime, the government buys so much that they cause shortages. The effect is to increase prices and cause inflation. If the government is allowed to invent money for itself based on electronic commerce, then it has to be controlled as a competitor for goods and services. The government can buy water when water is plentiful, but it had better justify it's purchases pretty well when it buys rare things like platinum, a Los Alamos Project, or doctors to tend to the sick. Doling out money for the government is a matter of hard accounting. But now we, the citizenry, can have fun watching those accountants justify themselves to us! Not the other way around,

Does No Taxes get rid of H&R Block? No, but it makes the lives of the H&R Block guys more enjoyable. Now they can be paid to maximize your market opportunity. They can find you money that the government needs to spend. You pay them to make you more of your tax-free money. You, the poor non-taxpayer, can decide what to buy and sell based on what people will charge or pay, not on taxation conditions. Wouldn't it be wonderful? Yes, it would.

This works for U.S. money without involving any other country! Wonderfully, the government can now reasonably dictate a means of reaping money from the buying and selling of goods in U.S. currency abroad! Remember the Internet? It's global.

We even do away with counterfeit money. Counterfeiters, if you haven't been told, have gone crazy with desktop publishing and color printing. Both Republicans and Democrats should see this one. The government could afford to give everyone the five-dollar, credit-card size, device that the less affluent might employ to spend their money and get paid. Counterfeiting this device would be impossible because it is just a digital wallet. Anybody can make them, or put them into things like cell phones. You still need banks, the Federal Reserve to throttle us occasionally, the secret service to watch the money handlers, and pretty much everything else, but you can't counterfeit money.

A Republican can now say "No Taxes," and a Democrat can say "More Services for the People!" The Republican has to show us that government cannot cause inflation or, by not spending where it ought to, deflation. The Democrat has to show that government buying of goods and services also doesn't cause inflation. The petty fighting between the parties will probably be no different from today. That's fine. You and I don't have to pay taxes. Not one cent to the U.S. Government, not one cent to the state government, not one cent to the local government, not one cent to any government, for anything, ever again. It's not that we don't pay, it's that we don't pay taxes.

I gave the talk on No Taxes because I personally like it a lot. At the time, in 1994, I was also predicting the Internet revolution. If Internet surprised you, realize now that No Taxes is perhaps not as crazy as you might think. It's not half as improbable as being the speaker sandwiched between Tipper Gore and Dan Quail.

If you are trained in Economics you have certainly, by now, decided that No Taxes is the economic equivalent of a perpetual motion machine. No Taxes would seem to require the impossible of printing money for the government to buy goods and services without causing inflation. This is not what is being said in this book. For the Economic scholars among you and others who think this book is about perpetual motion machines, the book’s argument goes like this:

(a) Go to electronic money and take out the taxpayer as the middleman, the result is no taxes for tax payer, much better information, and more efficient economic taxation models.

(b) There is a paradox that the government prints the money it uses to pay for goods and services, and then it taxes the money back. This is seen as an anti-inflationary mechanism, when it is obviously inflationary in hidden ways, because the government barges in and gets goods and services for nothing based on what amounts to timing. So, perhaps there are other ways to control inflation and do away with taxes entirely.

We simply won’t understand what we can do until we actually go to electronic money and learn more about the opportunities. It might be that we can, indeed, remove all taxation as well as the hassling of people about taxes.

To say that we already know the answer to this question is, I believe, not good scholarship. Our laws of Economics are not so firm as the laws of nature. So, while it may well be that No Taxes is a perpetual motion machine, it might also surprise people like the Internet. It is not clear, to me, anyway, that money and taxes are immutable forces of nature, or, at least, why they absolutely have to invade our lives with such vengeance.

This then is the totality of the story of this book. If you buy the argument for No Taxes, you might stop here. If you have million questions or think this might be a fun topic, read on.

What remains is meant to be a short book in episodes. Each episode expands on what has already been said. There is no way to work through every detail of a No Taxes future but we can at least hope to gain glimmers of the adventure in front of us.

This book is meant to be fun to read. As a lay-person, the perspective on taxes is from the outside looking in. An accountant takes money seriously, and rightly so. But in this book, let’s take the pain of accounting seriously, and money a bit more lightly. An economist also rightly takes his work very seriously. But let’s stand back and look at what the economist sees, from the eyes of someone interested in absolutely getting rid of all taxes.

Magic Stones

We begin our quest with a cartoon history of money and taxes. The purpose is to awaken our consciousness in the absurdity of money and taxes. So, going back, say, 40,000 years, you are tending your field, and the big bully living up in the cave begins running your life…

“This is a magic stone. Here, I put a hole in it. Now, I am the only one who can put a hole in stones. If anybody else does, I’ll have them stoned to death!”

Weird, but OK.

“You can trade a magic stone for a rabbit pelt. Trust it. I’ve got a thousand soft and warm rabbit pelts. Anytime you need one, just give me back a magic stone.”

OK, so this guy wants to get more rabbit pelts. But he’ll trade me back. OK.

“Oh, no! I’m running out of rabbit pelts! I forgot they rot. And now everybody wants more magic stones. Every year you can weigh me. If you don’t give me rabbit pelts for my weight in magic stones, I’ll kill you. Wait, I want your trust. I’ll just take my weight in magic stones. Forget the pelts. I’ll kill you, too, if you don’t give me a pelt for a stone.”

Huh? Is this guy crazy?

“Ok, maybe I don’t have enough rabbit pelts myself, anymore. Just forget all that about me giving you one for one of my magic stones. You are already hooked. Everybody knows that my magic stones are worth rabbits now.”

Yea, right.

Section 8. In World War II, a “Section 8” was your ticket home, because you were judged to have gone raving mad. Well, its also the taxation section of the United States Constitution: “The Congress shall have the power to lay and collect taxes, duties, imposts and excise, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States.”

“If I weight a thousand stones, you all have to split up the share that you owe me, equally. You can trust me; I don’t show favorites. If you don’t give me the stones that you owe me, I’ll kill you. Oh, by the way, if you die, I want all your stones back or I’ll kill your children.”

Well, at least he is doling out his punishment to everybody equally.

“Isn’t this great? It works for me!”

I don’t know if this works for me, but I had better be quiet about that. This guy is threatening to kill me.

“I’ve been told that many of you just don’t have the stones you owe me. Now that I’ve taught you to add and subtract stones, I will let the rich people pay more stones than the poor people. If you add and subtract wrong, I’ll kill you. But aren’t I fair now? By the way, your tax needs to be 200 times my weight because I’ve got to watch you more carefully. I can’t just take a census and count you anymore in order to figure out what you owe me.”

In 1999, 1.456 trillion magic stones, ah…dollars, were collected in personal income tax, 182 billion in corporation income taxes, 26 billion in unemployment taxes, 71 billion in excise taxes, 28 billion in estate taxes, 18 billion in duties, 42 billion in assorted other taxes, and about 10 billion in random other revenue for the United States Government. That’s a total of 1.833 trillion magic stones collected in 1999. The Government spent 413 billion on defense, 905 billion on human resources, 95 billion on physical resources, 230 billion paying interest on the debt, and about 112 billion on other things, for a total of about 1.756 trillion magic stones. We’ll talk about Social Security and other off-budget things later. About 5,000 people were in jail for figuring wrong what they owed the government in magic stones.

Stand back a moment, into the light of reality. One and a half trillion dollars, of the one and three quarters trillion dollars of government revenue, came from income taxes. In 1895, about a hundred years ago, the Supreme Court ruled income tax unconstitutional! For your information, by the way, about twenty years later (1913) our government had had enough of this unconstitutionality stuff and passed the 16th Amendment to the Constitution. Now, in 90 or so years, this once illegal income tax, that seemed so irrational and silly, has come to this giant portion of the government revenue. Even worse, virtually all the Government revenue comes out of your income, and they put you in jail if you don’t take your adding and subtracting seriously enough.

The drums start beating. You can hear them everywhere. They beat out the message: “Friends and Countrymen. I have very grim news. On our northern shore, people who have no regard for our country are attacking, killing everybody, taking all the rabbit pelts, and smashing our magic stones. For this purpose, I’ve had my hole makers make tons more stones. I know, I know, I don’t weigh tons. But you need me to stay slim, trim and ready to fight this menace. So you just owe me 10,000 times my weight in magic stones. Learn to multiply and divide folks. I’ll kill you if you don’t pay me my new tax. I’ll get the tax you owe me later, as soon as you get the stones that I will pay you to help me with this menace.”

Let’s see, he’s now saying that he will make stones and give them to us for our work so he can take the stones back in payment for the stones he made. I don’t know about what anybody else thinks, but this guy sounds really crazy.

Here is the balance sheet of the United States Government in 1999. For those of you used to looking at balance sheets, read it and weep (in billions of magic stones):

Assets

Cash 115

Accounts receivable 35

Loans receivable 184

Taxes receivable 23

Inventory 173

Property 299

Other 54

Total 883

Liabilities

Accounts payable 86

Debt 3,632

Benefits payable 2,601

Environmental Liabilities 313

Benefits payable 74

Loan guarantee liabilities 35

Other liabilities 169

Total 6,909

Net Position -$6,026 (or, minus six trillion magic stones)

Expected annual revenue $1,750 (about one and three quarter trillion stones)

Actually, this is all much too complicated, and when the government tucks things like 54 billion dollars or 169 billion dollars into the “other” category after listing a lot of categories already, it’s pretty confusing. So a simplified balance sheet says:

Assets

Cash 115

Other 768

Total 883

Liabilities

Accounts payable 86

Benefits payable 2,601

Debt 3,632

Other 590

Total 6,909

Net Worth of the United States government in 1999: about -6,026,000,000,000 magic stones

-$6,026,000,000,000. Hmm. Anybody for a party? How about losing a night’s sleep?

The U.S. Bureau of Engraving, and, in fact, most of the security printers for most of the first world countries have had to move from sheet-fed printing to continuous web printing because, otherwise, they couldn’t print money fast enough.

OK. If the message isn’t coming through, you have this hardware store. Here is your balance sheet:

Assets

Cash $115,000

Property and Goods $768,000

Total $883,000

Liabilities

Equity -$6,026,000

Accounts payable $86,000

Debt $6,233,000

Other liabilities $590,000

Total $883,000

You make about $145,000 a month in total revenue selling your rakes and concrete.

See..it, ahh…all balances! How are you feeling?

The Graphics Arts and Technical Foundation, a standards group for the printing industry, has just completed a forensic set of printing examples for the U.S. Government because desktop printing has put high quality counterfeiting in the hands of most anybody. The forensic set has one page for each color printing method known. The set is over six feet thick.

Anyway, the United States of America has enough cash for most of this month. Did somebody say we manufactured our own cash? We’ll have as much cash as we need. Do you have desktop publishing in your hardware store? You might be able to fix your little six million dollar problem with your color printer.

The government could just print six trillion dollars and pay everything off. It could subtract the 230 billion dollars it pays on interest today. So it would need only 1.5 trillion dollars in revenue, instead of 1.75 trillion dollars. This would probably continue just fine and dandy until we have another war, or something that seems like war to our government.

But, of course, the government dare not just print six trillion dollars and pay everybody off. The whole economy is about nine trillion dollars. The magic stones would probably lose their magic if the Government did that. Rabbit pelts would almost immediately cost a lot more stones.

“I am happy to say that, after the war, we have made great strides in stabilizing the cost of rabbit pelts. We also have a lot more stones at work in our economy. This is all very wonderful. I have a lot more taxes coming to me. Do you like my shiny new white castle? You can visit. I run free tours.”

Well, at least we are getting something for our taxes.

“I have found that our great economists are right in their theory of supply and demand. If supply is constant, an increase in demand will drive up prices. A decrease in demand will drive down prices. If demand is constant, increasing supply will drive down prices. Decreasing supply will drive up prices. Supply and demand for goods and services change constantly. I need prices to remain relatively stable so your taxes will mean something, and you can trust in the value of my stones.”

Uh, yea. Sure.

“I have used your taxes to buy goods and services from you. This has made many of you stone rich, and you are very happy about that. But I now recognize that every tax dollar that I spend, drives up demand and drives down supply. Every time I spend a tax dollar to buy goods and services from you, I tend to drive up prices for those goods and services, and devalue the stone.”

This is true. I do seem to have more money than I did before.

“Of course, you know I have plenty of rabbit pelts nowadays. I don’t buy many of those with my tax dollars, so rabbit pelts have seen something of a depression. They are now a dime a dozen. In not buying the rabbit pelts I used to buy, I’ve driven down their prices because there is now over supply and less demand. But here the stone is worth more.”

This guy sounds like he knows what he is doing now.

“I hereby announce a better way to measure the taxes you owe me. Let’s forget that thing about weighing me every year. I’m getting pretty old. I seem to be shrinking. I’ve been charging rich people more stones by looking at how much property they have. My economists tell me I can get a lot more stones from you, without harming prices too much, if you measure your income every year and I just take a bit of it. Let’s say, 25%.”

Wait a minute, hold it. Stop! I want to get off!

“Don’t worry, I give you as many stones as you need. I have lots of hole makers now. This lets me get the stones I need to spend on your goods and services. I base my taxes on your own productivity and consumption rates. This way, I don’t have to worry about whether I am going to cause inflation or deflation, as I had to worry about it in the past.”

I’m getting lost now!

“As you know I have hired a whole bunch of accountants to help us measure the details of supply and demand and the local spots of inflation and deflation. We let the prices of rabbit pelts fall, but we’ll take some of our tax stones tomorrow to prop up their prices a bit. Now that we understand supply and demand, we can be much more careful with your taxes. More important, I can buy more pretty castles for you to tour than I ever imagined I could before.”

Did he say he was just going to buy rabbit pelts to prop up the prices?

“I want you to know that we depend on you to tell us the truth every year about your income. So, I’ve assigned my meanest and dumbest accountants to come visit you, every once in a while, to make sure your income is what you say it is. If it isn’t, I’ll have to kill you and just take all of your stones.”

“Marge! Pack our bags. We’re leaving Africa!”

This brings us to the present day in the history of money and taxes. Some unimportant detail has been taken out but the major events seem to have been recorded in this chapter. If anybody dares say the proposal of taxation with No Taxes is crazy, please come back and consult our history, and what we are doing today. It’s all about little stones with holes, rabbit pelts, and somebody ready to kill you if you don’t respect their little stones.

Sound sane? Sound like where you want to be? Please, don’t think of taxation without taxes as some kind of insane quackery. We’re all quacking pretty loudly already.

III

Good, Bad, and just plain Weird

Taxes. Taxes are good. Taxes are bad. Taxes are just plain weird. Stamping out all taxes is not something that civilization just does tomorrow. Let’s give the process about ten years. John Kennedy gave us this long to go to the moon. Of course, maybe we have to add a year to give the economists and accountants awhile to exhale, after they choke and turn blue about not having taxes anymore. What’s good about taxes? What’s bad? What just plain weird about them? Let’s see in this episode.

Taxes are good because they limit government spending to measures of economic viability, because they teach the populace to add, subtract, multiply, divide and generally be educated, because they scare people all the time into not committing really violent exceptions to governmental ideals, and because they engage our creative juices in defeating government guessing.

The biggest of these is that taxes limit government spending. Without taxes, the government could just go wild manufacturing money and spending that arbitrarily manufactured money. The result would be the equivalent of a permanent war. The government would spend arbitrarily too much or too little on this good or service or that good or service. The government might decide to give everybody an airplane. Without taxes they might as well print money for themselves until they explode and explode us in the process.

Historically taxes had the civilizing function. Taxes were a way to get people to educate themselves, to force people to come up with money when all they had was land, and to communicate with the government despite the strong natural propensity to just ignore the government. As a civilizing function that stimulates the economy, taxes are just more humane than sending in troops to kill people until they listen. You can’t manufacture markets with troops. But you can manufacture markets with taxes.

Will the removal of all taxes cause us to revert to uncivilized beasts? Will we slowly stop doing work for others, and spend ever-increasing time just sitting on our farms eating beans and chickens, and watching the leaves flutter around? Or have we already reached the stage of civilization where the civilization in us is not going to go away? Is there such a stage? Can there be such a stage of civilization?

There is possibly a way to know the answer to this question. The method is the same as the method of actually doing away with all taxes. As we will see, the government will have to continue to monitor all economic activity. We can construct a measure; lets call it the “Civilization Deconstruction” measure. We don’t even have to invent the measurements, this measure is already familiar as the Gross Domestic Product. Fortunately the Gross Domestic Product doesn’t change much year to year. In 1997, it was 8.3 trillion stones, in 1998 it was 8.8 trillion stones and in 1999 it was 9.3 trillion stones. We will have plenty of time to save civilization, if No Taxes causes everybody to get lazy.

The biggest argument that taxless society will be fine is very simple. While No Taxes means that you don’t have to spend a considerable portion of your life in worry, pain, and plotting, it doesn’t mean that the government stopped spending money buying stuff from you. The government continues providing people with real opportunities to get filthy rich, own islands in the South Pacific, and sip ever-smaller cups of coffee on the backs of ever-more other people. In fact, if the suspicions are right, the government will have even more money to make more and more people richer and richer. All they have to do is to provide the government with goods and services. They have to work or become more efficient at work. This is not sitting on the back lawn dreaming of chicken pie.

Taxes have been good. Now, the proposal is that we are sort of civilized already and that taxes are now only bad. Taxes should all be done in. The movie “Popeye” had a tax-man going around and charging taxes for almost anything. There was a $.25 docking tax, $.17 new-in-town tax, $.45 boat-under-the-wharf tax, $1 stuff-laying-around-the-dock tax, a $.05 question-tax, and a $.50 up-to-no-good tax. Furthermore, he was an exact-change tax man. Being civilized, Popeye always paid. It didn’t make him happy. Let’s look at all kinds of more common, though no-less strange and weird, taxes and see how each one interferes with our general welfare.

Say, “general welfare.” This, if you recall, comes from Section 8 of the Constitution as well as some other sections. It says that Congress should provide for the general welfare. An argument for No Taxes is that all taxes are unconstitutional because they interfere with the general welfare. Congress must develop, on constitutional grounds, ways to collect taxes without collecting taxes just in order to promote the general welfare. So let’s see.

Income taxes ask you to report how much money you made and force you to pay a percentage of this money to the government. There are many bad things.

First, you have to actually pay attention to money you made. A lot of people actually don’t care about money or the money they make; they don’t measure themselves by money. Great mathematicians, brilliant pianists, wonderful machinists, great educators, and gifted carpenters become great because they give single-minded attention to what they value, and what they value is not learning how to fill out their tax forms. Accountants and all kinds of other people feed on these people and deplete their money, like parasites. Too many times a bad apple accountant gets loose and takes these people for more money than they can afford. The opportunities for this loss to our general welfare would be greatly mitigated if these good industrious people only had to worry about the cash they had in their pocket.

We all know these people. It is hard to estimate their number but it could easily be over 80 percent of us. People who don’t want to spend their time plotting over how they are going to be rich, should not be forced to wonder how much of the dollar that they get to keep. They should not be forced to wonder who they can trust to figure out how much they get to keep. There is real damage being done to our ability to hold to higher ideals of civilization, if we are constantly being brought down to money management.

Among the few segments of the economy that have been protected from taxation is the religious community. Here we see among our ministers and pastors people who are able to concentrate on their skills, but even here income tax looms its ugly head. There is a bit of protection from taxation, and you can easily observe its good effect, but there is not enough protection because you can see how stressed your pastor is over his own money and tax problems. Was the imprisonment of Rev. Baker for tax evasion good or bad? It was probably precisely the wrong solution.

What about Capone? Well, what is the message we are sending to our people if we put someone in jail for tax evasion when we all know he is a murderer? Shouldn’t we just get our act right in the first place? The imprisonment of Capone for tax evasion did material damage to our culture. It is not cute to put a known murderer away because he evaded taxes. It is a tragedy for our sense of right and wrong. Taxes are bad.

Another kind of tax is sales tax. Instead of taking money from the person making it, we take money from the person who is paying it. Now, in both cases, you have to remember that the government is manufacturing extra money for us to pay it. It is simply using sales tax as an alternative means of measuring the money it is paid based on marketplace activity. Many people argue that sales tax is not as bad as other kinds of tax because it puts the taxation at the point and time of the business transaction. This is most certainly true.

But sales tax is bad. First, sales tax is almost always a strange percentage like 6% or 7%. If something costs $1, we have to take the time to figure out whether the guy is giving the proper change on $1.07 for the five dollar bill. Most people don’t check. This is more opportunity for fraud. With strange percentages, it is easy for somebody to say $1.99 instead of $2 because you know $1.99 is no stranger than $2.14. The cumulative effect of all of this cannot be good.

The biggest psychological problem with sales tax has to be selling things like cars, boats, and airplanes. The black market is the market the government cannot see. Who doubts that the government cannot see a lot of car, boat, and airplane selling? Who doubts that people are widely using their willingness to break the law to effectively make more money than the next guy. When the tax is $1,400 on $20,000, this isn’t chicken feed. Or, maybe it is; maybe the gentry guy bought his chickens by selling his cars. Although he actually got $20,000, he only told the state he got $2,000. He saved about $1,260 in sales tax and probably didn’t get caught.

Both little and big, sales taxes are bad.

How about real estate tax? Here you just sit there and do nothing, tending your garden and watching the birds fly overhead, and you get a bill for it from the government. How many little old ladies are there out there that are run out of their homes because they can’t afford to pay the local real estate tax? Running little old ladies out of their homes, or running the poor out of their homes, could be deemed good. The county folk might think good riddance. People who can’t afford real estate tax also can’t afford to pay to fix up their houses very much. But wouldn’t it be better if they had the extra thousand dollars to put into their house?

Property tax is particularly evil for people who want to hold property but not make money off it. The Nature Conservancy had to come around with a special tax deal that essentially makes property untaxable by stopping development in perpetuity. This is pretty weird since it sets aside land for the tax advantage, not for the good purpose of setting aside land for future generations to appreciate. Again, our culture is given the wrong message. Is money really everything?

Personal property tax is worse than real estate tax because there are also often complex reporting requirements. It’s like income tax, where you do not have the income. You can’t just own a canoe for possible use. This is getting pretty close to the Popeye “up-to-no-good tax” and “ask-a-question tax.”

Another kind of tax is designed in part for the social good and in part to pay the costs of social costs. Gasoline tax, cigarette tax, alcohol tax, and other excise taxes fit in this category. These, as can be seen by the United States balance sheets, do not account for a huge percentage of revenue but the revenue is significant in the aggregate. Should we also wish all these taxes should go away? These directly affect the cost of certain goods in order to minimize their use even if supply is high.

The answer is to do away with these taxes, too. Mixing categories is not good. These are taxes plain and simple and the money goes to the government and is printed by the government in order to go to the government. If the people decide that cigarette companies are causing monetary damage that the government has to subsidize, the solution is not to tax. We regularly require that drivers of cars maintain insurance in order to cover themselves. A simple law would force cigarette manufacturers to maintain liability insurance. Of course, we would have to get more rational about how we assign liability. Such all too sad and common situations as this can be managed by insurance companies. The government may provide the insurance companies with some protection to contain the liabilities, it may decree limits on liabilities as it does in many situations, or it may say that the harm is great and that the insurance will certainly drive every cigarette manufacturer’s prices way up. Too bad.

Another major category of tax is import duties. The purpose of this tax is usually to provide some protection for domestic producers. This is not necessarily a bad thing, although efforts are clearly afoot to remove such artificial protections. To the extent that these taxes are in U.S. Currency, they would have to be removed completely as well. The Congress has other options. It can limit import volume. This has the effect of increasing price or, at the very least, it directly reduces the internal ill-effect of the lower-priced good or service. Congress could also require special liability insurance that recognizes that money would have to be available in the United States currency system to pay for possible problems with imported goods.

A kind of tax not well known in the United States but in use in Europe is called “value added tax.” This taxes the sale of goods at each step in the value chain. In the U.S. a wholesale to retail or supplier to manufacturer is not taxed. In a value added tax system, these transactions are taxed. Value added taxes are called “VATs”. It has been estimated that VATs could replace all taxes and result in only a 5% tax across the board to raise all the money needed for U.S. operations. It could be handled completely in business-to-business transactions and would therefore eliminate the need for the IRS. This can’t really be true. When buying stuff in Europe, you may be paying 15-30% to the national government in VATs. Many companies exist that reclaim VATs for U.S. businesses that want those countries to rebate the tax because they are not, in essence, citizens. VATs, in the present view, are just another case of the system showing its insanity. On the positive side, the VAT analysis for the United States shows that the federal government can be supported on 5% per transaction if the transactions are not just personal income.

Yet another major category of tax are the “off book” taxes, like social security tax. There has been a general fiction that Social Security is separate from the general revenue, but it clearly operates like the general revenue. It should be regarded as tax plain and simple and it should be removed from our lives. The government has to manufacture the money, year to year, to cover the social security costs. It can use separate measures than it uses for other spending plans to gauge the amount of money the Government will manufacture for Social Security. Social Security payouts are exactly the same as any other purchase of goods and services by the United States Government. It makes some people rich. It keeps some people happy with money.

Medicare is like this, too. Medicare tax has no place. It may be useful to determine the amount of money manufactured against a different metric than is used for the general tax and even Social Security. Since the goods and services that are purchased by the government are specific and constrained, then the effect of manufacturing money can have a specific inflationary effect. Obviously this would not be desirable unless there is a shortage that compromises the grade of service. Then the government should go for creating the money needed to increase supply. In any event, one would think that in this case, and others like it, there would be a separate measure, perhaps directly against what the sellers of these goods and services are getting in the marketplace. The wonder of electronic money managed for No Taxes is that it provides the opportunity for this kind of precise control.

What about tolls? Get rid of them. Put a radio tag on every car and feed the information to the much more comprehensive taxation system that can get the potholes fixed anywhere they are likely to be causing problems.

Estate tax is certainly one of the most vilified taxes because the government is taxing a dead person. Taxing the dead. Hey. We do it.

Taxing the dead is supposed to serve a number of societal purposes. A major one is that is keeps people on their toes. Just because your father is rich, doesn’t mean you don’t have to work. But in practice it is yet another source of social distortion and distress. Everyone knows that if your father is very rich, he is going to take care of you through the many ways to sidestep the original intent. In some small ways, this probably works but the tax is abhorrent and should be stopped.

A more difficult societal purpose to argue against is that successive generations could build staggering wealth. The wealth of Bill Gates five generations down could be an appreciable fraction of the entire wealth of the country. In a world of No Taxes, the absence of estate tax could lead to staggering economic distortions. But, hey, don’t we have monopoly laws? Don’t we break up the control of things that get too big and monolithic? This sounds like a much more straightforward law than a weird and silly tax. One way is simply to put an upper bound on wealth. With electronic money as the sole kind of money, the system could flag a need for a breakup based on a simple metric. But chances are this would create distortions with the wrong message, not unlike taxes. It may well be that the fear of concentrating wealth is actually not a problem at all. Wealth still wields great power, but the open press and laws against civil abuses tend to keep the power and wealth abuses at bay. We can expect disclosure laws and the like to help us.

A really interesting government strategy to help dissolve the problems associated with accumulated wealth would be to put a limit on money allowed to just sit. The government can require that the money be put to work even if that work is a U.S. Government Treasury bond or an interest bearing savings account. Currency in an electronic world can be detected if it is just sitting, unlike the currency that is stashed in the mattress.

Taxes are ugly no matter how you look at them. Even when they seem to serve a useful purpose, one wonders whether the useful purpose is really the right solution to the problem at hand. With a system for no-tax taxation, we will see that we will have the time and ability to explore all kinds of healthy and direct solutions to real problems. Taxes are about as weird a solution to getting the government money as can be imagined. The government prints the money to pay itself. Why involve the public in the problem that the government has? We let it print its money. We should put the responsibility on the government to spend what it prints in the right ways. The United States was supposed to be “we the people.”

If you still think taxes are somehow beautiful, here is an abstract of your income tax deductions for the most recent year the IRS has it reported, 1997. By bringing back memories of last April, I hope to nail the case being made in this chapter. Paying taxes is bad and weird. In this year, about 800 billion dollars were paid in income taxes.

Income Tax Itemized Deductions in 1997	Number	Deducted	Percent
	of Returns	Magic Stones	Of Stones
		(in thousands)
Total itemized	36,624,595	$ 620,810,172	100.0%

Total Taxes paid deduction	36,095,045	$ 220,628,058	35.5%
State and local income taxes	30,819,670	$ 136,964,632	22.1%
Real estate taxes	32,250,381	$ 74,997,732	12.1%