Taxation

Followed by “Protection Agencies”

600 words

Quite apart from the question of how political representation might be re-designed in a future hypothetical state to replace the corrupt order we have inherited, there is a need for reflection on what can be retained from the old order and what must be rejected. It is impossible to replace all at once any more than a ship can be rebuilt from top to bottom while at sea.

I leave aside here the contentious issue of the creation of money. I have addressed this inventively (constructively) elsewhere, but my solutions are little better than what others are saying. This is too complex a topic for here and now.

I assume that there does have to be a powerful state and therefore a government. Absent these, groups of criminals take the high ground of power.

One commanding principle of all my thinking is the need for checks & balances. Power must be distributed and therefore the concentration of power avoided. Whether one likes it or not, power is always present in one form or another. Good characters who hesitate to assume the power which is thrust into their hands will find it taken from them by persons lacking in merit.

Having set out these presuppositions, some long overdue reforms can be spelt out.

The focus of my recommendations here is taxation.

Further below I provide an explanation of the circular economy which underlies taxation. That is for readers who want to delve somewhat deeper and question more. Most, however, will accept that there needs to be tax of some sort, and will only ask how much and how it is to be levied. How the taxes collected are spent is another matter.

My starting point is a rejection of the tax policies in force.

1. With the possible exception of very high earners, there must be no income tax on individuals. None at all. There is already tax on most expenditure.

The purpose of ever more complicated income tax declarations is to waste the time of taxpayers, to demoralise them, and to trick them. It has nothing to do with any social justice or redistribution to those less well-off or more deserving than others.

In principle, tax should be levied either at one end or the other, not both. It makes most sense to levy it where transparency can be maximised. For example, at the factory gate or the port of entry.

2. Value added tax is an abomination. It is an ingenious system for total surveillance, with each entity in the so-called value creation chain reporting on the others. It is burdensome in the extreme, especially for those with low turnover.

Sales tax is better. It is technically somewhat different because it does not involve mutual surveillance. Properly administered, it can be used to tax luxuries and keep essentials free of taxation.

3. The taxation of personal services (haircare, tutoring, gardening, etc.) is likewise an abomination. It is an open invitation to (illegal) evasion, which is always morally justified.

4. These tax revenues could be replaced by ending tax exemptions on expenditure on advertising. The mass media have been totally corrupted by corporations feeding them (television, newspapers) with enormous sums, which are then deducted from the corporate income tax bill. Yes, mass media entities would face bankruptcy. High time. Serious journalism, including investigative journalism, can be paid for differently. See https://www.fuzzydemocracy.com/fzyenglish/infowars.html

Once the tax exemptions for corruption have ended, a steadily increasing tax could be levied on expenditure for advertising.

5. Others have long advocated various taxes on financial services, for example, the Tobin tax.

________ ________ ________ ________ ________ ________

Protection Agencies

600 words

“Protection Agencies” is another word for “Governments.” Protection is always necessary, whether from internal disorder or from territorial incursion. For the former there are police forces and the judiciary, and for the latter the military.

But government overreach and corruption, since 2020 at unprecedented levels, have led many to imagine that it is government itself which must or could be abolished. They embrace anarchism, now renamed “voluntarism,” in the belief that self-regulation is the answer.

The general reason that self-regulation is doomed to fail is that it does away with an essential layer of checks & balances.

When government becomes arbitrary and indulges in overreach, it changes from being a protection agency to being a protection racket, creating the threats it is meant to defend against. At this point major surgery becomes necessary. Those who use terror to impose their rule can only be countered by counter-terror. This is to place the weak-willed, the compliant, in the dilemma of having to choose which to side with, the force of reason or the thuggery of unimpeded power. This principle, too, is an application of the principle of checks & balances.

Equating government with “protection agency” will, for many, involve a rethink of what government is.

It may help to compare the role played by insurance agencies. These (in theory) compete with each other, restrained by the cost advantages offered by competitors but promoting themselves by the promise of reliability when it comes to paying compensation. A key difference, though, is that there need to be several insurance agencies whereas government must have a monopoly.

Resorting to the criterion of cost, a protection agency loses credibility when it comes to cost so much that an alternative protection agency can be imagined which would perform better.

One of the safeguards against government overreach and corruption is universal suffrage and the prospect of electing a new government. But the party system, now nearly a uniparty system, combined with corrupt mass media, has put paid to that safeguard. The solution here is, would be, “fuzzy democracy,” which is presented at https://www.fuzzydemocracy.com/ . This works by recycling votes such that every vote counts and none go wasted while providing an enormous choice of individual candidates independent of political parties. For technical reasons, this system has only become feasible recently.

At the outset I said that government provides protection from internal disorder and territorial incursion. This means long-term protection. It is through such semi-permanent hegemony that money becomes possible. Having money is to have a claim on an indefinite range of goods & services stretching indefinitely into the future.

It is essential to money, as a concept, that it circulates. This is entirely different to owning precious metal or jewels, which are best understood as barter intermediaries. Gold & silver do not deteriorate and, being inert, do not need to circulate.

Two elements of the mechanism of money are taxation and inflation. These force everyone holding money (rather than real assets) to spend it sooner or later, enabling others to participate in the monetary roundabout.

This said, excessive taxation or inflation undermine the purpose of money.

Taxes must be paid in the currency ordained by the hegemonic protection agency. They might be paid in gold or silver coinage, but cannot be paid in gold or silver. The principle is that, in order to finance its protective services, a government issues anonymised credit notes to its employees, which means that it incurs debt. By imposing taxation it demands the return of those credit notes, but only at appointed times stretching into the future. Since eventually everyone needs the credit notes in order to pay taxes, these circulate, thereby becoming, i.e. constituting, money.

The corollary of this time-dependent flow is that government debt is essential for the creation of money. Similarly, inflation, too, is essential for the flow of money, inflation preventing people from retaining money as if it were imperishable gold or silver.

These conclusions fly in the face of the narrative upheld in the alternative scene, where debt and inflation are demonised.