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[see also Taxes: Government Financing In A Free Society - GC]

According to Objectivism, taxes are evil because they are forced upon the citizens of the country. I agree with this and would be glad to live in the United States where i get my full paycheck and not have to worry about tax returns and stuff.

My question is about the transition to no taxes from what we have now. That is, if an Objectivist politician were to propagate reducing taxes what strategy would he take? Would you start with flattening the tax curve? or would he start by eliminating the tax from the lower end?

Opinions?

Edited by GreedyCapitalist
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It's hard to imagine. One Objectivist congressman isn't going to be able to do much. There are a lot of things that could be done as a first step, but the most important, IMO, is to stop spending first. If you continue spending and just don't gather the money needed to pay those debts, that's going to lead to a huge disaster. Objectivists don't generally advocate causing the collapse of the US government in Atlas Shrugged fashion. So while philosophically speaking it's taxation that's evil and not the spending, from a practical point of view, if you can do only one thing (which I think is more realistic), it would be to stop spending.

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There is a sersies of articles by Ayn Rand on the matter of government, and its financing. I saw a few in VoS.

Her idea was that it is too early to start something major like that. Rational philosophy must enter into the culture first, before this can be done or worth doing so.

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Spending less sounds like a good option. But in terms of appealing to the American people, where would the cutting of the taxes start?

For example, supppose spending *was* lowered considerably. Whose taxes would you cut first?

Also, i'm assuming that said politician would not start by teaching Objectivism.

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As has been pointed out above, a prerequisite to cutting taxes is cutting spending. If the government cut expenditures (of non-voluntary funds) to 0% then even a 90% flat income tax would be equivalent to no taxes, since the collected funds would essentially be destroyed.

It’s important to keep in mind that nothing can happen until there is an intellectual revolution, at which point the majority will refuse to pay taxes or accept welfare.

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Spending less sounds like a good option. But in terms of appealing to the American people, where would the cutting of the taxes start?
Well, I'd start by zeroing the budget for Health and Human Services, and for Agriculture and Transportation. These are at the top of the list of federal agencies that have no business existing and get lots of money.

The point that I might need to emphasize is that primarily we need to spend less, and when that happens we can consider who exactly gets their taxes reduced first. If you want a mob-rule type "what appeals to the masses" approach, I'd say, eliminate all taxes on incomes under $300,000.

Edited by DavidOdden
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It means that if they take 90% of your money and just sit on it (it is never spent in any fashion whatsoever), than it ceases to exist qua money. The goods it represents don't go out of existence, so the remaining 10% of the money will still be representing the total amount of goods in circulation . . . the net result being that your 10% will be worth as much as the 100% you had before. It basically relies on the fact that we use a fiat or representational currency instead of a hard currency: it's tantamount to your credit card company saying that you have a "theoretical" $100,000 limit, but you you have to stay $90,000 under the limit as a "safety gap". Practical result: you have a $10,000 limit.

If, however, the government were to take 90% of the goods or hard currency, there would be a problem, because it would be destroying productive capacity instead of paper that doesn't mean anything.

As for the question of where I would start if I were to reduce taxes, I'd probably hit "specialty" taxes like capital gains or vice taxes and "invisible" taxes like payroll taxes. Part of this program would be eliminating stupid laws like vehicle registration, and hyper-expensive programs like social security. The reason I'd start with these is that they are most indicative of the country's overall philosophical approach to the question of taxation. If you can get taxes that don't, apparently, affect most people repealed, you know it's time to move on the whole deal.

Then you start instituting measures like a flat income tax that decreases the burden on the sectors of society that invest most in future growth. This would theoretically ramp up the economy, making it easier to eliminate taxes altogether at a later stage. At the same time, you begin a takeover program of gradually introducing charges or a government lotto or whatever your final government-financing scheme will be. You also cut every last vestige of improper government spending and begin sending people larger and larger refunds.

In the final stage, there shouldn't be anything left but a flat income tax and a flat sales tax. It's a tossup which of these to eliminate first. A sales tax is semi-voluntary, since people have to actually go out and buy things in order to encounter it, but it may also cause people to limit their transactions in order to remain tax-free. If you actually manage to get to this stage and you have your voluntary-financing apparatus in place, why not just dump both of them at the same time? Sounds good to me.

It's not impossible or even really difficult to develop a practical plan, in fact, it's vital to have a practical plan when you start pitching your philosophical ideals. If you were a venture capitalist, would you rather invest with someone that says "the theory is this so we're going to enter into this area and start making some sort of product" or someone that actually came to you with numbers describing the market gap, why they think there's a demand, what specific product they're making to fill that demand, how they plan to merchandise it, advertise it, potential customers they've already approached, etc.? Seems like a no-brainer to me.

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If you want a mob-rule type "what appeals to the masses" approach, I'd say, eliminate all taxes on incomes under $300,000.

Of course, I'd say, if this approach actually stands a chance of working you don't have a political climate where it will be possible to eliminate taxes, anyway.

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It means that if they take 90% of your money and just sit on it (it is never spent in any fashion whatsoever), than it ceases to exist qua money. The goods it represents don't go out of existence, so the remaining 10% of the money will still be representing the total amount of goods in circulation . . . the net result being that your 10% will be worth as much as the 100% you had before. It basically relies on the fact that we use a fiat or representational currency instead of a hard currency: it's tantamount to your credit card company saying that you have a "theoretical" $100,000 limit, but you you have to stay $90,000 under the limit as a "safety gap". Practical result: you have a $10,000 limit.

Ahhhh, thanks. :lol:

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As has been pointed out above, a prerequisite to cutting taxes is cutting spending. If the government cut expenditures (of non-voluntary funds) to 0% then even a 90% flat income tax would be equivalent to no taxes, since the collected funds would essentially be destroyed.

It’s important to keep in mind that nothing can happen until there is an intellectual revolution, at which point the majority will refuse to pay taxes or accept welfare.

So you do support flattening the tax instead of eliminating tax from the bottom up or some other option. Somehow i feel that wouldn't go well in the current political environment. Heck! they (liberals) complain about legitimate tax returns by saying they favor the rich. "what's a couple hundered thousand out of millions for the rich?"...ughhh....

Can you explain what you mean by an intellectual revolution?

Cheers,

The Guru "not really a kid cuz i'm 19 now"

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According to Objectivism, taxes are evil because they are forced upon the citizens of the country. I agree with this and would be glad to live in the United States where i get my full paycheck and not have to worry about tax returns and stuff.

My question is about the transition to no taxes from what we have now. That is, if an objectist politician were to propogate reducing taxes what strategy would he take? Would you start with flattening the tax curve? or would he start by eliminating the tax from the lower end?

Opinions?

As I myself didn't have an income in 2005, I didn't pay any 'income' taxes, however, I do owe the town a whopping property tax bill. No income, but I STILL have to pay taxes (and a far larger number than the amount that goes to the feds in a good year--we're talking a brand new Kia every year). Sounds rather unfair, doesn't it?

The whole issue comes down to ownership: ownership of self and of property. The short version? We own nothing. Even our own bodies (and hence the labor we generate) are property of the State by force of military action. Certainly there has been no property ownership since property taxes and eminent domain have been law in the US.

Before we can eliminate taxes, we first have to reform the government, which respects no private ownership of anything--including our bodies. It is useless to discuss tax reform, when that matter is but a symptom of a deeper cause.

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So you do support flattening the tax instead of eliminating tax from the bottom up or some other option. Somehow i feel that wouldn't go well in the current political environment....Can you explain what you mean by an intellectual revolution?

No, I support immediately eliminating almost all the federal agencies, including the IRS. For that to happen, we will have to have a fundamental change in the intellectual climate and popular culture followed by a popular revolt (hopefully an intellectual one only) after which the public will demand fundamental changes to the government.

Edited by GreedyCapitalist
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I'm still not sure what you mean by an intellectual revolution. Do you mean everyone should be familiar with and follow Objectivism or start thinking rationally on their own and come to the same political goals as Objectivists without necessarily agreeing with the acutal philosophy.

Moreover, i don't think it needs to be a revolution--which implies a sudden change in thinking--but that an evolution would be okay too.

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"Revolution" was not used above to mean "quick change" but "drastic/fundamental change".

To roll back taxes, one needs a majority of voters willing to roll them back. Voters do realize that government spending requires taxes to be collected. There is a limit to how much of tax-cutting is possible unless these voters are convinced that government spending needs to be reduced.

However, an ordinary voter is not in a position to say how much a particular government program should cost: should the government spend $100 billion on the Medicare drug benefit, or $50 billion? All the voter knows is that he wants the government to help those poor grannies pay their drug bills. So, the real requirement for change is that people want the government to do less, be less involved, etc.

So, for any meaningful reduction in government expenditures, a sizable number of voters must have a fundamental change in their thinking about the role fo government. This change has to be strong enough that they hold firm when they're confronted by the stories of the people who will suffer through a government roll-back.

Edited by softwareNerd
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I understand that the spending needs to be cut before taxes but in terms of achieving political goals, it is easier to tell people, "Hey, the government is taking *your* money and because you want taxes to be cut, spendings should be cut".

The other way is to say that spendings such as Social Security, Welfare, Medicare, NASA and others is immoral.

Most of us basically agree on things except for the point that i think nobody hates spendings. But we can show people that they hate taxes.

Edited by The Guru Kid
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Imagine if the government gave everyone a $10 bill. That wouldn't make anyone richer, right? Same thing if the government took $10 from everyone and burned it.

Not that this is so important but this would change the percentage of money in the system that individuals would have. For example, someone who only had $10 would go from having a non-zero fraction of money to no money at all. :D

Then you start instituting measures like a flat income tax that decreases the burden on the sectors of society that invest most in future growth.

Has anyone here heard Richard Salsman's speech "A New Tax Policy that Advances Capitalism"? I have not, but he explicitly states that a (specific implementation of the) flat tax might potentially be worse than our current system. I am curious as to why. Here is the abstract:

“Indirect taxation” at a rate which is the same, proportionally, for all citizens, is the only tax system consistent with the U.S. Constitution and a capitalist fiscal policy. Today’s system of graduated income taxes (direct taxation) is immoral, unconstitutional and totally inimical to prosperity. How did the income tax become law in the U.S.? How has it evolved since passage in 1913? How might it be abolished? Why is a “flat tax” on income, as proposed by Kemp-Armey-Forbes, potentially worse than our current system? Why must tax reform precede spending reform? In answering these questions, Mr. Salsman argues that only the passage of a national sales tax — and with it the abolition of the IRS and all federal taxes on personal and corporate income, capital gains and estates — will permit the advance of capitalism in the 21st century.

The Fair Tax seems to be an interesting idea as far as tax reform goes. It seems to be a step in the right direction.

Edited by DarkWaters
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The Fair Tax seems to be an interesting idea as far as tax reform goes. It seems to be a step in the right direction.
Check out this thread, for some discussion of the Fair Tax.

The problem I have with any Federal Sales tax proposal is that I'm convinced that after a few years, people will complain that it is regressive, and that the new money that we "need to cover this deficit" should come from richer people... in other words, with the passage of time, we'll end up with both Sales tax and Income tax.

Edited by softwareNerd
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My question is about the transition to no taxes from what we have now. That is, if an objectist politician were to propogate reducing taxes what strategy would he take? Would you start with flattening the tax curve? or would he start by eliminating the tax from the lower end?

Opinions?

In my mind, the first taxes that should go are: income and property taxes. Income Tax because they punish productivity. Property tax because it is a double tax on your productivity (you pay for your property with income that is already taxed) ,it is downright evil to force one to pay rent to the government on something they already paid for with after tax dollars.

But it would depend on what funding certain taxes are used for in certain areas.

For example, here in Ontario, Canada our provincial Income Tax was implemented to pay for our provincial health insurance plan. An objectivist would want to eliminate the government monopoly on health insurance and make all health insurance voluntary, so in order to do that you would first have to eliminate the tax used to fund health insurance in the first place so that people can be able to afford their newly chosen insurance plan.

Property taxes are used to fund municipal expenditures. A property tax could be scrapped and replaced with a locally administered consumption tax. If taxes have to be there (which they will in the transition to laisse-faire), taxing property is far more unjust than taxing consumption.

Edited by Glenn
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  • 4 months later...

Greetings to all. I'm relatively new to Objectivism (right now I'm about 2/3rd's of the way through Atlas Shrugged, have read a handful of Rand's essays, and am a regular at www.capmag.com). My question is: given that in general forced taxation is an infringement on property rights, how would Objectivism argue to fund the limited government it requires. I've read about a voluntary lottery possibility, but is this a realistic option for our current government, and if not, what are some alternatives? More generally, if government is necessary to protect our individual rights, how can we ensure that this entity is funded without forcing citizens to pay for it, which is an infringement? Seems like a contradiction, but then again, I'm new to this philosophy. Thanks.

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I've read about a voluntary lottery possibility, but is this a realistic option for our current government, and if not, what are some alternatives?
One alternative is to not have our current government, in particular the part where trillions of dollars are destroyed every year for no good purpose save stupid welfare schemes. If the expenditures were restricted to the proper function of government, lottery and especially contribution would be a quite viable plan for financing. Another option would be that governments could charge a user's fee to enforce contracts, so that when you make a contract, to be enforceable, both parties have to pony up a dollar, or $5, or something based on the cost of enforcement.

It is not generally government policy to take the cost of government out of the hides of wrong-doers, but they should be made to pay. Thus a thief should be required to pay for the cost of bringing him to justice. Of course, this may not be possible in every single case, but this is an option that should be pursued vigorously. Similarly, rogue nations which try to violate the rights of Americans by e.g. invading our borders or stealing our overseas property can be delat with by seizing their assets (be they in the US or, if necessary, in Ratistan).

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  • 2 months later...

Hi, I'm new to this forum and yet have always been very found of Ayn Rands writtings. I wanted to ask a question however about taxes. Is it possible to fund a government (police, courts, military) off nothing but voluntary donations? And if it is possible, what historical evidence has shown that this type of system works. I know that the construction of the Great Wall of China was funded entirely off of government lottery, we should see if government can be funded the same way.

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