Theory of taxation

In order to realize certain values and goals that we hold in common—or compromise to tolerate—in our society that, for whatever reason, are not best realized through free participation in a market economy, we give our governing bodies the right to impose certain taxes upon us. These taxes consist of eight specific types, and each plays its own economic role in distributing the tax burden fairly and efficiently. The specific amounts of each tax are to be determined as needed to cover all government expenditures on the various programs to realize our values and goals.

1)     The first type of tax is a tax on market transactions of consumables—including the sale of labor by persons to employers and including interests on loans—which should be levied at the state level (“state” meaning nation-state or a state of a federation or a confederation). In order to maintain our maximum privacy from government invasion and maximum freedom from government influence in the types of transactions that we conduct, the tax rates on all market transactions of consumables should be identical. However, this tax should only be levied on the sale of consumables to the final consumer, not on “value added” transactions (the various steps of production of the consumable in the supply chain), to not favor enterprises with greater vertical integration. This tax must be applied consistently to everyone, including private persons, incorporated for-profit entities, and incorporated non-profit entities.
2)     The second type of tax is a tax on market transactions of equities, which should be levied at the state level. In order to maintain our maximum privacy from government invasion and maximum freedom from government influence in the types of transactions that we conduct, the tax rates on all market transactions of equities should be identical. In a nation-state, in order to minimize capital outflows from the country, the tax rate on market transactions of equities should be set at the national level, and it should fluctuate on an annual basis—never by more than one percentage point per year—to maximize the tax revenue based on the tax rate versus the number of transactions. In a federation or a confederation, in order to minimize capital outflows from the country, and in order to minimize inefficient competition by the member states among each other, the tax rate on market transactions of equities should be set at the national level the same as in a nation-state, while being collected by the member states based on the location of the seller.
     Gifts to one’s own immediate family members amounting to 20% or more of the average annual income (in the donor’s country), in the span of one fiscal year, should be considered and taxed as market transactions of equities. Gifts to all other persons or entities amounting to 10% or more of the average annual income (in the recipient’s country), in the span of one fiscal year, should be considered and taxed as market transactions of equities, with the only exception being gifts to legally incorporated non-profit entities. All instances of inheritance beyond 20 times the average annual income should be considered as a market transaction of equities for tax purposes; all personal inheritance of at most 20 times the average annual income should be free of any taxation.
3)     The third type of tax is a tax on land-space (geometric space), which should be levied at the state level. In order to maintain our maximum privacy from government invasion and maximum freedom from government influence in how we use and enjoy the land-space that is available to settlement (as opposed to land-space that is reserved for the preservation of nature), the tax rate on all areas of land-space must be identical. The only exception to this rule is that the tax on land-space may be applied at different rates to public entities (municipal and regional administrative districts) versus private entities (holders of land-space that is not incorporated into public entities).
     In order to maintain our maximum freedom of utilizing as much land-space as we can afford, the tax on land-space should be set low enough so that the occupation of land-space is maximized. Specifically, the tax rate should be so low that at least 80% of the land-space available to settlement is claimed by either private or public entities.
4)     The fourth type of tax is a tax on land-value, which should be levied at the municipal and regional levels (village, city, county, etc.). The administration of this tax should be left to the discretion of the municipal and regional entities for the development of their own communities on their own land-space holdings.
5)     The fifth type of tax is a tax on resource extraction, which should be levied at the state level. This tax is levied on the extraction of subsurface natural resources that are available to all of the residents of the state individually but to which exclusive extraction rights are granted in order to avoid inefficient competition and potential conflict.
6)     The sixth type of tax is a tax on externalities, which should be levied at the state and national levels, as might be necessary. The tax on externalities is levied on market transactions, resource extraction, and waste disposal that contribute to a significant burden to society as a whole. For example, if a society provides medical care to the public at the expense of the public, it may impose a tax on the sale of products that have an adverse effect on public health, such as alcohol and tobacco. Also, if the release into the environment of a particular resource in large quantities has an adverse effect on the environment—such as carbon that is contained in fossil fuels—a society may impose a tax on the extraction of that resource. Also, if a substance that is harmful in large quantities is released as waste into the environment because there exists no viable method to properly treat it in a closed system—such as some types of fumes—a society may impose a tax on the disposal of that substance into the environment.
7)     The seventh type of tax is a tax on imports and exports, which should be levied at the national level. To maximize economic efficiency and productivity, there are only two reasons to impose this type of tax. The first reason is to compensate for activities that are circumventing the regular tax structure (points 1-6), such as crossing the border to conduct market transactions at the lower tax rate of another country. The second reason is to protect domestic industries that are strategically necessary for national defense.
8)     The eight type of tax is a tax on the membership of states in a federation or a confederation, which should be levied at the national level onto the state governments. To maintain the independence of each member state in the state’s own internal affairs, while also incentivizing the national government to develop struggling state economies, this tax should be imposed directly on each state government as a percentage of each state’s own tax revenue. The percentage of each state’s own tax revenue that is claimed by the national government should be based on the needs of the national government, with the national government being composed of the representatives of each state. The elected governing officials of each state should be held personally responsible for the payment of the tax to the national government.

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