Taxes in one form or another are necessary in any society above the hunter-gatherer level. And even hunter-gatherers required “sharing”, which was a sort of “tax” in its own way. In times before the invention of money, taxes were collected in the form of labor. You worked off the tax obligation. This is likely how the pyramids were built in Egypt. The Pharaohs probably used labor conscription, at least for the more simple tasks which could be done by unskilled labor under the direction of hired overseers. Most of the workers would have been agricultural workers who were only needed for part of the year. Leaving the rest of their time open to working on the pyramids, which must have taken at least years to build. As the Pharaohs were seen almost as gods, it is possible that the people saw the work more as something to fulfill a religious obligation, a sort of duty to the country and its holy ruler.
Some libertarians have suggested a social order where everything is “owned” by someone and you pay to use it. Somewhat along the line of toll roads and so forth, although the concept covers more than just roads. Perhaps some sort of “membership fee” would be collected, much like a private club. In theory the idea sounds interesting, but it likely would be difficult beyond a relatively small sized village unless there was a standard medium of exchange. Having money pretty much means that you have to have some sort of governing body, some means of resolving disputes, and so forth. Someone has to be the leader, the person who makes the decisions. In any case, the history of the human race pretty much indicates that civilization started about 8,000 years ago, in the form of mud brick homes there in what is today the Middle East. Eventually city-states developed, ruled by a boss man, leader, king. The ruler was also often the “law giver”, as well as being semi-divine. Money came about in the form of precious metals, which formed a medium of exchange, a way of converting work, the production of goods and services, into an actual economy. It was also possible to “tax” people for money, then use the money collected for the benefit there of the ruler. Who using tax money, could buy goods and services from providers. Hire soldiers, pay priests to convince the people that the government was “just” in what it did, even if the government did things that didn’t benefit the people, but only the king.
With time political systems were invented that didn’t have a king, strong man, warlord as ruler. The concept of elective representation was invented by the Greeks, who soon learned that political parties and the elected representatives tended to serve those who could finance political campaigns. The Greeks of Classical Athens discovered “demarchy”, which was the selection of representatives by lot instead of by popular elections which often elected people whose major interest was in serving those who had financed them! Demarchy however hasn’t been popular with most political leaders, and it certain would not have been favored by our “Founding Fathers”, who were “men of means” and who favored the creation of a government that would “protect wealth and property” from the “mob” (the working poor, those without wealth and property). The most common form of taxes back then were property taxes along with tariffs on imports from other countries. Taxes on income first came into law at the time of the Civil War, but were dropped after the war as being “unconstitutional”. The permanent establishment of an income tax required a Constitutional Amendment (the sixteenth) which was passed in 1913. At first it only applied to wealthy people, but with time eventually applied to almost everyone. It is an effective tax, but also creates adverse economic effects, reducing work incentives and reducing the amount of money available for investment. Avoidance is also a problem… A number of alternative taxes have been tried out, but all of them tend to create problems of one kind or another. Enforcement is also a problem, as is the creation of “black markets” where “cash” is used and every attempt is made to avoid detection by the tax collector.
The effective tax rate that Americans pay consists of the income tax, the payroll tax, state income and sales taxes along with property taxes. There are also miscellaneous taxes and fees. License fees, telephone fee to support 9-11, fuel taxes, local sales tax. Then although you may think your employer is paying half of your payroll tax, you are actually paying all of it in lower wages and higher prices. Realistically you are paying a tax rate of about 30%. Even higher in some cases! Don’t believe me? Draw up a list of every tax you pay. The amount will surprise you! If you have any investments, you’re paying capital gains on those. Americans are in effect paying close to a third of their income in the form of taxes!
There is however a different sort of tax out there that would take far less of your income. Consider the Automated Financial Transaction Tax. Every financial transaction is taxed. The burden of taxation is effectively spread throughout the entire population, and tends to be to a great extent one that taxes the wealthy more because they engage in activities that involve moving money around. Buying and selling stocks on Wall Street. While these sort of activities are very profitable, they do not actually “produce” anything of real value. There is some evidence that this sort of activity was responsible for the Great Recession of 2008. It would thus be to our benefit to “discourage” these sort of activities as far as is possible. This the Automated Financial Transaction Tax would do. It would also “tax” those who operate in the “underground economy”. Not by a great percentage, as a 6% tax would bring in sufficient funds to replace all other existing taxes due to the fact that there are about one hundred trillion dollars worth of financial transactions over the period of a year. Also, due to the design of the A.F.T.T, there is no need for everyone filling out tax forms. H&R Block will have to find something else to do. The process can be completely automated using our current technology. We could even design it to be as unnoticeable as possible if we so wish. It also has far less adverse effects than does our present tax system. There are no deductions, no tax credits (unless we want them) and no paperwork. The tax is 6% on every financial transaction period. It would be a lot like the Michigan sales tax (which is 6%), but it would eliminate all other taxes. There would be one tax and one tax only. No other taxes would be allowed. State and local government would get their money based upon the population. No one gets less, no one gets more. I suppose we could still have state lotteries as they are voluntary and no one is forced to buy lottery tickets…
Jerome Bigge, (muskegonlibertarian.wordpress.com)