A Simplified Taxless State: A Proposal (part two of three)

8 months ago
63 in liberty

In this three-part series, I'm going to show how a state can be a pure market actor and not require taxation. The state will still have an income - cynics would call it taxes under any other name - but the key difference is that the income is obtained through market means, based on a state's USP, and not through coercion by force. This leads to a society where the state does not need to know anybody's income, wealth, or transactions, leading to the obsolescence of most registers and reporting requirements (including the elimination of a corporate register), and where a "black market" is a contradiction in terms, as the state does not interfere with the market it is a natural part of. It also means an end to victimless crimes by its very nature.

Skyscraper office buildings

Part Two: A low-friction voluntary economy

In the first part of this series, I introduced necessary new way of thinking of land ownership - how there are tier-one and tier-two land owners, and a nation-state is the only type of entity capable of owning land, on the basis that it's the only type of entity able to maintain a military capable of repelling other tier-one land owners (other countries).

This leads us to part two, where I elaborate on the gains this brings, given that one accepts the premise that the state owns all land (even if it pretends to give sub-ownership, that's still sub-ownership, as argued in part one). This means that people who formally lease a land plot pay a lease for that plot to the state. Everything is voluntary and on market terms, and this gives the state an income with which to uphold basic internal and external security, civil services, and a social safety net (probably universal basic income) to its liking - but just as probably not enough money to employ scores of unnecessary bureaucrats and gender study batallions.

(Let's skip for now exactly what a land lease will look like - I'll be returning to some basic thoughts around that and possible models in part three.)

Wealth is created in the quantity of voluntary trades

Remember how, if we want to create wealth in a nation, our objective is to maximize the quantity of voluntary trades? This means we should enable people to trade how they want, when they want, what they want, and without any burden of taxing, recording, or reporting any of it.

This structure, where the state gets all its income from voluntary land lease and nowhere else, enables a society to have exactly that.

There is no longer any need for bookkeeping regulation. There is no longer any need for banking regulation. There is no car register. Apart from leasing land, there are no forms whatsoever.

Gold gold and more gold

The state gets its income at the bottom of the stack, literally on ground level of the economy. Every other cost must be enough to cover that land lease. The rest of the economy can work exactly how it wants, and will work exactly how it wants.

There are no income taxes, which leads to people being able to make income how and when they please, from one or many sources. There is therefore no personal tax declaration and no tax return forms. There is no corporate registry and therefore no corporate taxes either -- investment and bankruptcy protection can be well handled contractually -- and therefore no bookkeeping requirements. There are no authority forms whatsoever for regular everyday business over and above the state income, which is land lease and only land lease.

(Obviously, corporations could keep proper bookkeeping anyway. If they want to. In any form they want. That's the whole point! Maybe there are better forms of bookkeeping today than the double Venetian bookkeeping from 1495. Yes, you read that right: fourteen ninety-five.)

Imagine the amount of trade that can happen if you just allow it to happen, if you don't burden it down with recording and reporting requirements for every single transaction - if you don't have to care about any one single transaction and can have the state work just fine anyway!

This also means that there's no tax wedge at all into the efficiency gains from division of labor. If there's a few percent of efficiency to gain from exchanging services, there's no longer a state which makes that unprofitable before there's a 150% gain - or more usually a 500% gain. Imagine the efficiency gains unlocked!

As a corollary, imagine the wealth that can be built if you remove all - all - obstacles to trade like this! It has the potential to be running circles around a traditional society with an overdeveloped sense of bureaucratic order.

In part three, we'll return more precisely to a few models of how the land lease could work in terms of market pricing and trade. There's also the important question on how to value land improvements.

Handcuffs (open)

Victimless crimes cease to exist

As a final note on this part, it is absolutely key that the Simplified Taxless State remains a non-privileged market actor, even if it is also the arbiter between market actors in another role. By this, I mean that the state is strictly prohibited from inventing "collective problems" and give itself the right to use force against citizens to "solve" those problems. This has the very important side effect that the state can't enforce arbitrary behavioral rules against citizens where there's no victim, and therefore, no claim.

In other words, in just that definition of the state duty, we have introduced a requirement onto the definition of a crime: There must be a victim pressing charges. This basically means that everything except crimes against life, liberty, and property cease to be criminalized immediately - just as it should be. There is no reason for a state to interfere with somebody exercising their property rights to manufacture slippers, a chair, or a DVD from their own materials. There is no reason for a state to interfere with voluntary trade of goods and services, except moralistic reasons, which should go out the window yesterday anyway.

Oh, and what about pollution, which is the most common objection to this? How would this scheme handle pollution? That's actually one of the easiest things in this entire picture. Remember how, when you lease a residence, you're liable for any damages caused to the residence by you during your lease? The exact same standard boilerplate could just as well apply to a land lease, and it's as simple as that.

In part three, we'll look more at the land leases that make up the state's voluntary income.

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62
  ·  8 months ago

I posted a question on the first part, but I don't see a particular answer to it (or perhaps I've misunderstood the answer): given the voluntary nature of employing governmental services, i.e. the state actor has no coercively-enforced advantage in the marketplace, could an individual simply declare their plot of land independent from state control and become a de-facto tier-one land owner, so long as he or she also does not request the benefits that the state actor is able to provide?

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59
  ·  8 months ago

Wow, thats a really good question. In practice it will be a question of power. Imagine, this "individual" is not an anarchist guy, but a big corporation worth billions of Dollars. Than it might have the power to become a state by his own. If not, how about a bunch of these big corporations together?

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65
  ·  8 months ago

If it's an economically better alternative, it should be possible. The powerful enterprise in this case would constitute a new "state", with it's own defense which is more cost-efficient.

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50
  ·  8 months ago

This company will not have any kind of commitment to the environment. This could create a pollution problem.

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45
  ·  8 months ago

Yea it all boils down to the cost efficiency of their protection. So then we would have hubs of rebellion against the state, of people claiming this bubble of land as their own, and because they can defend it there is nothing anyone can do. This sounds alot like the oligarchies of old, or exactly like the system we already have.

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45
  ·  8 months ago

there is a reason this question is going unanswered.

29
  ·  8 months ago

I think the idea of voluntary states/taxation will be necessary to bridge the gap between a world of nation states and free anarchy. From the early days of rape and pillage to the charming dispositions of swindlers, taxation has evolved to the point most people doubt it is compulsory.

Now, I don't particularly like the idea of a tax on all land being called voluntary. Unless you're a fish or a seasteading billionaire, it'd be identical to the present day minus all the other compulsory taxes. Besides, You ain't no kind of man if you ain't got land.

The underlying premise, that the state rightfully owns the earth, would just be a reset button on state power. This belief in states is entirely cultural. It is William Blake's "mind-forged manacles" and if people don't stop believing this bullshit no amount of political reform is going to be enough. The problem with a free market society coexisting with a government is the government will grow incredibly powerful by feeding off its productive people. The U.S. is perhaps the most historically relevant example of this. Additionally, land and future taxation can be used as collateral for credit. It's a recipe for unconstrained growth.

I think another means of facilitating this transition is too simply relax government control and allow businesses to step into traditional government roles. E.g FedEx or UPS. If the service is necessary and needed, people will pay for it willingly. As I see it, nothing major needs to be undone or tore down. Time and consumer choice would make the government service obsolete. Let them fade away.

Another factor we mustn't overlook when we ponder a free society is the very interface we are conversing through. The internet completely changes what future self-government will look like. We can see glimmers of it nowadays, but who knows what a couple of centuries of this will do to our political systems.

59
  ·  8 months ago

Love how your taking a very advanced concept and presenting it in a very plain language way. I thank you a lot, love the concept.

68
  ·  8 months ago

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61
  ·  8 months ago

wow this guy totally nails it eh !
our objective is to maximize the quantity of voluntary trades? This means we should enable people to trade how they want, when they want, what they want, and without any burden of taxing, recording, or reporting any of it.......
is it not the very essence of this community of Steem, decentralized exchange of real wealth from one to another without need of explanation to anyone ! with nothing more than a rent of space from a citizen owned and paid for protection system protecting the tenants if you like of this physical space and it,s right to exist ! Based on the historical boundaries of man which would be for the greater part seen as being still relevant by the greater majority of people living within its borders !! The problem will always be the borders, but they can too be liquefied by an online decentralized community of nations combined in a true exchange of wealth be it gold or Steem . Where people contrary to their place of physical existence could interact and reward others far away for things which they offer to the world of value.
A great and important post I think from our resident visionary of the future Falk !!

42
  ·  8 months ago

wow very good post you

51
  ·  8 months ago

Here is the spanish translation!

67
  ·  8 months ago

Great article! Thanks for the posting, namaste :)

58
  ·  8 months ago

Not quite sure I get the land ownership. You are saying that everyone would lease land from the state? And you wouldn't have sole ownership of land at all?

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63
  ·  8 months ago

Check part one (linked) for a much more thorough explanation of this!

EDIT: actually inserted link into comment - thanks @jamesc for showing this can be done in the comment below

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42
  ·  8 months ago

hello sir check my recent article me

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59
  ·  8 months ago
42
  ·  8 months ago

must have stared at that gold vault for like 10 minutes at least now.

59
  ·  8 months ago

One downside of this land lease solution is, that nobody buy a piece of land and then do nothing. He has to work to pay the lease. If he can not pay the lease for the land then the state will expel him from it. This is really awkward about your system. What would be a commodity to keep your wealth save for years? (except SteemPower of course)

32
  ·  8 months ago

Very insightful falkvinge! I wonder what impact free energy generators could have on the taxless state? (Such as a solid state 5kw home unit that costs less than $100 FRNs to build)

It appears to be getting close to freeing us from the tax farm...

I have a teaser article for my new series on Steemit, "The Anarchronicles"

keshe

https://steemit.com/anarchy/@scotty/the-anarchronicles

keshe

43
  ·  8 months ago

I'm going to be called a negatron but I feel the whole plan is flawed.

Under your approach "his leads to a society where the state does not need to know anybody's income, wealth, or transactions".

"Doesn't need" isn't in the same ball park as "doesn't want". Taxes are not just about revenue, it's about power and control, same as it's always been.

Keep the citizen's nose to the grindstone, be a good boy, pay your taxes and contribute to society. Do NOT stick your head above the parapet and question the absolute bullshit, consumer driven madness we are all part of.

Taxes are here to stay for the majority.

54
  ·  8 months ago

So, men and women that want to do business as a 'country' or 'government' still get to operate a protection racket and deny actual ownership of land to everyone else. Pay up, or else. As always, the biggest threat to everyone else are those who do business as 'government'. Useless, unproductive, violent scum.

55
  ·  8 months ago

Great post.


In this model, if you live in an apartment, will the tenants of the apartment still pay the lease fee based on square foot or will the owner of the apartment complex?

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63
  ·  8 months ago

I'll be returning to that in part three, but the land lease will either be based on ground area times attractivity (measured by population density in a log scale) or a simple auction to establish market value.

How that ground lease cost trickles onward is basically up to the market actors involved. If I signed a lease of an apartment, I imagine I would be paying a landlord who leased the ground for the building.

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55
  ·  8 months ago

Great. Now, we have to patiently wait for part three.

59
  ·  8 months ago

Great post. I loved the first one, which makes total sense.
Monaco is a sort of taxless state (except for the social insurance taxes). But Monaco's success relies on the fact that it attracts wealthy tex-evaders (F1 Drivers...) and get some gifts from them.

I think that what is missing in your analysis is the answer to the following questions:

  • How to promote art and culture ?
  • How would you manage education and (fundamental) research ?
  • How to manage homelessness and unemployment? (welfare)
  • Management of private real estate (invention of tier-3 renters)

I'll give you my thoughts so we can have a discussion:
Point1 is very important because culture is precisely what defines a country. A pure capitalistic approach would probably lead to forms of art whom role would only be to get a ROI (we already have it today, it's called TV...and it sucks).

Point2 is tricky. The US University education system works on money, and has extremely strong impacts on the economy (debt, leading to leverage effects, especially under an economic crisis).
Fundamental research may not bring immediate ROI, thus would be put aside from the research priorities: The state would miss opportunities and would have to "buy" technologies abroad, leading to high costs for technological innovations (basically, you'd pay the taxes to other countries buy buying tech or importing high-end goods)

Point3: what happens when, because of point2 for instance, your country is in a 10-years economic downturn and unemployment raises at dramatic levels ?
How would you control land leasing in order to avoid homelessness, and still bring a good level of income for basic state spendings (Military for instance)

Point4: How would you manage the fact that people would probably create businesses with the land: creating a shortage of land in areas, making the market prices climb and making a profit out of it (I live near San Francisco... real estate is crazy).

###Thanks for your insights. GREAT GREAT reading.
(Can't wait for part 3 !)

@sebastien

47
  ·  8 months ago

Great post @falkvinge

56
  ·  8 months ago

I have currently been trying to configure a smart contract for land ownership and decentralized assets within bitshares but haven't yet been successful. Any ideas? With a 20 acre piece of land and blocking it in 1/4 acre lots with privacy policy honoring the understanding of building up and keeping green. :D

25
  ·  8 months ago

Is anyone in South Africa reading this? Some very interesting comments and article. I need to reread everything. But my hunch this is a great evolution, maybe into something different. It would help if the 'government' was decentralized. And what about roads, the use thereof?

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26
  ·  8 months ago

Visit libertarian.org.za for more info on south African libertarians

67
  ·  8 months ago

Look forward to part three, this was very interesting and educational for me. Interesting how pollution is one of the easiest things. Great post! thanks for sharing :) Alla x

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50
  ·  8 months ago

I think that the same land-lease-system should be applied for water and air. Because these should be protected by the same easy method of liability in case of 'damage'

54
  ·  7 months ago

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63
  ·  8 months ago

The elimination of victimless crimes is fine, but that still leaves the worst kinds - this has always been a weakness in the stateless model. I posted something on the subject, raising more questions than providing answers ..

https://steemit.com/anarchism/@kurtbeil/crime-control-in-a-stateless-society-and-current-crimes-of-state

46
  ·  8 months ago

On the one hand individuals owning land is largely illusory today anyway since property taxes are effectively paying a lease to the state despite supposed ownership. On the other hand if the state clearly and plainly owns all land outright and leases it to individuals then the state gets to decide who gets to lease which land. Taking the land someone is living on as is currently called eminent domain would be as simple as not renewing a lease. In order for the state to own all land it'd first have to take all land in the largest eminent domain grab ever. This is entirely at odds with the sole legitimate roles of the government, the protection of life, liberty, and property. In any event implementing such a system would involve a lot of shooting and death at best.

59
  ·  8 months ago

Remember to read later! Thanks

54
  ·  8 months ago

What about the fact that the state has a monopoly on land ownership and charges lease fees that are so expensive as to discourage people from investing in land when needed for productive purposes?
Also, do you think class action lawsuits are okay? If so, then the only way to deal with tragedy of the commons situations in this situation is to file class action suits, which seems like a hugely inefficient way of dealing with tragedies of the commons. Am I missing something here?

25
  ·  8 months ago

Good article.

This is in some ways an old idea in new context, similar to the the classic "Land value tax" https://en.wikipedia.org/wiki/Land_value_tax .

Urbanists have some been advocating this tax as an alternative to real-estate tax because of the massively inefficient use of land since the automobile became popular and the urban sprawl became a problem as a lot of valuable land has been inefficiently used and allocated as parking lots and motorways in often in collectivised or semi-collectivized ownership.

This could also be implemented on a second level as "charter cities" could act as 2nd tier owners under the nation state and "lease" land to private owners in exchange for funding city infrastructure.

66
  ·  8 months ago

Just lower the guns, let everybody compete at "governing" people, and the natural balance in "government" will appear. It is the guns that is the problem, nothing else

48
  ·  8 months ago

At this point in time, are you aware of any states who are considering this proposal, or who have considered it in the past? I would be very interested in passing these articles on to the Oklahoma State Legislature. I don't know if you are aware of how many states are actually struggling and currently cutting programs as we speak due to financial difficulties. So a viable alternative would meet a very urgent need right now.

50
  ·  8 months ago

Do I get it right that we would still need a well working democratic system? Since we still need people to lead an army for defence and some kind of judicial power.
From experience I know it's not easy to have a well working democratic system.

70
  ·  8 months ago

Thanks for sharing. -upvoted! Feel free to visit my blog with different content too. Best regards, Jonas Ahrens

50
  ·  8 months ago

Thought provoking article!

29
  ·  8 months ago

One of the most interesting things I've read in a while... The problem with this model is that it doesn't eliminate corruption. So a powerful corporation will want a piece of the landlease pie, and brag government officials so that they can claim land as their own, making it a tier-one land owner. How could this be avoided?
I think after a while this will become the norm and we would see the end of the state as we know it, having a bunch of micro-corporate states everywhere. Although this could kinda be a good thing, on one hand, it creates competition, cuz how do you set prices when there is no competition?? That's another question that your system hasn't answered. You say it would be kind of like an auction system, but there's no reference price so...
Also, inflation in this system is inevitable, because you have a fixed amount of land and a growing population that will press on the demands on the system.
Another question, how do you prevent people stacking houses on top of each other like Favelas? I can see buildings growing taller and taller in the areas of lower prices and the higher price land going empty (yes I know this can create an auto-regulating tendency)

43
  ·  8 months ago

As long as "the state" has a monopoly on land ownership and military, there can be no free market at all. Military and land "rent" or "licenses" will be the new taxation. And "the state" will still do whatever it wants, rules won't apply to rulers.

Taxation is not the main evil of the state, but monopoly on violence.

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25
  ·  8 months ago

100% agree. nothing has changed. the man with the gun gets to make the rules

25
  ·  8 months ago

Great blog about a voluntary state that can be created by the people. By spreading the definition of liberty and freedom we can accomplish this dream to be truly free.

25
  ·  8 months ago

I'm not sure the proposal really solves the basic problems of modern society. the state must be responsible for protecting the citizen from other citizens, and this is a pernicious activity that requires a privilege utterly susceptible to abuse. but the state must be responsible because no one else can be. and to hold such responsibility it must have the power to enforce rules. but what rules? who gets to make them? who gets to decide what is right and wrong? is it illegal to sell drugs? what kinds? is prostitution illegal? if so, is it illegal to coerce someone into prostitution? and what about defining terrorism? is it terrorism to stand up in the middle of a theatre and yell fire?

these are all the quandaries modern states face and none of them are really addressed in the given proposal. I'm all for federated states where a government serves as a weak glue (which is how the US was designed) between sovereigns and perhaps handles foreign diplomacy, but at the end of the day, local governments still have to perform law enforcement or else gangs do.

thoughts?

52
  ·  8 months ago

Your tax less system is similar to the way the Vatican's sovereignty behaves. Instead of "taxes" per say it is museum fees, tourist fees, etc. Essentially taxes is revaluated. If the Vatican could take out the outdated centralized monarchy and replace it with a decentralized open source ecosystem, then we will have what you envision.

Many comments say how the State will always be corrupt because of people. Well in this day in age, our technology is far advanced that the blockchain system can do it for ourselves. The system(machine) not people will push for our liberation. Literally eliminating the middle component that made it seem that free market couldn't work. But it's Post-Capitalism, not capitalism any more.

43
  ·  8 months ago

Bookmark.