The particular model for the type of social order that I wish to see is anarchist social democracy, which includes a voluntaryist ("voluntary taxationist") aspect. And I would like to elaborate on and defend this aspect of my anarchist theory here.
To begin with, it seems reasonable to outline the primary sources of revenue for the anarchist social democratic confederation (and for the municipalities that constitute the confederation). The four main sources of revenue would be: (1) land value tax, (2) interest and profit from banking, (3) corporate tax, and (4) income tax. Under anarchist social democracy, land would be publicly owned, so the land value tax would constitute rent owed to the community. Banking institutions would also be publicly owned, so profits from interest and such would go to the treasury. These first two sources of revenue would go towards funding a universal basic income for all citizens of the democratic confederation. All commercial and industrial enterprises would be regarded as public property (at least partially, if not entirely). Consequently, the community could demand its share of the profits as a sort of corporate tax. The income tax in this society would be entirely voluntary. Rates for income tax would be set through a democratic process, and payment would be voluntary, but the democratic confederation would confer certain privileges upon those who voluntarily pay income taxes. In turn, the privileges would be denied to those who refuse to pay their share. The corporate tax and income tax would go towards funding all other government services besides universal basic income (e.g. police, military, administration, regulatory agencies, welfare, etc.).
My model of anarchist social democracy incorporates the idea of “voluntary taxation” proposed by Auberon Herbert. Mr. Herbert argued that the government can and should be funded entirely through voluntary contributions. However, I have taken Herbert’s arguments for voluntaryism and synthesized it with Amartya Sen’s argument in favor of progressive taxation. I hardly think it is necessary for me to argue in this forum that compulsory income tax is theft, so I will simply assume that as fact for the purpose of this essay. However, the relative virtue of progressive taxation needs to be addressed. Furthermore, I will need to explain how these two seemingly contradictory ideas can be reconciled to one another. How could a voluntaryist society ever have a progressive income tax? How is it that an anarchist social democrat can go around advocating progressive taxation on an entirely voluntary basis?
Auberon Herbert had a model of voluntary taxation that seems entirely unrealistic for modern times. There are a great many things that we need modern governments to do that were not a concern in the 1880, so Herbert’s scheme has become obsolete and is in need of revision. For instance, environmental concerns were not a big issue in Herbert’s day, but now we need local governments to be empowered to regulate industry in the interest of the greater community. If a corporation wants to pollute a river in order to save money on the disposal of toxic waste, there ought to be regulatory agencies to prevent them from doing so. Furthermore, it seems to me to be desirable for there to be public schools, universal healthcare, etc. And there can be no reasonable objection to such things so long as they are funded on a voluntary basis. Furthermore, the cost of infrastructure is considerably higher now that we have cars, planes, electricity, and massive bustling cities that require municipalities to ensure safe drinking water and proper disposal of waste and sewage. Thus, it seems to me that the voluntary taxation scheme needed for the sort of anarchist social democracy that I envision must be progressive in nature in order to bring in sufficient revenue to meet the needs of modern society.
Amartya Sen has a brilliant argument for the justice of progressive taxation. Suppose that there is a flat income tax of 50%. A person making 10,000 dollars a year will pay 5,000 dollars in taxes. That’s nearly a year’s worth of mortgage payments! A person making 1,000,000 dollars a year will pay 500,000 dollars. However, the amount that they are left with is ridiculously large. The rich man still enjoys a standard of living that is 100 times greater than that of the poor man mentioned. The total revenue brought in by this flat tax on these two individuals is 505,000 dollars. Yet, the flat tax has impoverished the first individual and allowed the second individual to still live in luxury. The flat tax is not a fair tax because the burden of the tax is heavier on the poor than on the rich. The first man is likely a laborer, who works hard every day. The second man is likely a speculative investor who earns the majority of his income from exploiting the system or by exploiting people. Let’s revise our tax system along progressive lines. The first man will now pay a 10% tax, costing him a manageable 1,000 dollars per year. The second man will now pay a 51% tax, which is not much of an increase. He will now pay 510,000 dollars. This still leaves the wealthy man with plenty of wealth. By no means is either individual impoverished by this tax. Yet, this progressive tax actually brings in more revenue. This progressive tax is more reasonable and more equitable because it ensures that the burden of taxation is fairly distributed and brings in more revenue at the same time.
The system of voluntary taxation under anarchist social democracy would be progressive. However, a voluntary tax will only be paid if there are sufficient benefits offered in exchange for paying taxes. Since the taxation would not be compulsory, the government must offer something sufficiently valuable in exchange for taxes; the government must incentivize people to voluntarily contribute to its treasury. How shall the government incentivize people to willingly pay their taxes without compulsion?
The system that I envision would be Georgist and mutualist, which means that the anarchist social democratic confederation would have a land trust (since all land would be publicly-owned) and a public central bank within a social credit banking confederation. Competing currencies would be allowed, but only the standard currency would be accepted as payment for taxes. These two geo-mutualist aspects of my model of anarchist social democracy are essential to the success of the voluntary taxation scheme that I propose. These two public institutions—the land trust and the banks—would demand that one pays taxes in exchange for their services. Also, keep in mind that the system of government that I propose consists of a confederation of directly democratic popular assemblies, consistent with the anarchism of Murray Bookchin. I am not supporting big government or statism. (You can find more on these topics of geo-mutualism and direct democracy in my other Steemit posts or on my website, i.e. AnarchistSocialDemocracy.com.)
In order to incentivize people to pay their taxes, the land trust would require that proof of payment of voluntary income tax be presented as a prerequisite to the purchase/rent of land within the confederation. Furthermore, the banks would require the same proof of payment as a prerequisite to opening an account or receiving a loan. So, in order to own a house, own land, open a bank account, or receive a loan within the anarchist social democratic confederation, you would be required to present proof that you have paid your share of the voluntary taxes that society has requested from you. If you do not pay your taxes, the privilege of land-ownership/home-ownership, receiving loans, getting credit, and having a bank account would be revoked. Consequently, most people, especially the wealthier members of society, would voluntarily contribute their fair share in exchange for the benefits that would be given to them.
But is that really voluntary? For something to truly be voluntary, there must be sufficient alternatives. In order for it to be voluntary, people must have the liberty to do otherwise. Hence, left-libertarians say that wage labor under capitalism is not voluntary because there is no other option. I may be free to choose a different employer, but I cannot choose not to engage in wage-labor. Starvation is the only other option; and that is no choice at all. The question at hand is whether or not this progressive voluntary taxation scheme is tantamount to capitalistic wage-slavery. Do people within this society really have any other choice?
My answer is yes, of course they have other choices. Under anarchist social democracy, the incentives to pay taxes are sufficient to elicit payment from most people but would not keep people from being able to survive and live decent lives without paying them. Thus, the anarchist social democratic scheme for a voluntary progressive income tax actually is truly voluntary, unlike wage labor under capitalism. An individual may opt out, choosing not to play along. They can rent land second-hand rather than buying it as fee-simple property from the land trust. They can use an alternative currency. Land-ownership and having a bank account aren’t necessary for survival. So, although this scheme would elicit payments from most people, it would certainly not be compulsory.
Thus, I envision an anarchist social democracy with a left-voluntaryist income tax, a voluntary progressive tax, which would be used to fund various welfare programs, from public education to universal healthcare. And the system of governance would be directly democratic, in line with the anarchism of left-libertarians from Mikhail Bakunin and Peter Kropotkin to Noam Chomsky and Murray Bookchin.