Ever wondered why we pay taxes and what would happen if we didn’t? How would a tax-free society work? Can a society survive without taxing its citizens? To answer this we need to understand the origin of the tax. Why did we start paying tax in the first place?
Taxation can be traced all the way back to ancient Egypt where so called “scribes” would collect tax and audit households for cooking oil. In Greece tax was introduced as a way to pay for expenses during wartime but the tax was then removed once the war was over and any resources gained were used to repay citizens. The Romans paid custom taxes for imports and exports. Caesar Augustus introduced an inheritance tax of 5% that was used for military retirement funds that was later adopted by the English and the Dutch. Julius Caesar later imposed a 1% sales tax. When Rome fell the Saxons Kings in England also introduced land and property tax.
A progressive tax reform where citizens were taxed based on wealth and status was introduced very early on. During the 14th century income tax was imposed on the wealthy while the poor paid very little tax. However, eventually, taxes on land and commodities hit hard on the poor as prices on food such as wheat increased and hunting grounds became off limits. These scarce conditions lead to starvation and riots.
In 1800s Britain the war against Napoleon required finances and what better way than to take it from the hard earned wages of the people? This is when the modern income tax as we know it took its first breath.
So how would it work?
There are a number of problems that come with taxes, one of which is tax fraud and corruption. However, if we didn’t pay tax these issues would not be issues. Some wars, such as the 100 years war between England and France, were extended due to rebellion against oppressive tax policies.
So, what’s the point of all this? Well, it’s important to understand that taxes didn’t always use to be part of the societal core. Taxes that were first introduced to fund wartimes spread to take a share of our lands, properties and income. And most of the time we let it happen because we didn’t have the means to prevent it. Of course, you might argue that taxes help pay for products and services a society needs in order to function properly, such as infrastructure, healthcare, and education. These are things we all have to use. Correct. But why do I have to pay for healthcare if I’m never ill? And why do I have to pay income tax when I also pay for sales tax, production tax, and property tax as well?
Some people never reflect over the amount of tax they actually pay. Consider buying a TV for example. You might take your car (that you pay taxes on), to the gas station to fill up on gas (that you pay taxes on) and take the road (that you pay taxes to build and maintain) leading towards the TV store (that someone pays property taxes on). You walk in the door (that someone paid taxes to create and sell) and look around at the TV selection (that all have been the victim of manufacturing tax – not just the TV as an entity, but also all the different parts that go into building the TV). You select a TV that you would like to purchase and one of the sales people (who pay income tax) take your payment (that is taxed at the point of purchase as well as by the TV store when they declare their revenue). You take the TV home (that you pay property tax on) and plug it in to power it up (that is electricity that you pay taxes to use) and on and on. You get it.
A tax-free society would be completely free from any kind of tax including income tax and sales tax and would instead be driven by capitalism, free trade, competition, and charities. This also means everything would be privatized and there would not be any government funded services meaning that if a group of people wanted to build a new road or run a hospital or a school they would have to raise the money themselves to fund the project and build it.
Governments would also be very small and limited to reduced area sizes. The role of government would be to make life of its citizens better but essentially the people would run it. The only existing tax would come from criminals as punishment for their crimes. Depending on the severity of the crime they would have to pay a certain amount of tax for a certain amount of time. This money can then help the victims and the society as a whole. Advertising and tolls could equally be used to pay for services, just like they do pay for a lot of today’s journalism.
A tax-free society means the people own the government, not the other way around.
What are benefits?
Privatizing services that are currently under government control would mean higher competition which lead to lower prices and better services. This also means police, teachers and healthcare professionals would receive higher salaries, the services from police, schools and healthcare would be better as they need to compete with other organizations, and criminals who are not a danger to society can be used as labor force as punishment.
What are the downsides?
Not everyone might want to assume equal responsibility in monetary contributions, meaning everyone else has to pay more. However that could just mean people who don’t pay cannot use the service or they have to pay to use it, just like any other customer. For example people living in a high crime area might not want to pay for a better and bigger police force. A criminal tax could also lead to more and higher charges of innocent people just to get tax money.
A tax-free society would be beneficial to all people, poor and rich, as individuals would not have to pay for things they did not use. Hence, a poor person who is relatively healthy would not have to pay for a rich person to use the government funded health care system. Instead of being a burden and costing society money, prisoners would have to pay back with free labor and taxes to earn their way back.