Subnostr

You make some great points. I made that "people don't change" mistake that I despise when made by other people. Whadda hypocrite!

I agree that you don't really want to mix in financial incentives too much. That is why I want to just use a transaction tax. Government picking incentives prevents the market from optimizing and has added a huge overhead in IRS agents and accountants, while disincentivizing interpersonal commerce. The loss of economic activity is immeasurable (not without being able to compare parallel realities)

The main thing I wish we could collectively knowledge is that the main function of a society, like every living thing, is to raise the next generation in the values that created it. We seem to think we can have a society that encourages goals other than continuing society and relationships without life.

James A Lewis 1y ago

The issues I see with a transaction tax is that it incentivizes lower velocity and/or system skirting. We already have transaction tax on Bitcoin, and we "skirt" that system by making a "joint account," if you will, and making off-chain transactions that don't get taxed, then settling later. The same thing will happen on new layers. It may also create an incentive to use custodial wallets that will reduce the number of "taxable" transactions. A flat tax is a lot more doable and less "skirtable", and the same goes for property tax. I wouldn't mind taxes if they're quite small and I and my neighbors can talk directly to the people who decide what it is. If I don't like it, I can move outside the city or county. A national tax however... not so much.

Again, #localism

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Discussion

Daniel Wigton 1y ago

Agreed on the localism. When I say "transaction tax" I mean paid locally. Kind of like a local sales tax. How would a flat tax work differently?

James A Lewis 1y ago

Would this be something only for business-customer transactions. Paying back for dinner shouldn't be taxed, and preventing that while also taxing payment for taxable sales in an automatic way will be difficult.

A flat tax is based on whether you live in an area, simply put. If you live/work here, you should support the community.

Daniel Wigton 1y ago

Hmm. I didn't think of reimbursement. It's a good thing I am not actually in charge. But no, I was not planning on different transaction types. My reasoning is that if you treat business-customer, business-business, differently then it adds extra friction for interpersonal commerce. Under our current tax system if I want to hire my neighbor to mow my lawn now and then, I need to register myself as an employer, get a tax id, file a w-4, then submit yearly w-2s. Or he could register as a contractor and do it himself. In either case it is a massive pain in the neck, so for odd jobs we either go under the table or just don't hire each other at all.

If your law requires people become (minor) criminals just to associate freely, then something is wrong. The case of reimbursement is an issue or not depending on the transactional tax rate. We seem to be ok already with 3% going to credit card processors.

You probably can't run a government on 3% But I think the size of the economy would be much larger with greater transactional velocity.

In your flat tax would everyone pay the same amount or is it a rate on income?

James A Lewis 1y ago

It's a bit simpler if your neighbor doesn't do it for a living. If you pay him less than $600, no reporting is needed. Even if it's greater, all you need is a 1099 and to include it on your annual tax filing. Only when you plan to hire people full time do taxes get tough. On the other hand, if he does it as a business, he should be the one to report it, not you. The tax code is messed up, and there's an untold number of dollars spent on trying to pay as little as possible that should really be put to use making things people need and want, but I digress.

The flat tax idea I have is to take 10% of the local poverty line and make that the flat tax, or 5% of income above 50% of poverty, whichever is less. I thought of treating it differently based on household size, like making the "above X%" line scale, but that's at least the basic idea.

Let's say poverty is $40k, as a round number, and the average contribution would be 8% of it. I think basic governance, police, and defense should easily run on $3.2M per 1000 households in today's dollars. A city of 100k people would be on the scale of 25k households, adding to $80M/yr.

I've also toyed with the idea of a small property tax. It seems right to have those who own property to contribute to its protection, right? A defense fund should be supported by owners of property, just like insurance to for home and autos. I'm thinking 0.25%/yr. A $400k home would have a $1k annual tax that goes to defense. The bigger the target, the more you contribute to its defense.