RE: Taxes and the Market for Force

["David Lloyd-Jones" <dlj@pobox.com>]

Bob writes:
> At 4:25 AM -0400 on 5/4/98, Bill Stewart wrote on cypherpunks:
> > Income taxes are probably the best method for the economy
> > of extracting lots of money,
>
> Except, of course, in a world where digital bearer settlement is cheaper
> than electronic book-entry settlement.
>

This is wrong.  Income taxes are a dopey way of extracting money, for the
simple reason that income is impossible to define.  The Canadian Income Tax
Act, one of the better ones in the world, runs to about four pages of real
legislation, levying the tax, followed by 1500 pages trying to define income
and taxable income, followed by 300 pages of assorted regulations built into
the act.  Basic interpretative documents run to about 16 bookshelf feet.  A
tax library is an investment of maybe $250,000 and ten years' work.  And
this is the best case...

(Canada is a constitutional monarchy, which means that government is by the
people united against the legal dictator.  The US, by contrast, is
constitutionally a democracy, which pits all the people against each other
squabbling over the spoils.  This means that American legislation is far
worse in all respects than Canadian. This is also the reason why most of the
effective and the emerging democracies are monarchies, Britain and
Scandinavia in the first column, Jordan, Morocco, Bechuanaland and a few
others in the second. Vote for the Czar and the Kaiser! Bring back Freddie
Baganda and the Log! Reclaim the Ashanti Stool!)

To the extent that you must have a government, the best way of financing it
is Value Added Taxes.  These have the singular virtue of encouraging the
underground economy, i.e. mass entrepreneurship by many who would otherwise
be poor.  At the same time it is the only tax which it is possible to levy
on the eighth and ninth deciles of income earners, the slice of information
handlers who are for practical reasons pretty much outside the income tax
system, in many cases because they operate it: lawyers, accountants,
bookkeepers, and so on.

                                    -dlj.