Introduction To Voluntary Law (Book), Public Interest Laws, Voluntary Law

Taxes and Funding For Social Causes


It may seem fantastic that one day there will be no penalty for failure to pay taxes other than loss of reputation.  Truly the idea does seem remote from reality.  Maybe you can be convinced that it is only a hair’s breadth away.

The conversion of taxes to reputational morality payments that are entirely voluntary is closer than it seems.  The modern version of investment financing for both charitable causes and business, that is, crowdfunding, has proved that social programs can be funded voluntarily.  Crowdfunding differs from conventional fundraising only by being online, in some respects.  But what a difference being online makes!  Any interested donor can keep tabs on the progress of the fundraising from practically anywhere in the world.  If the donor consents, the identity of the donor and the amount of the donation can also be published.  Fundraising drives can become a very explicitly public event.  The combination of receiving donations and publishing data about the donations is an excellent medium for cultivating reputations, so long as not corrupted by falsehood.

Promise making, a.k.a. personal adoption of law, is also a medium for growing reputation.  By promise making, each person supplies the yardstick by which their honor can fairly be measured.  The detailed shape of the yardstick already tells us a lot about the promisor’s expectations.  But it tells us nothing about the promisor’s performance relative to that yardstick.  Promise ledgers by themselves are necessary, but relatively empty of meaning.  The real juicy meat is the promisor’s record of performance against their own yardstick.  Information is publicly available from which a reliable assessment can be made of the extent to which promisors have fulfilled the promises they have made.  The point is, the activity of public promise making and public promise keeping is a medium for reliably indicating reputation.  The reputational information is like a credit score, but much more multi-dimensional.

Likewise, publicly advocating for certain social action, and then publicly donating money to the social causes you advocate or wish to support provides meaty reputational information.  It allows you to put your money where your mouth is; or not, as you please.  By your pattern of giving and not giving, you provide society with a profile of who you are, in the sense of what impels you to action.  When the crowdfunding is operated as an open or partially open online system, the same reputational services that collect and dispense promise keeping histories can provide similar information about donation histories.  That’s more meat on the bone.

When reputational information becomes meaty enough, it has a value by itself, largely non transferable.  The value is that of reciprocal action.  Think about it.  If you are a large donor to many causes over a long period of time, when you are soliciting money for the cause that employs you, you are more likely to find support.  Not only that, you will learn who reciprocates support, and you may use that information in deciding who to give to.  If you have a great reputation, you will receives lots of support, employ many people in your social cause, and earn a respectable living for yourself.  Having a great reputation in a network of donors is a very valuable asset, valuable in some ways beyond measure.  Not everyone will have the greatest reputations, but everyone will recognize the value of a good one.  Nearly everyone will put some energy into maintaining a donation profile that is respectable for their circumstances.  Most of those who don’t donate will be in some sort of need, and eligible for being supported as needy clients, to be rehabilitated into productive members of society if possible.  There may be a few Scrooges who just won’t understand, and will try to hide their true wealth and income to escape being considered overly selfish; but it is hard to see selfish attitudes lasting for long when the society depends heavily on giving, and most donations are transparent.

What has just been described in barest outline is an evenly rotating economy based on donating to social causes.  Every imaginable social cause can be funded this way: collective defense, including military defense; environmental protection; social justice; care of the poor, sick, orphaned and helpless; rehabilitation of criminals; a national weather service; scientific research and exploration, and so forth.  The list is endless.  This new economy will do everything useful that the current system of taxation does, and will do it better, with much less waste and corruption; it will do more than we know or can presently imagine, besides.  The social causes economy will resemble a traditional exchange economy, in which it is sometimes difficult to tell the difference between a social cause and a business concern.  After a time,  there will no longer be a meaningful distinction between causes and businesses.  Every cause will do some business, and every business will be involved in a cause.  In those future days, the accountants will glad that they no longer have to make difficult distinctions between tax-exempt donations and taxable income, both because there will no longer be any income tax, and because the new economy would have made those distinctions so difficult had income taxes managed to linger somehow.

That income taxes will not linger forever like every other government program seems fantastic, but again, it is only a hair’s breadth away.  Only two things need to happen: first, the applicable legislature or voting public need to start gradually defunding programs, and requiring the applicable revenue agency to replace the funds from income taxes with financing obtained from  voluntarily crowdfunded programs.  Tax payers could easily be motivated to donate by granting dollar-for-dollar tax credits for every donation.  The revenue agency would not need to manage the technical aspects of crowd funding.  Crowdfunding might be managed instead by a community made up of professional crowdfunding system operators, and the users of the crowdfunding system, just as it is today.  All the revenue agency has to do is keep an eye on things, keep ledgers and statistics, and report back to the legislature.  After enough time, political activism, and rejiggering by the crowdfunded recipients, everything will be funded voluntarily, and income taxes will cease to exist.

The path is clear.  It will not be politically easy, but mainly because it is natural to fear the unknown, and we can’t know exactly where the path will lead.  Some sacred oxen will be gored, and everybody who now depends on the income tax system for income will have to find an alternative source of support.  That is of course part of the beauty of this path: as the demand for labor in the tax system decreases, it will be offset quite closely by demand in the crowdfunding sector, and in all the new and revived sectors that the crowdfunding sector will motivate.  Yet another benefit is that the social information that can be gleaned from the income tax system will not be lost, but it will be transformed into something more just and dignified.  More will be discoverable from the crowdfunding system about who is up to what, and for what purpose, that was ever possible from the income tax system.

Wherever the path of voluntary law leads, we can be certain there will be no income taxes there.  Voluntary society will see to that.  Voluntary law must require it; income taxes and all other forms of coercion are not a rational option within the bounds of the voluntary law.  All taxes will be replaced, inasmuch as serving some useful function, with voluntary crowdfunding.

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Photo by HM Revenue and Customs