taxation

Taxation: Not-a-Taxes

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And now to the comment I wanted to answer:

Back on “Trope-a-Day: Intimidating Revenue Service“, Mark Atwood commented:

On the other hand, I do wonder what the various access fees, use fees, and voluntary organization membership fees all add up to.

The two examples I am thinking of are:

For the case of the eldrae, the dogcatcher org that has already been shown as an example, that in our world is a government activity paid for out of taxes.

In our world, up until the 1930s, building things like sidewalks and hospitals were funded by the voluntary merchants associations and voluntary fraternal organizations. And while membership was completely voluntary, and while participating in such fundraising while a member was again completely voluntary, NOT being a member, or NOT being seen to throwing a goodly amount into the hat when it was passed, was guaranteed to freeze you out of society, and if you were a member of the professions, completely out of your ability to practice your profession.

So, yes, this is a thing, because some things that we have governance do here are indeed useful. But it’s not nearly so much of a thing as it might be – by the time you add up all the assortment of necessary things, I would be very surprised to find that they came to more than 15%-20% for all of ’em stacked up together for a generous helping of relevant analogous services (and, arguably, distinctly non-analogous service levels), vis-a-vis the grotesquely high numbers one can see *here* when adding up all the different taxes of different kinds, and never mind the inflationary effects of making up holes in the budget in other ways, too.

There are a number of reasons for that:

The first and most obvious is the sheer number of things that aren’t done at all. To start at the really obvious end, while it’s easy enough as a government to spend money on things like prohibition, John Pistole’s pre-flying grope-a-thon, extra-charge licensing of any number of day-to-day activities, official protection from the dreadful, dreadful scourge of people growing edible plants in their front yards instead of grass, etc., etc., ad literally naus, it’s damn near impossible to convince them to purchase such services to be applied to themselves. I could grow this list basically for ever, from authoritarianism to subsidy and back again, but it’s such a long list it’s probably easier to let you think of your own examples.

The second entry in this category is things not done for practical reasons, because they have to survive a private-sector planning process. If an odocorp doesn’t think there’ll be customers for its road, they don’t build a road. If the high-speed rail magnates don’t think a line will run at a profit, they don’t build a line. No-one’s wasting money on bridges to nowhere in this polity.

The obvious rejoinder here is that that makes it very hard to build obviously good things in the long term, like the interstate highway system or the transcontinental railroad – which is fair, and I can see that being a big issue in a society more like ours. In their case, though, partly it’s a matter of their longer lifespans and thus planning horizon making such things look like better investments (and there were some very large, long-range speculative loans being floated, here), but also, as I think other parts of their history demonstrate (the colonization of space, the orbital elevator, the first Thirteen Colonies, etc., etc.) the eldraeic risk appetite is somewhat different than the human one when it comes to Doing (or even Funding) Great Things. That’s valxíjir for you. It’s better to fail at attempting something great than to succeed in bein’ a mediocrity – and, in fairness, when you live forever, you can always try again1.

The third is that the organizations providing this sort of thing are immersed in a free market, and I mean a free free market. The rapaciously creative-destruction-filled kind, in which artificial barriers to entry and incumbent protection and regulatory leveling and other things that favor people who play the system are stripped bare, leaving nowhere to hide for private-sector inefficiency and incompetence, much less the kind  we see in the public sector, here. It’s easy to get away with high costs and poor service when your funding won’t suffer. An analogous organization *there*, be it ICC or COG or plain old non-profit branch, that indulges in such things is chum for the competitive sharks.And, relatedly, being the bunch of bloodless rationalists that we might stereotype them as (“shut up and multiply, son!“), this sort of consideration applies to charitable and mutual-benefit organizations every bit as much as it does to for-profit ones. Those voluntary mutual-benefit or charitable organizations which can’t demonstrate that they’re having a real, measurable effect, and for that matter a real, measurable effect that’s worth paying their price for, and for that matter a real, measurable effect that no-one else is providing markedly more efficiently, are not long for this world in Imperial space. We’re payin’ for results here, not warm fuzzies.

(With specific regard to your second point, there, by and large people will get cranky if you’re still receiving the benefit while not paying for it, but true non-excludable goods in that sense aren’t all that common. No-one’s going to come after you because you prefer your own arrangements health insurance to that which you can get the Fraternal Association of Hole Wranglers, or whatever, although they may want to know why in case it’s something that they ought to fix. You may suffer a bit, professionally, if you aren’t a member of any relevant professional association, as among the things that consumers like to see is the seal of a guild professional, but again, it’s not like those are legal monopolies, and in almost every case if you don’t like the deal one guild offers its members, you can go join another one whose package deal you like more. And, if your personal reputation can hold up alone, there’s also nothing from stopping you from trading just on that – the seal’s just there to back up your rep with theirs, like any qualification.)

The fourth is the difference in the regulatory burden. For various reasons (including, of course, not having been bought by incumbent interests), there’s a lot less of this to start with, but it’s also qualitatively different. No-one there thinks it at all sensible to write thousands of words on what, exactly, constitutes a officially-approved lettuce, or the one true standard procedure for polymethadamnpainintheassyne disposal. They write “products sold must be as described” (Much of this specific area is left up to the (voluntary) guilds – the Edifacient Sodality of Bakers and Pastrywrights, for example, has a great interest in protecting the integrity of its seal, so it keeps a good eye on the product quality of its members.) and “don’t dump or leak polymethadamnpainintheassyne into the atmohydrosphere”. In short, they concern themselves with ends, not means, and that means that people can apply innovation to this sort of thing without having to wait for the creaky mechanisms of governance to approve whatever new thing they came up with, and no-one’s being told that no, they can’t sell their polymethadamnpainintheassyne because it’s toxic waste, even if this company over here uses a million gallons a year of the stuff as feedstock, and, yes that’s a real example of just how ass-backwards things can get *here* .

The disadvantage of this policy, of course, is that it requires that the people administering it be able to use discretion and judgment and so forth rather than simply adhering rigorously to The Book. The position of the Imperial culture on that one is that anyone who can’t exercise judgment in their job should be fired and replaced by a simple robot, and in particular is manifestly unsuited to any sort of supervisory position over anyone ever, so suck it up, already.

The fifth one is plain old alternative monetization. Being private-sector organizations, the people who provide all these services are perfectly free to seek alternative ways of raising additional funding. The odocorps are, I am pretty sure, making good money offering all kinds of value-added travel services, not to mention roadside advertising and selling interesting statistical information, all of which subsidizes their primary service, and much the same goes for most of the other organizations in this category.

So, in short, yes, there are a bunch of those things which most people pay in day to day life, but by and large, those plus the ESF still don’t add up to close to the tax burden most economically-equivalent-yet-unfree civilizations impose.

As a side note, another thing that helps a lot in making this sort of thing work is the general ethos that when you find a problem that’s not being dealt with and that you care about, the thing to do is fix the problem, or if it’s too big a problem for just you, round up a posse to fix the problem. One of the major problems that people from *there* would have with “activists” *here* is that problems are there to be fixed, and people who prefer to sit around whining about raising awareness of the problems should get the hell out of the way and let someone serious in there to actually tackle it.

(And people who prefer to sit around demanding that other people should fix the problem for them should be thrown out.)

((And people who prefer to sit around demanding that other people should be forced to fix the problem for them, or else, should be thrown out the airlock.))

It’s not a universal rule – I am reminded of that one Occupy group, of all things, which decided that the best way to solve the problem of people suffering under crushing unrepayable debt was to solicit donations, buy up the debt on the collections market, and then forgive it. Those guys get a big old Buddy Jesus Thumbs Up from the Imperials for doing things the proper way – see problem, devise solution, act. But for the most part, shit and valxíjir, do or do not, already. There is no whinge.

But then, I am writing in the universe in which – well, it’s difficult to draw exact parallels due to the differences in culture, commercial culture, and economics, but in which I’m pretty sure the local analog of Sam Walton was given a knighthood-equivalent and a damn great statue for Services to Supply Chains in the Noble Cause of Ending Scarcity, so.

1. They have lots of serial entrepreneurs.

Taxation: the Fee

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(Seeing as it has become relevant as background information to a comment reply I plan to make soon, a summary.)

Well, the first obvious question is “does the Empire even have taxation?” This is a matter of some controversy, for values of controversy equal to “the Empire says it doesn’t; everyone else says it does”.

In the sense that the corporate governance has to raise revenue to pay for things somehow, obviously, it does.

But, say Imperial philosophers of governance, the difference is that the Empire Services Fee is paid voluntarily, as a matter of explicit contract between the individual citizen-shareholder and the Imperium Incorporate; and there is no special crime of “tax evasion”, rather, failure to pay is a civil matter of breach of said contract, and ultimately will merely result in loss of citizenship services and privileges due to default on said contract rather than criminal penalties enforced by violence. And any citizen-shareholder can choose to terminate their contractual relationship with the Imperium Incorporate at any time, walk away, and owe not a penny more.

This is because of the historical differences in evolution, they would go on to say, in which the Empire’s system stems from its origin as a coalition of private law providers paid by their customers, and as such is little different from any other regular commercial contract. Whereas most other systems of taxation originated in some historical autocratic muck as the local Big Sophont with a sword nicking everything that wasn’t nailed down and killing anyone who objected, and the apple hasn’t fallen very far from the tree in most cases.

Which is why, they conclude, the one is a fee, suitable consideration for an agreement among free, mutually-respectful gentlesophs in a civilized society, and the other is a tax, an antiquated, violent, ungentlesophly barbarism about one step above serfdom and tribalism, if that.

At this point in the discussion, if outworlders are present, the first punch is usually thrown and the argument is tabled for the duration of the brawl.

(That all being said, the first point is salient enough that the typical reference work includes an entry reading: “Taxation: see Empire Services Fee (ESF)” just so that people used to foreign ways of thinking about things aren’t totally confused.)

So what is it?

Well, it’s very strictly defined, that’s what it is. After all, it’s a contract, and *there* that means that it’s the kind of contract that actually has to be specified, not the fluffy kind that one party gets to unilaterally rewrite the terms of any time they like without so much as a by-your-leave. (The Curia hates those.) So they have exactly one tax fee, levied on incomes (or, more accurately, profits) – all others are not only illegal but unconstitutional, and *there*, they take that restriction seriously – in the form of  a flat-percentage. Take all income you have received in consideration of contracts, deduct the expenses incurred in the course of earning said income, and hand over The Percentage of said profit, be it a beggar’s mite or so large your accounts are using scientific notation. You’re done.

(For the purposes of simplifying assumptions the following are also defined as “income in consideration”: capital gains (at time of realization); royalties from intellectual property and discoverer’s licensure; salvage, trove, and booty. Gifts are specifically not. Also, these are deduplicated: once a corporation’s profit has been taxed once, the dividends it pays out aren’t taxable as income a second time; that’s double-dipping.)

The Charter also imposes a cap on how big The Percentage can be (20% – in the modern age, somewhere in the low single digits is more usual, and historically, it never broke 15%), and also requires that it be The Percentage. The Curia has declared all progressive and/or regressive schemes unconstitutional as a violation of equal protection that privileges one citizen-shareholder over another, and no-one’s having any of that.

By letter of the Charter, the Empire does request that foreign-operating and foreign-domiciled citizen-shareholders continue to pay the ESF on their income earned abroad (like the US but unlike virtually every other country on Earth). Unusually in many eyes, few object to this – since while said expatriates don’t receive many of the services it pays for, the ones that they do receive tend to be rather expensive1.

…so it’s not like they’re not getting good value for their 3.5% per annum, belike.

And it does work essentially on the honor system. At the end of the fiscal year, the OIR send out a note to every citizen-shareholder and registered coadunation telling them what the current rate is and asking them to remit it as a check or electronic transfer. They don’t have to supply detailed returns, can largely make their own reasonable judgments as to what ought to be deductible, etc. (If someone’s remission appears grossly discrepant with reality, they may take you to court and audit you, but requiring that you demonstrate it ahead of time violates the principles of Imperial law that say that one should not be required to prove one’s innocence, or to maintain records enabling one to prove one’s innocence with their absence being considered evidence of guilt; that’s both unjust and damnably rude, sir!)

Other Similar Things

To append some notes on other things:

The ESF is, technically, not the only source of government revenues. There are also –

  • Seigniorage, of course, when the money supply is necessarily expanded to keep pace with economic growth. This, however, is lesser than elsewhere because it’s the IBMV’s policy not to let the government spend all the seigniorage; to avoid distorting the economy it’s randomly inserted into asset stores all across the Imperial economy in automatic proportion to their existing size. But, y’know, the Exchequer does have a very large account.
  • Fines, to a small degree, but it’s not like they can rely on those because such things are handled by the Curial courts which pass along the remainder at the appropriate time and do not let anyone else get in on the fining-people business, because they know exactly how corrupting it is if either the people who make the rules or the people who enforce the rules get to make a profit by so doing. So that’s not going to be permitted.
  • Most significantly, donations. Of which there are rather more than one might expect, for a variety of reasons, including that the Imperial government is equally happy to take donations or tax payments in services or kind, and that there are entire mechanisms set up to let people, say, outright purchase (on an annual or lifetime basis) titles of Privilege, which give you a nice title to wave about on your letterhead and additional social clout in exchange for Paying For Necessary Stuff So The Rest Of Us Don’t Have To, but mostly because (a) there is the widespread philosophical conviction that voluntary payment of the costs associated with one’s share of the public goods and commons is virtuous, and also because (b) it’s a lot easier to persuade people to give you money if you don’t start out by robbing them in the first place.
  • The Protectorate of Balance, Externality, and the Commons sometimes runs a positive balance as it goes about its business of ensuring that all externalities are internalized – the negative charged and the positive subsidized – such that the market can best approach optimality, but usually it balances out and it only interacts with the general fund rarely, if ever.

There is also that stuff called social money. That is the province of this thing called the Plurality, which we saw a little of in action here. Now, the Plurality isn’t, in many ways, part of the government – or if it is, it’s a sort of weird, unofficial fifth quasi-branch that isn’t formally part of the state3, operates without any of the sovereign powers of government, and can’t, in fact, coerce anyone to do anything at all. All it is is a clearing house for public philanthropy2 and other related endeavors (in the shape of its Citizen Oversight Groups) that handles the issue that there are all sorts of things people want to be done and that they simply don’t have time or capacity to be personally involved with all of.

People contribute “social money” to the Plurality, representing whatever money they want to spend on general good stuff (and can, if they have some ideas of what ends they particularly care about or wish to avoid touching, hypothecate it all they want.) The COGs (so-called because they are the overseers appointed by the citizen-shareholders to Fix That Problem) which have sufficient general support to make it into the Plurality bid for a share and put up proposals before it. And a combination of multivariate proxy demarchy and resolving the mess of hypothecations and specifications people made when contributing the money determines how it gets shared out to the various general goods that people want to buy.

Now, that’s not a tax or anything like it, and there’s no obligation – not even a voluntary agreement – to contribute anything to it. Nonetheless, almost everyone does, because the sort of people who (a) can and (b) want to become Imperial citizen-shareholders want to live in a nice, shiny society that works well and gets this stuff done, and being rational people, they’re quite aware that it doesn’t happen by itself and that they have to grease the wheels if they want it to happen at all. If not them, who else?

(Most people also prefer to contribute directly, one way or another, to those causes that are uniquely close to their hearts, of course, but the Plurality system is a good way of ensuring that even the things you didn’t think of Right Now but which you nonetheless want to be done get the resources they need.)

Footnotes

1. Like, say, dropping a battlecruiser into someone else’s orbit to remind the barbarous non-consensual foreigners that He Who Fucks With Imperial Citizen-Shareholders Hath Sown The Wind, And Shall Reap The Whirlwind. Less spectacularly, the carefully labyrinthine banking and commercial privacy laws that keep said expatriates from being levied upon by said barbarous non-consensual foreigners aren’t all that cheap either.

2. Well, not exactly anthro-, but you know what I mean.

3. This tends to be a subject of argument when the will of the Plurality is, say, funding hiring a shit-ton of mercenaries to go shoot some trouble somewhere, which is something that can happen when the news convinces the citizen-shareholder on the street that, to use an Earth example, “those ISIS guys are mass-murderin’ slave-takin’ assholes”. Explaining to the international community that (a) no, it’s not a declaration of war, because the Plurality ain’t part of the governance and represents the people, not the polity, and yet and at the same time (b) shooting mass-murderin’ slave-takin’ assholes is pretty much always a legitimate exercise of the Right of Common Defense, so, yeah, the governance is not planning to do anything about it, either, is always a tremendously enjoyable job down at the Ministry of State and Outlands, Imperial Diplomatic Corps.

 

Trope-a-Day: Intimidating Revenue Service

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Intimidating Revenue Service: The Imperial Revenue is really quite happy and fluffy as an organization; it helps that thanks to the Empire’s by-explicit-act only citizenship and please-agree-to-this-to-enter border crossings, the tax really is opt-in for almost everyone; that the Empire Services Fee really is The Tax, a single one which applies to individuals and organizations without distinction; and that The Tax is limited to no more than 20% by the Imperial Charter and is currently hovering around 3.6%.  Needless to say, given all this, the degree of actually, genuinely, not-a-euphemism voluntary compliance they achieve is… impressive. Hell, you don’t even have to fill in an intrusively detailed tax return – just work out the appropriate amount and send ’em a check. They trust you.

(They can be quite intimidating to people who are determined to cheat their way around paying that 3.6% they agreed to up front, but popular opinion is that those people pretty much asked for it.)

In The Details

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“Accurate description of a subject society is vitally important to our work, and thus it is important to be aware of our descriptors as tightly-defined terms of art. For example, ‘primitive’ and ‘barbaric’ are not cognates: a society whose implicit economic scarcity requires people to labor in exchange for subsistence goods is primitive, but need not be barbaric. Contrariwise, the practice of taxation is in and of itself barbaric, but not necessarily limited to primitives.”

– An Introduction to Cultural Sophontology

Cost of Breathing

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LIMÉRI STATION HABITAT FEE ASSESSMENT

LIMÉRI STATION HABCORP, ICC
A PROTECTORATE OF BALANCE AND EXTERNALITY AFFILIATE

RECIPIENTS Anlave-Kateris Household
  – Anlave Claves-ith-Estenv
  – Kateris Muetry-ith-Muiris
ADDRESS OF RECORD 1-00003-01496-0223
Talentar
Liméri Station
Dalecí
14, Avenue of Focative Mirrors
PERIOD COVERED Tílenmot, 3502
Charge (Es.)
Base Habitat Fee eldrae x 2 74
Air Usage Increment barbecue x 3 1.6
Air Usage Decrement greenhouse, 960 sq. ft., active -0.70
Cogeneration 1,953 kWh net
(23,934 kWh use / 22,981 kWh gen)		 1.1
Dependent Increment bandal x 1 3
Dependent Increment child, eldrae, x 1 6
Hive Processing Rebate 15,961 state-usage infoblocks
4,117 hab-usage infoblocks		 -0.3
Thermal Overage Decrement +5° -0.42
TOTAL   84.28

This assessment mailing is for informational purposes only.  Applicable habitat fees have been deducted from the designated Active Debit Account as selected, and no additional charges are due.

For further queries or requests please do not hesitate to contact me.

Given under my hand and seal this day, 31 Tílenmot 3502,

Galén Sallantar-ith-Sallantar, for and on behalf of,

Liméri Station HabCorp, ICC

Positive Externalities

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All income earned, by individuals other than the Imperial Service or duly contracted security providers where the activities in question are within the scope of their contract, in the course of:

  • Defeating or preventing existential, species-level, or Imperial security threats, whether global or local;
  • Repelling raids or invasions;
  • Preventing acts of terrorism or exceptionary crime;
  • Preventing or ameliorating ongoing natural disasters or technological accidents;
  • Or otherwise engaging in activities falling within a reasonable definition of ‘saving the world’;

And all income deriving from technologies or other intellectual properties or physical properties developed or appropriated (when duly condemned by a prize court) during such activities, for a period of twelve years subsequently;

Shall not be subject to general taxation.

– Imperial Revenue Code, Vol. 2 (Special Exemptions) § 17.