Do income taxes and other taxes on productive activity still make sense today?

According to Wikipedia, the “concept of taxing income is a modern innovation and presupposes several things: a money economy, reasonably accurate accounts, a common understanding of receipts, expenses and profits, and an orderly society with reliable records. … For most of the history of civilization, these preconditions did not exist, and taxes were based on other factors … [such as] wealth, social position … Practices such as tithing, or an offering of first fruits, existed from ancient times, and can be regarded as a precursor of the income tax, but they lacked precision and certainly were not based on a concept of net increase.”

There’s plenty more in the Wikipedia article on Income Tax, but it’s not especially important for the purposes of the question I want to raise here, which is this:

Given that conditions have changed dramatically in technological terms in our world over the past 20 years, are income taxes (and other taxes on productive activity) still the best way to perform the functions we originally created them to perform?

Some functions of taxes:

  • Revenue raising for government
  • Alter prices to affect demand and discourage unwanted behaviours
  • Redistribute wealth (through progressive taxation)

Some conditions that have changed:

  • Technological ability to automate precise accounting in real time for most transactions
  • An urgent global need to reduce consumption and waste to operate within planetary boundaries
  • Increasing socioeconomic inequality across multiple countries (and between countries), with more wealth owned by fewer and fewer people
  • Increasing automation in many areas of work leading to technological unemployment
  • Near ubiquitous access to information and self-education via the internet
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Personally, in a “user pays” world, the structure is a little redundant.

It should be a User Pays tax system.

Thanks for sharing your thoughts, Rob!

What kind of taxation structure/s are you thinking of when you say “User Pays”? Would you include, for example, tolls for highway use, fees for services rendered in education and health, consumption tax (e.g. Goods & Services Tax (GST) in Australia) … ?

Also, would you suggest restricting all taxation to that “user pays” model?

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To be honest Kylie, I’ve always been a fan of the debit tax system. It’s simple and data suggests that it would help strengthen the banking system in general. Can tend to end up a bit like communism though. As if the banks need a stronger cartel, right? But…the upshot is, because they are the caretakers of the wealth, they are the ones with the biggest tax load, due to their earnings on held or secured funds.

The general population becomes wealthier because they are paying less tax (10% for example) and the banks pay the lions share because they have the liquid holdings, this being the biggest earner. (calculate 10% of ALL money transacted in ONE day by all consumer turnover per diem). I think it would be interesting to see the figures.

I also think that the basic fundamental of taxing productivity of the individual, is tantamount to counterproductivity.

Interesting to hear your thoughts, thanks …

Do you think we should still have private banks, or, perhaps, now that we have computers to do most of the work of ‘keeping accounts’, we could have money itself ‘owned and stewarded’ by the people in common? That 10% you speak of could be used to pay a ‘basic income’ …