The health of our democracy depends on our citizen’s ability to understand how their government acquires and deploys the people’s resources.
Well formulated taxes aren’t evil, they’re exceptionally useful. A well formulated tax raises revenue for the government and regulates trade. To achieve both of these objectives, compliance must be easy and the people must view it’s influence on the marketplace as socially beneficial. The mechanics of the tax must also be simple. If people don’t understand a tax’s influence on their own decisions or on the broader economy, they can’t make informed political or economic decisions.
The government should deploy three types of taxes:
Federal tariffs regulate international trade by taxing imported goods. Proceeds finance the security that enables trade. Higher tariffs finance larger security forces.
Sales taxes regulate consumption of nonessential products. Proceeds finance the infrastructure that facilitates trade. A higher sales tax facilitates more investment in infrastructure and increases savings rates.
Regulatory taxes impose fees on goods and services communities wants to regulate. Proceeds pay for local social social services. Higher regulatory taxes decrease the demand for taxed goods and increase funding for services.
These taxes naturally create balance in the marketplace by giving the people, through their government, control over the context within which economic activity takes place. Taxes must adapt to new social and economic realities.