Only two fundamentally different kinds of taxes are necessary. One is to encourage sustainability, a Resource Tax, the other for everything else, Income Tax.
Tax structures would be biased towards :
The Resource tax would be levied on any product or service which uses up any resource. Services which do not use up 'stuff', mostly 'social' services of some kind, would not be subject to the tax as they are sustainable and thus to be encouraged. And also, by virtue of not using up resources they are almost by definition of benefit to people in some way and thus contribute to keeping, or adding to, a spiritual side of life.
There would be several varieties of this kind of tax for different purposes but the main one, what we now call VAT, would be altered to reflect actual value added. The new concept of VAT is that it should be a tax that directly reflects the distance a product is from the raw materials used in its creation. The aim is to reflect environmental concerns, particularly energy usage, and to make consumers pay for luxuries proportionately while allowing staples to be reduced in price, and to make the decision about whether to pay the tax and whether to possess luxuries as opposed to staples a matter of individual choice, and to guarantee a mechanism for ensuring that the staples of life are available to even the poorest members of society as a matter of right.
A possible outline plan for conversion from what we have now to the new idea would run something like this : Start with some extreme luxury goods such as jewellery, electronics or musical birthday cards. Start a voting list of these goods with each entry having a percentage level set for it. This sets the relative 'luxury' or otherwise that the public attaches to the item. Each percentage point has associated with it a percentage of tax. There could be just one tax level or up to a hundred. After two years of voting a baseline has been established which has been set by the people to express their opinion on the 'worthiness' of a good on environmental or moral or any other grounds the people (as opposed again to the government/corporations/vested interests/experts) decide for themselves.
All this is completely public so all concerned know in advance what is to happen. Call the start date when the seed list is fixed, T. At say T+5 years the manufacturer of each product will have to pay VAT at the new rate. In the interim the manufacturer pays at todays standard rate, and simultaneously decides himself how to adjust his prices to the consumer so that he can move to the new rate most painlessly for himself and his customers at T+5 years. This introduces a moral dimension to the changeover - how much and how is the manufacturer prepared to screw the consumer and under what treatment will the customer vote with his wallet. For these goods the new system would then be implemented. Voting would be continuous and every so often, perhaps every five years, at a pre-announced date a year in advance, the level of tax for the products would be again adjusted. The adjustment would take effect say ninety days after its setting.
There is no secrecy here and no surprises so no grounds for complaint by consumer or manufacturer. People with vested interests will whinge about its complexity but with computers that is a completely fatuous argument, and consumers already cope with never knowing how much anything is going to cost in the future, especially in countries such as the USA where state taxes make prices vary geographically as well as in time. They manage, we could.
As the system is shown to work, and the bugs are ironed out on the most expensive and least numerous examples then it can be extended at will. As well as raising taxes for luxury goods of course the public can decide to lower them. Again it is the choice of the People. The People can even vote for maximum tax on nappies and no tax on heroin but at least it is the People who decide. The moral dimension is there for all to exercise, or not. It would make moral sense to have a second voting list available from day one which was for those goods which should attract no tax at all, either because they were raw materials, or staple materials or simply goods which a 'moral person' would consider all people rich and poor should be entitled to have by right.
The Transport Tax would be a variety of Resource Tax.
The Resource Taxes would be distributed among all Government departments for spending.
If Resource Taxes were insufficient to fund all of government, and this is the decision of the People, tax on income would be levied. Ethical and legal issues will be handled by the law and Resource taxes so the origin of income will not be relevant, just its amount. So the kinds of tax will not be determined by the source of the income but by the purpose to which the tax is to be put. Thus the total of income tax will be made up of all the different purposes, some for health, some for Law and Order, some for education etc. Among the benefits of raising tax this way are :
The premise that tax needs to be of only two kinds, resource and income, means a whole raft of present day taxes become completely unnecessary overheads to society. Examples include :
Income tax would be compulsory. However, there is no good reason for not allowing voluntary contributions to allow an element of choice not only about what goods an individual wants to spend net income on but also what services the individual does, or does not, like the government to spend compulsory tax on. For example, it is quite conceivable that people would contribute voluntarily to health if they objected to the size of the defence budget and knew a voluntary contribution would only be spent on health and not be divertable to defence. Similar choices could be made to allocate one's tax to culture and education, or science and infrastructure.
So, each kind of income tax would have a parallel fund which is entirely voluntary. Anonymity would be necessary and can be achieved using some analog of the Postal Order process. As with all government functions the exact state of these funds would be available for all to see permanently and in as near real-time as possible on the Web.
Such a huge simplification of the tax system will have very large effects on such things as employment. These would be disastrous in today's structures but be a benefit to all in tomorrow's structures. The whole business of administering tax of any kind for any purpose is an overhead for the People. It serves no purpose in itself and it is not something people pay money to go away and do for their holidays. Except to the degree that it is absolutely essential it is a total waste of human resources and soul destroying for everyone except the tiny minority who have nothing else in their lives except an interest in complex tax. For these people we must urgently find some other way to maintain the quality of their lives. This simplification of taxes is also cheaper to administer thus freeing up money for other uses and contributing to lowering the cost of living. This negative feedback is again assisting overall sustainability of government. Allowing individuals to control, by their spending choices, much more closely how much tax they pay also adds to negative feedback and again assists with sustainability. The lowering of cost of living feeds back into less need to work. All these factors contribute to unemployment in today's systems. This is not happening in isolation, however, but in tandem with changes to working practices which are designed to make the whole business of working for a living less soul destroying. This process will include changes which encourage flexibility in both types of work, conditions of work and amount of work. Unemployment from one source, such as tax changes, will be counteracted by increased employment in services of one kind or another, including the business of not working. All the while the bottom line is changing, from on the whole soul destroying to, on the whole, spirit enhancing; from money to a holistic view of life.
A very important use for the slack in employment will arise in the new system from the need and desire to do something for the rest of Humanity. Our slack can be used to help raise the poor of the rest of the world away from survival towards the bottom line phase change when their economies can move away from growth towards sustainability. When they achieve this we gain too because then the finite resources are available for us too.
If taxes were used to encourage a levelling of wealth and sustainability, would there be a loss of competitive drive to the extent that the economy stagnated along with standards of living? No. This system is bottom up led and subject to negative feedback so it will become a steady state centred around wherever the People want it. If things did drift then the government can use the taxes to bring it back into balance.
What about the rich? Once basic needs are met there need be no forcible re-distribution of wealth downwards and such forcing would not be either desirable or in keeping with these principles. The rich could work as hard as they liked to get or stay rich while paying the same taxes as everyone else. They would be able to use their wealth as they wished but still contribute more from choice by choosing to spend on goods with higher Resource Tax levels. The rich can also take advantage of services without penalising the poor because the poor will already be catered for in other ways, and services do not use up resources so there is no objection to the rich paying to use them, again ploughing their wealth back into the economy.
This structure will keep some degree of competitive market going thus maintaining some efficiency pressure. But why would 'efficiency' be an issue and how would we measure it if we were interested in it?
Both tax and sustainability policies would strongly discourage foreign trade which, by its very existence, uses up resources. The pressure would need to encourage export of knowledge and discourage imports altogether. Exports would be funnelled into products coming under the banner of the Humanity department.
Simplification of the tax system would also enable the gradual abolition of most other taxes one by one. For example, the revenues from Poll Tax and road tax would be absorbed into income tax and resource taxes so Poll tax and road tax could cease to exist. This would again free up human resources for more productive endeavours and save on bureaucracy, administration and other soul-destroying tasks.
What categories of income tax would there be? Possibilities :
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