Libertarians believe taxes are legislated theft - a "share your wealth" system that benefits politicians who rob Peter to pay Paul. No wonder the satirist H. L. Menken described elections as "an advance auction of stolen goods." We are against taxation!
While taxes exist, we offer the following ways to simplify the system and ensure taxpayers are fully aware of how much they are paying and where the money goes:
Income Taxes
Income taxes represent 22 per cent of the average family budget, more than what we spend on shelter (19 per cent), transportation (13 per cent) or food (11 per cent). A government limited to protecting us from aggressors instead of buying our votes with all manner of goods and services would require considerably less than this. This would allow us to introduce a flat rate income tax. We must stop discouraging people from working by taxing them at a higher rate just because they work harder and make more. The flat rate income tax does this. It also simplifies the calculations involved. We would also introduce higher deductibles so that those living below the poverty line would pay no taxes.
Dedicated Taxation
Too often government collects taxes that are supposed to be for a specific purpose but most of the money ends up elsewhere. For example, less than half the money collected in "road taxes" (gasoline, licenses etc.) as is used for roads. The money goes into the "general revenue" pot to fund other departments. Libertarians believe that as long as taxes are being taken from the public they should only be used for their stated purpose.
Sales Tax
Ontario's sales tax makes tax collectors out of every merchant. It is another money grab that must be eliminated as quickly as possible. Libertarians are dedicated to phasing this tax out of existence.
Property Taxes
Property taxes are the primary source of income for municipalities to pay the costs of providing required services for their residents. Most would agree that police and fire prevention are essential services, and that the municipality should also build and maintain the roads and sewers, collect garbage and plow the snow.
Unfortunately, the larger the municipality, the more services are added to the "required" list. Services such as libraries, swimming pools, tennis courts, opera houses and sports stadiums, usually named after politicians, add to the municipal tax burden. One reason smaller communities do not suffer from this expansion of "required" services is that individual tax payers have more control over the local politicians and their spending.
Municipal taxes are no longer limited to providing infrastructure and services required by all residents alike. As a result, how to allocate them becomes a significant political issue. Market Value Assessment is a thinly disguised effort to extract taxes "from each according to his ability" or "make the rich pay."
A Libertarian government would limit the services municipalities could operate on a tax funded basis; all other services and facilities would be provided by voluntary, private funding. The costs for these "core" services would be allocated according to property size and frontage.
Regional and Metropolitan levels of government would be eliminated to reduce costs and increase accountability.
References
Sweden's Secret Recipe - This article from The Spectator tells how Anders Borg, Sweden's Finance Minister, cut taxes during the economic crisis in order to 'stimulate' the economy. In 2011 Sweden "had the fastest growth in Europe," and was able to abolish it's deficit. (Reproduced on the Frontier Centre for Public Policy.)
