23. On Taxes:Paying Taxes is an Obligation; Resisting Taxes is a Right

As long as citizens require a government, they must pay taxes, for taxation forms the foundation of governmental administration. Without tax revenue, a government would collapse. Why do citizens need a government? Because certain social services require governmental provision. For instance, governments maintain social order, safeguard citizens' personal and property security, nurture minor citizens, and deliver social services such as education, healthcare, and elderly care. Given current technological and ideological limitations, these services still require provision through governmental institutions. Consequently, we can definitively state that citizens pay taxes for one reason alone: the government collects revenue to advance the collective welfare. Every taxpayer receives commensurate services through the government. Conversely, if the government collects taxes without delivering social services, citizens have the right to refuse payment.

The purpose of government taxation is to deliver social services. The greater the scope of these services, the heavier the tax burden; conversely, fewer services mean a lighter tax burden. Is there an optimal balance between services and taxation? When we adhere to the principle that smaller government is preferable, we recognize that more government services are not necessarily better, as expanded social services inevitably entail greater governmental power. Therefore, the government should only provide the most fundamental social services—those sufficient to ensure citizens can live with dignity. For example, if a pension of 2,000 yuan is enough to enable a retired elder to live a dignified life in old age, there is no need to increase the pension amount further, lest it unduly burden citizens. Thus, the total amount of taxes collected should be limited to the funds necessary for the government to fulfill its social responsibilities.

Regardless of how taxes are levied, the ultimate burden always falls on individual citizens. It can be said that everyone is a taxpayer. Since every person must pay taxes, the design of tax categories and rates, the calculation of tax amounts, and the collection procedures should be as simple as possible. These tax matters should be comprehensible to an ordinary citizen after minimal study. This means an ordinary citizen should clearly understand whether they owe taxes under specific circumstances, the amount owed, and how to pay. Yet under current tax laws worldwide, even a college-educated person, faced with a bewildering array of regulations, often cannot determine their tax liability or the amount owed. This necessity has spawned specialized accountants and tax consultants to resolve tax issues.

It is absurd that citizens, as taxpayers, are unable to fulfill their tax obligations to the state without hiring professionals to assist them. How can taxpayers be compelled to fulfill obligations they don't even understand? This approach to taxation is indistinguishable from robbery or fraud.

Therefore, tax laws must be simplified. The goal of simplification is to ensure any ordinary citizen can clearly understand whether their actions require taxation, how much tax is owed, and how to pay it. Simplification should involve minimizing the number of tax categories, simplifying tax calculation methods, and reducing the number of steps required to pay taxes.

Regarding tax categories, none is more foolish than the personal income tax. Individuals are the primary consumers; without assets, they cannot consume, and without consumption, the economy cannot sustain itself. Imposing personal income tax directly reduces funds available for consumption, clearly hindering economic development. Even more absurdly, personal consumption itself constitutes taxation, as a portion of every consumer expenditure inevitably goes to the state as tax revenue. Moreover, all taxes are ultimately realized through individual consumption. Yet personal income tax remains universally imposed under the pretext of ensuring distributive fairness and preventing excessive wealth accumulation. However, higher earnings from labor signify greater societal contribution and should be encouraged, not restricted. Unearned income can be effectively addressed through inheritance taxes. Therefore, the expansion of personal income tax should be abolished.

Inheritance tax is a tax that should be vigorously enforced, yet many countries impose it not at all. This is because this tax severely restricts the inheritance of unearned wealth, thereby undermining the interests of legislators. Legislators in various countries often possess assets they wish to pass on to their children. Based on the principle of self-interest inherent in human nature, legislators typically refrain from enacting laws that harm their own interests. Consequently, inheritance tax receives insufficient attention in many nations. In our essay "On Inheritance," we argued that the inheritance system is fundamentally incompatible with democracy. Achieving true democracy necessitates abolishing inheritance. The method to abolish inheritance is through the full imposition of inheritance tax. When all inheritances become tax revenue, it effectively abolishes the inheritance system. By increasing inheritance tax revenue, we can substantially reduce the tax burden on other tax categories while maintaining overall tax revenue. This inevitably lightens the burden on taxpayers. It amounts to having the deceased pay taxes, with the living reaping the benefits. Thus, no tax is superior to the inheritance tax. A key method of evading inheritance tax involves the deceased gifting assets to others during their lifetime to avoid taxation. To prevent this, the law should prohibit gifting, as receiving gifts constitutes unearned gain—a practice that should be restricted.

Regarding tax collection methods, the current practice of designating the recipient as the taxpayer is both incorrect and inefficient. The true bearer of the tax burden is the payer, whose payment already incorporates the tax amount. Therefore, the payer should be the taxpayer. When the payer is designated as the taxpayer, collecting taxes becomes straightforward with only minor adjustments to the payment system. Suppose I am purchasing a garment. At the point of payment, the system automatically displays the total transaction amount as 200 yuan, including 6 yuan in taxes. I simply confirm the 6 yuan tax payment and remit the 200 yuan. The 6 yuan tax is then automatically transferred to the national treasury's tax account, while the merchant receives 194 yuan.

Why would I, as a citizen, accept this tax-paying payment system that helps the government collect taxes? Because this system benefits citizens. In a democratic country, every citizen has a tax account. The tax amount from each transaction is credited to the citizen's personal tax account, allowing them to view their tax contributions in real time through this system. A citizen's tax contributions are directly linked to the social benefits they receive. Higher tax contributions yield greater access to social services. For instance, unemployed citizens with higher tax records receive increased unemployment benefits, while elderly citizens with higher tax records receive higher pensions. In short, whenever government-provided social services require tiered allocation, citizens with higher tax contributions receive higher-tiered benefits. Under this incentive system, every citizen voluntarily pays taxes with each transaction. This inevitably reduces the cost of tax collection significantly.

In essence, when the government collects taxes for the welfare of its citizens, taxation becomes a civic duty; when the government collects taxes without providing corresponding social services, tax resistance becomes a right.