The Glitch

Anarchists don’t believe in the state, or taxation, let alone that those can be used to reform capitalism… but if we did, then here’s how we’d go about it.

TLDR: don’t tax the income, tax the possession of whatever assets generate that income.

Spoiler – it won’t be permitted to happen.

Consumption

Consumption is the main driver of the capitalist economic system. It creates an imperative to pursue exponential growth on a finite planet, to strip-mine the environment in pursuit of riches.

Hoarding

Hoarding is incentivised by the workings of the tax system. Taxes are used to fund the state, which functions to defend private property and maintain social order, therein facilitating capitalism. There exist three main forms of taxation:

1. Tax on business surplus
2. Tax on individual income
3. Tax on individual consumption

In the case of the latter, different classes of consumer goods & services are taxed at different levels, in order that the state can attempt to balance consumption within the economy.

A business is not taxed on its income or consumption, but rather on its surplus. The effect of this, is that wealth and consumption are being taxed, rather than the means of generating wealth and driving consumption. This causes the capitalist to reinvest surplus into commercial land and capital goods. Hence a tiny number of ruthless people end up owning huge assets.

Tax Capital Goods

The obvious solution is to scrap income tax, and corporation tax altogether, and replace them with a tax on commercial land & capital goods. This would in itself constitute a huge administrative saving. No more tax returns, no more tax brackets or allowances, and a vastly simplified payroll process. Instead different classes of business asset would be taxed at different levels, with the state having scope to tweak those in order to balance economic output.

Pocket the Gain

Capitalists would be less incentivised to reinvest any surplus in the means of generating wealth, and more inclined to pocket the gains. The tendency would be towards smaller more nimble businesses, and state owned industry… since possessing the means of wealth generation would create an automatic tax liability. Hence individuals would be deterred from hoarding such assets.

Fulfilling Need

Wealth generation would no longer be facilitated by hoarding or driving consumption, but rather through fulfilling genuine need.

Reform Won’t Work

The bargaining power of labour would increase, since the capitalist would find it more expensive to maintain the means of exploiting labour, thereby narrowing the earnings gap. However the ruling class always see to it that the tax system is tweaked to their advantage, so at best this would simply mark another phase in the struggle. It’s unlikely that such reform would even to be considered, let alone implemented.

For this reason we advocate worker self-management, and the abolition of both the state and capitalism.