Saturday, April 26, 2014

The Poll Tax is ethically good for all people!! : It is only bad for government...


Basically, any taxation is never ethically good. It violates both individuals' property right to hold their accumulated wealth saved up by earning from their labour, wisdom, and trust from others. It reduces the degree of freedom because it enforces individuals to involuntarily split their income off from their owning so that they have less and less choice to decide how to use their income for. At least, taxation can be regarded as the necessary evil as long as government for administrating the public sector is demanded by individual citizens.
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The poll tax, whose rate is equal for everyone, is ethically the best form of the direct taxation as well as the ethically best taxation among all kinds of taxation! It ensures the fairness that those who utilise pay their cost. Under the modern economic system, majority citizens seem to have forgot that the public welfare incurs costs and someone has to pay. There is no free lunch.
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The public sectors have been expanded to provide an abundant public welfare since the notion of the welfare state was introduced and became more demanded. More citizens have started using these public goods and services with free or relatively low prices. But, there are many suffering from it. Majority of private sectors suffer from the high taxation even though they might be more able to provide more satisfactory goods and services than the public sectors owing to their virtuous market competition mechanism.
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It discourages higher income citizens to voluntary spend and invest for something. It not only discourages their entrepreneurship but also their loyal obligation as the chosen fortunate individual citizens. Nowadays, these higher income expect the state authority, who is responsible for the public sector management, to be always responsible, and many of them have become meager since the welfare state establishment.
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Nowadays, the national governments tend to frequently use the progressive taxation (Taxing more on the higher income citizens and less on the others) because they are craving to gain a high tax revenue as much as possible . They claim for a high tax revenue due to the remarkably expanding huge public sector scale nowadays. Then, they are required to impose the progressive tax because of its efficiency.
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The reason why the poll tax is hardly introduced because this taxation is inefficient for government to collect the tax revenue from citizens. Even though the nominal tax rate is equal for all, the relative rate to the income level of citizen varies in a regressive manner so that this is a regressive taxation.
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The regressive taxation means taxing relatively more on the lower income and less on the higher income in proportion to their income level. So, when the reliance on this taxation increases, the aggregate demand decreases because the lower income citizens spend less so that the aggregate supply eventually goes down and the higher income citizens invest less. Therefore, the market multiplier goes down, and the aggregate tax revenue goes down.
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However, among all the regressive forms of taxation, the poll tax is still the best alternative even by means of the public sector economics (More than ethics). Compared to the indirect tax (E.g. The sales tax, the VAT, the consumption tax, and the emission tax) and the inflation tax (It has been named as such since Milton Friedman called the price inflation itself is a form of taxation).
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The indirect taxes still allow individual citizens to pay or not by changing their consumption and life patterns to the certain extend. So, imposing this tax still does not enable citizens who are more reliant on the public welfare to realise and taking a part of their responsibility. In addition, the tax revenue from the indirect taxation is always volatile because tax payers' contribution varies across their varying life patterns (Microeconomics) and the business cycle (Macroeconomics). Therefore, this taxation revenue does not guarantee to cover the welfare spending and ensuring the cost is payed by those who have used.
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The price inflation is indeed the taxation by the state authority such as government and the nationally owned central bank. They may increase their money supply relative to the existing aggregate productivity level of their overall market capacity to cover their government expenditure. Then, the price inflation takes place, and then consequently reduces every individual citizen's real income. This is why the price inflation is called the inflation tax, and the effect is same as the poll tax, and it is more regressive than the indirect tax.
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The inflation tax causes various bad effects on economies, which consequently reduce the overall capacity to cover the public sector economic costs. When the money demand (Do not be mixed up with the liquidity) goes down due to the money value depreciation due to its excess quantity supplied, it reduces the real income value. So, even though they have a stable income earning source, their income is kept depreciated even though they work hard, play wise, and live peacefully for it.
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The inflation also represses the capital market. When the currency value is unstable and not trust worth, then the financial inflow into the market goes down. It also negatively affects the value of stocks and other equities traded in the market because the inflation reduces the real value of these assets. Moreover, the higher inflation causes the high volatility of its price index change, which notoriously increases dealers' prediction costs.
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On the other hand, the poll tax is political-economically the best among all forms of the regressive taxation. Because it is the direct taxation, it is much easier and more certain to collect the targeted tax revenue from the designated tax payers. Unlike the inflation tax, it does not depreciate the real income of every citizen and maintains the stable and prosperous capital market performance.
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Socialists underestimate the importance of the capital market for the working class citizens. But, they have forgot that the redistribution of wealth through the voluntary motive keep stimulating the real market to provide these working class people jobs and the high living standard. Also, the saving income earnt from their diligent labour can be secured under the healthy stable capital market.
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Mrs. Thatcher was a highly enlightened political leader who had rationally understood that the incompetent lower income citizens free ride on the welfare state. Mrs. Thatcher attempted to introduce the tax system which enables individual citizens to realise there is no free public welfare available for all without enforcing someone paying more. After levying the poll tax, citizens will eventually realise that they have to pay for what they get.
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She indeed attempted to let all individual citizens to recognise that the taxation is essentially necessary evil which perpetuates the monopoly power of the welfare state. So, to sustain the fairness under the equity rule Mrs. Thatcher attempted to introduce, these incompetent lower income citizens have to be responsible for sustaining the public welfare themselves without unfairly extracting the income of those who utilise the public welfare at the same level or less.
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In addition, Mrs. Thatcher's enlightenment policy would have incarnated the laissez-faire political economy where individual citizens only demand the minimum optimum size of the public sector and think highly of the freedom of choice and their virtuous voluntarism. The Poll Tax would have been the first step to emancipate the UK from the toxic of socialism and its welfare state. The Poll Tax was not economically effective, but it was the ethically beneficial taxation notifying all individual citizens about their own responsibility for the public welfare utilisation without free riding.
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Nevertheless, virtuous Mrs. Thatcher was forced to resign her position under the thread of some British citizens and the contemporary British parliament. The contemporary British Conservative party was overwhelmed and pressured by the tyranny of mobs to remove Mrs. Thatcher from office. The tyranny by the incompetent lower income and low cultured mobs rejected her enlightening policy, and claimed to free ride on the unfair welfare statism. The government has once been hijacked by this tyranny of mob once again since expelling Mrs. Thatcher.
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Only the legitimate cause to contradict the validity of her imposing Poll Tax should be the legal matter. Under British legal system, where the Common Law is equivalent to the constitution in this country without a written constitution, levying a different form of taxation in a particular region of the UK is against the Common Law. Thus, if there would have been the politically legitimate reason to remove Mrs. Thatcher from office, this legal matter is rather the legitimate reason to accuse her Poll Tax.
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Japan already has the poll tax. Mr. Heizou Takenaka, the former councilor of exchequer in Japan, has said that Japan imposes the taxation form which is resemblance to the Poll Tax which his admiring the competent, tough minded, and highly talented British prime minister Mrs. Margaret Thatcher even could not succeed in imposing. There are two lump sum taxes like the Poll Tax in Japan.
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The lump sum taxes he mentioned were the national health insurance and the retirement benefit. Japanese national health is not a universal coverage because it only covers 70% of their expense, but it applies to not only the public but also the private hospitals and pharmacies. The national health insurance tax is still not quite expensive and Japanese citizens rarely complain about it. The retirement benefit tax is currently complained by Japanese citizen. The tax rate for the national retirement insurance has not changed since the rapid economic growth meanwhile the expected future receivable benefit after the retirement has been declining since the birth rate started dramatically declining.
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Mr. Takenaka ironically referred these lump sum taxation as the unfavourable taxation for majority Japanese citizens. His aim was the pure irony against Japanese welfare state supporters who describe these two lump sum taxes as the favourable taxation for lower income Japanese citizens. This was his unique irony to contradict Japanese socialists who are in favour of defending these two taxation covering the national insurance costs.
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The reason why Mr. Takenaka blamed these two lump sum taxes for the public welfare was the inefficient management by the government officials and Japanese state bureaucrats, and because he is in favour of the privatisation. He actually insists that the lump sum is the ethically ideal taxation but it is realistically extremely difficult taxation to impose due to the massive opposition from citizens. Therefore, the problem of these two Japanese lump sum taxes is not the form of taxation: it is how their revenue is managed to spend. This is what many socialists in this world tend to misunderstand.
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Even though Socialists argue that the Poll Tax hinders economic growth and overall individuals' well-being, these lump sum taxes have been already levied on all Japanese citizens excluding the unemployed state benefit receivers since the beginning of the rapid economic growth period. These lump sum taxes themselves have not slowed down Japan's rapid economic growth despite their contradiction.
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