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  • In 1716, Christopher Bullock coined the iconic phrase “'Tis impossible to be sure of

  • any thing but Death and Taxes.”

  • It's a phrase so simple, yet profoundly relatableso much so that it's been

  • echoed by Daniel Defoe, Benjamin Franklin, and your libertarian uncle with theDon't

  • Tread On Mebumper sticker on the back of his truck.

  • But what if this wasn't the case?

  • Aside from the obvious result of sending everyone who works for TurboTax to the unemployment

  • line, what would actually happen if everyone just stopped paying taxes?

  • Today, we're going to find that out.

  • Taxes are about as old as the concept of centralised hierarchies, dating back into Pre-Roman times.

  • In their simplest state, taxes are payments made to the centralized authority figure of

  • an area in exchange for the services that centralized authority figure provides.

  • Former US Supreme Court Justice Oliver Wendell Holmes once said, “Taxes are the price we

  • pay for a civilized society.”

  • And while there's definitely merit to such an idea, it doesn't make taxes any less

  • of a pain in the butt.

  • The median income of the American taxpayer is roughly $56,000 per year, and around $11,000

  • of this goes straight to the government in income tax as well as taxes for Medicare and

  • Social Security.

  • For anyone without a bank account in the Cayman Islands, that's a lot of money.

  • It's like throwing away an expensive family vacation and a complete redecoration of your

  • home every year.

  • So, it's understandable that a working joe might daydream about getting to keep the entire

  • 56K without Big Government skimming a little cream off the top.

  • While, in an abstract sense, we all know that taxes are useful, a few hours filling in your

  • returns are bound to make you at least a little sympathetic to 19th Century French philosopher

  • Frederic Bastiat's idea that taxation is theft.

  • As in any major financial decision, there are three factors worth looking at: Benefits,

  • Costs, and Precedents.

  • What would be the real impact of a world where taxes were repealed, or if the people of planet

  • earth simultaneously decided to object to all taxation?

  • First, let's discuss the benefits of a world where your most libertarian friends get their

  • deepest desire.

  • The first and most obvious benefit is that you'd get to keep more of your paycheck,

  • due to the sudden disappearance of both federal and state/municipal income tax, which would

  • also be a huge boon if you happened to win the lottery any time soon.

  • Not only that, but your employers wouldn't dock your earnings for payroll tax under the

  • Federal Insurance Contribution Act, making for an even sweeter pay day.

  • And if you wanted to spend that excess money on a new sports car, a designer outfit, and

  • a pearl necklace, you'd also be in luck, because there'd be no luxury tax imposed

  • on these items.

  • Ditto for if you wanted to celebrate your fat stacks with some All-American booze and

  • cigarettesthese are typically more expensive because they're subjected to a so-called

  • sin tax.”

  • But that's not a problem for you anymore.

  • If you're a little more on the affluent end of the scale, you could also smoke a tax-free

  • cigar to celebrate the repeal of capital gains tax, typically levied against the selling

  • of assets in stock and bond transactions.

  • And if you have a wealthy, elderly relative who might be checking out any time now, in

  • the absence of estate tax, your rich, dead grandpa could be a real cash cow.

  • Though, to be fair, if either of those last two really apply to you, you probably have

  • an accountant on your payroll to help you minimise the taxes you pay already.

  • Plenty of the uber-wealthy already dodge a number of taxes using bank accounts in tax

  • havens such as Switzerland, the Cayman Islands, and Panama, though that's probably a conversation

  • for another day.

  • Fans of The Shawshank Redemption will probably already be aware of the gift tax laws, used

  • by banker-turned-convict Andy Dufresne to curry favour with his jailors in that hit

  • Tim Robbins movie.

  • While the first $14,000 is already exempt from taxation - meaning, one individual can

  • gift another a sum of $14,000 per year with no tax on the sender or recipient - in a world

  • with no taxes, you could give and receive potentially unlimited quantities of money

  • without losing a cent of said money to an outside party.

  • The larger sums of money you tend to deal in, the more you'll financially benefit

  • from this sudden lifting of taxes.

  • Though once again, while the uber-wealthy save far more than the average person, the

  • little guy actually needs what comparatively little they save a heck of a lot more.

  • Next, property.

  • There are a number of taxes levied against renters and property owners the world over

  • that would suddenly be miraculously lifted in a world with no taxes.

  • Property tax, or ad valorem tax, is a recurring tax on one's property, typically imposed

  • by a local rather than federal government entity.

  • This can apply not only to homes, but also cars, boats, and business properties, such

  • as offices and factories.

  • The level of tax on real estate is also subject to change based on the perceived value of

  • the properties in question, based on factors like market value, location, and condition.

  • But this would suddenly cease to be a problem.

  • Anyone with the proper funds could suddenly leap into the currently-pretty-inaccessible

  • property market without the added overhead of these aforementioned taxes.

  • Finally, even outside of luxury and intoxicating goods, everyone would generally save money

  • on consumption in a world without taxes.

  • That's because most consumer goods would suddenly experience a price cut without the

  • added cost of sales tax, typically implemented by local governments to earn extra revenue.

  • This is one tax cut that actually would benefit the working class more than the wealthy, because,

  • proportionally, working class people typically put more money into the economy through consumption

  • than their affluent counterparts.

  • The same can be said for excise tax, typically imposed on fuel.

  • Gallon by gallon, in a world without taxes, you'd start to see the savings pile up.

  • And finally, without user fees, the costs on everything from toll roads to cell phone

  • network packages suddenly drop off.

  • And in a world where simply using a phone can potentially incur six different taxes,

  • according to financial writer Bill Fay, the simplicity of a tax-free world does start

  • to look pretty attractive.

  • Though of course, any situation can seem like a utopia when you only consider the positives,

  • and that's not why we're here today.

  • That's rightit's time to ask ourselves about the potential drawbacks in a world where

  • nobody pays their taxes.

  • To understand why a world without taxes could potentially resemble a post-apocalyptic nightmare,

  • we need to get back to the fundamentals.

  • Much like any financial transaction, while it may seem like the money you're losing

  • on taxes is just being flushed down the toilet, it's actually your part in an exchange with

  • the government for a number of extremely valuable services that essentially keeps society as

  • we know it afloat.

  • Time for a little reminder on the various vital services your tax money funds, and why

  • it could cause massive problems for countless people if they fell through.

  • Firstly, healthcare and Medicare.

  • In countries like the United States without universal healthcare, it's already a financial

  • nightmare to get injured or sick.

  • Government programs like Medicare are designed to lighten the load on the most vulnerable

  • in society, and while the system isn't perfect, they've helped many Americans avoid slipping

  • into destitution from factors beyond their control.

  • However, in the absence of tax money to fund ventures like public healthcare and Medicare,

  • privatisation would fill the void.

  • As a result, you'd have to foot the entire bill for quite literally all forms of healthcare

  • without any form of government assistance.

  • You might think, “I'm healthy, so why should I need to pay the government for healthcare

  • I'm not using?”

  • And wellIf recent events have taught us anything, it's that you never know when

  • you need a well-funded healthcare system available to all.

  • The circumstances can really sneak up on you, whether it's a viral pandemic, an unexpected

  • injury, or being blindsided by a sudden cancer diagnosis.

  • Even if you're not currently using any form of government-assisted healthcare, we can

  • still ensure you that you'll miss it when it's gone.

  • After all, nobody is healthy forever.

  • But it's not just healthcare you'd be losing in a world with no taxes.

  • The largest expenditure of the US Government by a significant margin is social security.

  • This particular government function is so universally beloved across political lines

  • that it's hard to imagine a proposal more unpopular than even cutting social security,

  • let alone losing it altogether, as we would under a tax-free world.

  • In a world without social security, millions of people would essentially be locked out

  • of retirement forever.

  • While the obscenely wealthy could save some portion of their money for a rainy day, most

  • working-class people would essentially need to work from cradle to grave in order to sustain

  • themselves and their family in a tax-free world.

  • You may also think, “At least I get to keep all of my income.”

  • And that's excellent, as long as you can hold down that job, but that isn't a certainty.

  • 13% of the annual US budget goes towards income security in various forms, from retirement

  • to disability benefits to cash benefits for the needy.

  • If you can keep your job, this won't apply to you, but if a run of bad luck leaves you

  • unemployed, your chances of ending up homeless and sick increase massively.

  • And, as we've already established, the lack of Medicare here would make getting sick a

  • potential death sentence.

  • Public education is another thing that would essentially fly out the window in a world

  • with no taxes, leaving the education system as little more than a series of private schools.

  • This lock millions of people out of even the most basic education, perpetuating and even

  • expanding pre-existing cycles of poverty and inequality.

  • Ofcourse, this would cause even larger problems further down the line, as having far fewer

  • people in education has the later effect of fewer trained professionals in key roles.

  • In other words, only a tiny portion of a society being educated is literally always a bad thing

  • for pretty much everyone.

  • A well-educated world is a stronger world.

  • In a world with no taxes, we'd be throwing the sick, the poor, the unemployed, and even

  • veterans under the bus, as around 5% of the national budget typically goes towards supporting

  • veterans injured and traumatised in battlewhich, incidentally, is also funded by

  • the tax payer.

  • If you're a fan of crop subsidies, working infrastructure like roads and bridges, law

  • enforcement, national security, national parks, and public libraries, you have plenty of good

  • reasons to want to continue paying your taxes.

  • Of course, there have been precedents for tax resistance in the past, but never for

  • its own sake.

  • Typically, tax resistance is a form of protest designed to illustrate a sense of displeasure

  • with the expenditure of one's taxes for something the tax payer finds morally or fiscally

  • objectionable.

  • Various populations have consistently used tax resistance against their rulers for over

  • a thousand years, continuing through to the modern day.

  • In 2017, after the election of US President Donald Trump, some anti-Trump protestors took

  • to tax resistance in order to voice their displeasurespecifically by refusing to

  • pay federal taxes while continuing to pay state taxes.

  • Andrew Newman, one of the tax resistors, gave the following reason, “My tax money will

  • be going towards putting up a wall on the Mexican border instead of helping sick people.

  • It will contribute to the destruction of the environment and maybe more nuclear weapons.

  • I think there will be a redistribution of wealth from the middle class to the wealthy

  • elite and Trump's campaign for the working man and woman was an absolute fraud.”

  • It's worth noting that tax resistance is technically breaking the law, thus leaving the protestors

  • vulnerable to fines or even arrest for tax evasion, so it's one of the more legally

  • risky forms of peaceful protest against the government.

  • In conclusion, we have to return to our first question: What would happen if everyone stopped

  • paying taxes?

  • We now know that any benefits of a tax-free system would incur huge boons for the super-wealthy

  • while passing on the even greater costs to the poor and working class, by eliminating

  • all the social programs and initiatives that make up society as we know it.

  • While we may not always be satisfied with the way the government uses all of our taxes,

  • a world without taxes altogether wouldn't even the playing fieldit'd only deepen

  • the inequalities already inherent in the current system, dragging everyone down eventually.

  • We'd say that avoiding that outcome is worth a little income tax.

  • Check outWhat If The US Paid Off Its DebtandHow Does The German Economy Compare

  • To The United States Economyfor more interesting economic lowdowns from The Infographics Show.

  • In the meantime, stay safe, stay informed, and pay your taxes.

In 1716, Christopher Bullock coined the iconic phrase “'Tis impossible to be sure of

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What If Everyone in USA Stopped Paying Taxes?

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    Summer posted on 2020/08/31
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