In this post, we explain our concept of SORAnomic Fair Taxation derived entirely from Book 5, Chapter 2 of Adam Smith's Wealth of Nations. The taxation of modern Economics suffers from the fact that (1) taxes are imposed not on where they are meant to be and (2) that taxes must only be paid in money. The first one creates an obvious economic injustice while the second one creates an indirect injustice by forcing the taxpayer into the role of a merchant as he has to sell his product or service for money (which may not be his primary skill). We correct this by levying taxes directly on the people's revenue and by allowing tax payment in kind, through a system called Shared Direct Taxation or simply 'SORAnomic Fair Taxation'.
Smith's system is based on the idea that wealth is not measured in money, but instead in the quality and quantity of goods and services available to a person. This is different from current Economics which measures everything in units of money. Nowadays, GDP, Taxes, and Prices are measured in money. Smith says 'no, prices must be valued in terms of real objects.' For example, instead of dollars which is a fiat thing, everything can be measured in terms of Big Macs, which is a real thing. In this way, everyone can know the real value of their stuff because everyone knows the value of a Big Mac.
A commodity that always varies in value can never be an accurate measure of the value of other commodities. Book 1, Chapter 5
In our system, the value of a thing produced in Switzerland would be relative to the same thing produced in South Korea, and so the real values between any country (and thus their real wealth or poverty) can be measured accurately.
The natural limitations of human cognition created a problem in every country's taxation system because the government could not know the real value produced or traded by each person:
The impossibility of taxing people according to their revenue by any capitation led to the invention of taxes on consumable commodities. The state, not knowing how to directly and proportionally tax the revenue of its subjects, taxes it indirectly by taxing their expence. Their expence is supposed to be proportional to their revenue. Book 5, Chapter 2
The problem with taxing consumables is that a single merchant can have a lot of customers and it would still be impossible to log the purchases of everyone. So instead of taxing the buyer directly, natural limitations led to governments to tax the merchant. However, this created the possibility of fraud since tax collection was 'outsourced' to few individuals (merchants):
The goods may be taxed while they remain with the dealer before they are delivered to the consumer. Goods which are consumed immediately are taxed this way.
The bounties sometimes given on the exportation of home produce and manufactures, and the drawbacks paid on the re-exportation of most foreign goods, have created many frauds, and smuggling. To obtain the bounty or drawback, the goods are sometimes sent to sea then clandestinely re-landed in another part of the country.
Nowadays, this commercial system of taxation produces frauds easily when the merchants or companies misrepresent their revenues and more commonly by 'smuggling' the money into tax havens, which in essence are the same problems Smith described.
Since the problem of tax injustice is caused by natural limitations, we use technology to get around it, in the same way that airplanes lift up humans who are naturally not meant to fly. We do this by placing the entire economic system online so that each buyer and seller will have a user account of which all its actions can be recorded in a database and known by the server. This will allow real-time personal traceability of any economic action, allowing any tax to be imposed on the person directly.
For example, each tax can be split between two parties to spread the risk of non-payment and so that the tax burden will be lighter.
The real advantage of this system of taxation is that barter trades can be taxed fairly, which is useful for people without money or those not engaged in the mercantile trade or buying and selling. In contrast, taxation by the IRS mandates that even barter be taxed in the fair market value measured in currency.