Taxation has long been held up as a necessary component of civilization – the raison d’être that enables functioning societies. And for a long time, tax revenue was crucial for building infrastructure, funding public services, conducting wars, and more. However, something has dramatically changed that challenges the entire taxation paradigm. Governments and central banks now have the ability to print as much fiat currency as they desire thanks to reckless financial engineering policies like quantitative easing. This begs the urgent question – with unlimited money printing, do we really need taxes anymore in the 21st century? Moreover, what is the alternative as innovation and technology rapidly accelerates? In this blog I will argue that emerging cryptocurrencies present a viable alternative to replace outdated notions of taxation, through novel technological innovation that promises more financial freedom and autonomy for individuals.
The Taxation Landscape: An Antiquated and Coercive System
To understand if we still need taxes, it is useful to dissect where taxation comes from and what purposes it served historically. Some records show various forms of taxation dating back over five thousand years to ancient Egyptian times when pharaohs compelled subjects to hand over grain and livestock. This set an ancestral precedent of rulers forcibly extracting economic resources from its citizenry without consent. Over the subsequent centuries taxes continued to aggressively fund war efforts under various empires. It was not until the early 20th century that taxation shifted towards funding public infrastructure and services for the social good.
The key attribute tying all forms of historical taxation together is coercion through implied violence. Pay your taxes, or you either lose your home, possessions or liberty. Such aggression was perhaps necessary before the advent of modern monetary policies. Still, it sets an uneasy relationship between free citizens and state through conditioned compliance. It also gives governments endless power for abuse through punitive taxation measures. Just look at the American Revolution that was ignited from unfair British taxation. The unfortunate truth is that tax coercion has been deeply woven into the fabric of governance since antiquity.
The other pivotal purpose of taxation is revenue generation for whatever cause rulers deemed appropriate during different eras. War efforts, infrastructure projects, expansion of bureaucracy. Taxation served as the revenue engine to make this possible. But its core dependency was the limitation and responsibility around monetary supply. Rulers could not simply create endless money from thin air to fund endeavors. Taxation filled this void as the money faucet tied to citizens through force. This gave taxation immense and continuous power throughout history. However, its criticality has recently been undercut.
Money Printing and Quantitative Easing Breaks the Taxation Paradigm
A seismic shift occurred in the latter half of the 20th century that transforms the premises behind taxation. Governments granted central banks unprecedented power through vague “dual mandates” to control inflation and maximize employment. This essentially gave central banks a financial engineering playground with no concrete objectives, models or proven efficacy. What ensued were reckless policies like quantitative easing (QE) where central banks create endless money out of digital airwaves to buy assets and pump up supply. The Bank of Japan pioneered QE in 2001 and it has since spread globally. The Fed, ECB, SNB and more enacted QE programs leading to over $15 trillion newly fabricated fiat currency that continues growing exponentially.
These actions have far reaching implications that most turn a blind eye towards. The power to print unlimited fiat money breaks the dependency chain taxation previously filled for raising government revenue. With digitally engineered money, rulers no longer need coercive taxation to fund any initiatives or bureaucracies. Taxes only still exist because the conditioning runs so deep across society! But the power to create endless stimulus for government self-interests is already here…and greatly abused! This is the core argument around futility of taxes in the 21st century interconnected economy.
Cryptocurrencies Present an Alternative to Taxation through Technological Innovation
Understanding that taxation is now obsolete in light of uncontrolled QE money printing, what alternatives exist to fund public interests? This is where the emerging world of cryptocurrencies and blockchains present an opportunity. Cryptocurrencies at their core are fundamentally new paradigms for programmable and predictable money tied to transparent open ledgers. Unlike fiat currencies where central banks have full control, cryptocurrencies such as Bitcoin operate on set algorithms with a limited supply that no central party can manipulate.
The economic design of crypto assets removes faulty human intervention and instead uses unfettered technological innovation to operate transparent financial networks through hardcoded monetary policies and peer-to-peer transaction validation. This allows crypto networks to function self-sufficiently through small network fees rather than unreliable and antiquated notions of taxation that governments unreliably collect and divert. Relying on smart technology rather than fallible regulators encapsulates the crypto asset breakthrough.
Some argue cryptocurrencies are too volatile still. While it is true crypto assets carry enriched risk-reward profiles, the core premise around technological innovation enabling alternative economic modes free from coercion persists. Cryptocurrencies offer glimpses into monetary systems operating freely based on algorithmic law rather than violent enforcement through taxation. Even as crypto technologies stabilize, they unravel openings for how public economic coordination can shift away from the deeply problematic taxation model that governments irresponsibly rely on and abuse. The pillars for technological freedom outside taxation already exist and will profoundly expand with time.
A Glimpse into Taxless Societies Enabled by Crypto Assets
For many, it may seem unfathomable to consider a society coordinated outside the premise of taxation. Our conditioning implicitly accepts taxation as integral to organized civilization. But why exactly? This thought process stems from lack of alternatives rather than questioning validity in the first place. Cryptocurrencies provoke new financial possibilities that history never presented. Through algorithms, transparency, accessibility and global participation a taxless world is not that far stretched. Crypto asset design hits taxation flaws at the core across these vectors:
- Algorithms over violent mandates: taxation is only enforceable through coercion not consent. Cryptocurrency protocols coordinate through unbiased coded algorithms everyone can inspect and consent to rather than forced agreements prone to corruption. Voluntary user participation generates needed capital.
- Radical Transparency over Obfuscation: most tax dollars get lost in bureaucracy leading to mismanagement and inefficiency. Crypto miners validate each transaction on public ledgers fully transparent for anyone to assess efficacy of resource mobilization.
- Accessibility versus Confiscation: cryptos expanding to phones worldwide enables more grassroots and equitable participation than exclusive capture by governments who then redistribute unfairly after siphoning hefty admin fees off the top.
- Borderless Structure over Constraints: taxation never accounted for closing international borders and economic globalization. Cryptos overlay seamlessly across flags enabling coordinated participation that taxation inhibitions stall.
These types of operational advantages will profoundly reshape the practicality and philosophical underpinnings of taxation policies going forward. In essence, cryptocurrencies present optimistic and refreshing opportunities for coordinated funding grounded in freedom and inclusiveness rather than yet another model of control, confiscation and coercion to fill holes left by deeply flawed monetary policies enacted by central banks. For these reasons, crypto assets offer a glimpse into the obsoleting of taxes for the next era of social and economic participation on this planet. The potential is tremendously exciting!
In Summary: Cryptocurrencies Usher Numerous Possibilities without Taxation
This has been a high level glimpse into why taxation serves little practical purpose in the face of endless quantitative easing and how the emerging world of cryptocurrencies offers alternative models to fund public interests outside the coercion of taxation. As with any new frontier, there will be volatility and uncertainty as technology reshapes old assumptions.
But the realization emerges that we may no longer need oppressive tax policies in functioning societies thanks to smart programmable money innovation. It enables coordinated participation across borders quickly that eliminates necessity for archaic taxation systems.
While far from perfect, cryptos restore visibility and accountability around public revenue that governments egregiously manipulated to their advantage behind veils of complexity for so long. Moving forward, we should be both skeptical of unjustified policies like quantitative easing combined with old taxation models as well as openminded to blockchain experiments demonstrating technological possibilities without the former constraints.
The innovation genie is out of the bottle and it augurs optimism for grassroots financial coordination free from centralized coercion and control.