Chapter 11. Fiscal strategy.

1. This chapter's goals.

In the previous chapter we have described a strategy for the balance of the domestic market, on the basis of the communal invention of money according to investment and consumption production surpluses. We have called them mercantile common goods.

This strategy allows not only a market equilibrium, but also the quantification of the communal money hoard (credits and finances) which will be used to cover the government expenditure, to finance all those activities that the geo-political society takes up as its own and not of private enterprise (we called them public services).

Putting aside the invention of money -which all moden states bring about through their national banks-, the other classical system to establish a communal money hoard is that of fiscality.

During the starting period necessary to find out if the rational strategy of political invention of communal money is enough for the communal needs of the geo-political society, an extreme strategic market prudence must be shown. For this reason, and in order to overcome any possible experimental invalidation of the hypothesis or actual lack of investment and consumption production surpluses, law can foresee having recourse to fiscality.

Cheque-invoices, which allow a rational strategy for invention of money, can also become the instrument of a drastic fiscal simplification and rationalization, as we will try to demonstrate in this chapter.

2. A unique tax to establish a social solidarity monetary hoard.

Present day tax systems are frightfully complicated for the tax-payer and very expensive for the several collecting bodies, because of the great number of employees necessary for the collection and control.

This situation can be easily overcome through the cheque-invoice, which allows the application of a unique tax, by fixing a legal percentage on each of the cheque-invoices produced by the geo-political society, to be paid always by the customer.

This system allows a great simplification: there is a unique tax, the same for everybody, which is paid according to the expense made; there is one only controlling body: the geo-political society; and collection is automatibc, since every produced cheque-invoice implies automatic payment of tax, which eliminates all sorts of collecting bureaucracy.

The monetary hoard obtained through this only tax will be equitably distributed to the credit-investing sector and to the consumer-financial sector, according to the different statutes we will consider in next chapter.

3. Collection advantages.

The two main advantages for the simplification of tax collection are the following:

4. Advantages for taxpayers.

The main advantage of a unique tax as suggested, from the point of view of taxpayers, is that it makes much easier the respect of fiscal obligations. Consumers will have no further worry concerning taxes, as each signed cheque-invoice implies automatic payment of the corresponding tax percentage.

On the other hand, businessmen will be able to calculate in advance for every accounting year the whole of taxes to be paid on their purchases of rough materials, equipment goods or production factors (work, capital, staff, invention) and therefore will be in a position to apply this expense to cost prices.

Of course workers, as production agents, will pay no tax: it is the company who buys their work and therefore, being a customer, pays the corresponding tax. Workers will only pay taxes as customers-consumers.

Probably this tax will be much cheaper for the taxpayer than the whole of the many taxes he now pays.

The percentage will not be very high, if we consider that every cheque-invoice implies payment of a tax and eliminates therefore present day fiscal fraud. The compulsory cheque-invoice avoids at the root, as it can easily be understood, all underground economy: therefore the tax amount will be directly proportional to the actual total volume of the market of the geo-political society.

5. Progressive tax on consumption, much easier than vat.

As we have explained in the previous paragraph, the unique social solidarity tax is proportional to the actual volume of purchase indicated in every cheque-invoice. It is therefore progressive for those who buy more and, especially, in the consumption area: consumers spending more pay a higher amount than consumers spending less².

The advante of the social solidarity unique tax with respect to the value added tax (vat) is that the first one does not admit interpretations of fiscal law nor discussions on its application, while all the laws concerning vat can be interpreted and discussed, which means the existence of a bureaucracy to take up a job of inspection and arbitration.

With respect to equity between the two different taxes, it must be said that in both cases it is the customer and market in general who pay, not the company. But because of the possibility of interpretation in the application of vat, larger companies are in a better position to discuss and complicate its application, and, as a consequence, to have more advantages than ordinary companies: these are the only ones to have an interest in the free and responsible market we are suggesting.

The money amount collected through the unique social solidarity tax is in the end redistributed as finances and credits.

6. Transient fiscal policy.

The unique tax to obtain the social solidarity monetary hoard implies the suppression of all other taxes (state, regions, boroughs...). It will only be fixed, maintained and perhaps increased, reduced, suppressed or fixed again, if political convenience makes it necessary, as it has been indicated at the beginning of this chapter, or if the omniaccounting, statistically exact, of all the geo-political society demonstrates that, in practice, the political invention of solvent communal money, with respect to actual production surpluses, is not enough for the chosen democratic economical policy.

Summing up:

Political convenience suggests to «protect» the hypothesis of mercantile common good as investment-credit production surpluses and consumption-financial production through:

If the hypothesis of common good is experimentally confirmed, in practice it will be possible to reduce a percentage of tax on the amount of every cheque-invoice.

Notes:

¹A guild system must be studied to avoid unfair competition of vertical companies -made out of several specialized production sections for the same final product- with respect to horizontal companies much more specialized and clients to each other, a competition caused by the fact that the first ones will have lower tax burdens than the others.
²The accumulation of successive taxes which weighs down on final price: