ss 1,2

prout.econ

Taxation System

June 1, 1995

Q: Is it correct that a Proutist society tax revenue would come mainly from value added taxes?

You know, these taxes on items of purchase are not equitable. But if the tax is placed upon those items which are not necessary to function, then it becomes a more reasonable tax. However, in a Proutist society, it is not the system to tax the items which are produced and given to the people. The tax should come in the manufacturing. That is to say, each cooperative, each trade, will give a portion of what it makes to the government, so there will

not be individual tax, nor will there be sales tax. But each discipline, each cooperative, will give a portion from its profits. If profit is $100, then perhaps $10 will go to social reform or social government. So there will be this type of mechanism rather than individual tax or sales tax. But you must remember, all of the people of the cooperative will earn from the remaining $90, so they will not equitably distribute the $100 profit, they will only distribute $90. In this way social programs may be supported.

Now there might also be a tax upon luxury items, but not on necessity items. If fuel is needed, then it should not be taxed, nor should food be taxed. But fine jewelry or alcohol, these may have a special tax as they are not essential. But still, this tax should not be overmuch. Tax must not exceed a basic amount and should be carefully regulated.

An economy that is locally based will be autonomous and will not need heavy governmental support. Most of the tax will go on to the larger support, to the confederation. But a portion will stay for the social programs and social reforms that will be implemented by local governments. So you see, the social programs will get the support of the people through the cooperatives, and all of these trades will have a vote. If the profit is $1000 in one trade and $100 in another, they will pay accordingly $100 and $10. Those who are more productive, whose goods are in greater demand and whose profits are higher, will take greater burdens - but not to the point where their workers will become dissatisfied feeling that for their extra effort and success they get nothing. This should not happen.

And there may be competition between cooperatives so that each works to be the better. Within a trade, let us say farming, there may be in a given area 10 cooperatives, all a part of the same trade, all with voting members. They may compete one with another for excellence. So competition is there, only greed is checked. Tax must be there. But let it be placed directly upon the profits of the cooperatives, and there will be no unequitable distribution.

Now, you say, in this way perhaps the price of food will go up, because those who produce must pay the tax. But I do not think this will be the result. If the profit is less, then the tax is also less, and all will pay the same price.

But you must remember, in a Proutist society the basics are guaranteed to all. And the social programs are supported by the tax. So no one will go hungry, though they may have to work or be a part of a training program to get these basic needs. There will be no welfare class. All will be given employment. Even the mother with children will do cottage work at home. These things will be local social programs and the primary thrust of local government.