Almost everything I do with my podcast and writing is aimed at encouraging borderless thinking and hoping to make the immigration process less racist and classist. While I see many benefits in more continents following the example of Schengen states, open borders, and getting rid of income tax would not solve the world's problems.
Let's take a look at some social democracies. For example, in Belgium, where you pay 21% tax on most goods, people still have to pay 25-50% income tax. Currently, the VAT (Value Added Tax) in Norway is 25.00%, and general income is taxed at a flat rate of 22%. If the sales tax became even higher due to the elimination of income tax, these countries would become even more unaffordable for many people coming from developing nations than they already are.
Examples of countries that have sales tax and very low income tax are the United Arab Emirates (UAE), Saudi Arabia, Bahrain, Qatar, Oman, and Monaco. None of these countries are particularly known for benefiting people forced to cross borders but rather benefit the rich.
A much fairer solution would be to create a significantly higher tax on luxury goods and services and prevent corporations from establishing their headquarters in tax havens.
Here are some other dangers of relying on sales tax without income tax:
Since sales taxes apply to most goods and services, regardless of income level, they take a higher percentage of income from those with lower incomes
Higher sales taxes can discourage consumer spending as individuals have less disposable income available. Yes, we need to consume less, but the wealthy could afford to keep spending whereas the poor would suffer.
Relying solely on a sales tax can increase the incentives for tax evasion and the growth of black market activities.
By relying solely on sales tax, the progressive nature of income tax is lost, potentially exacerbating income inequality.
In other words, we would be creating a borderless word for the wealthy. I really enjoyed your piece, but upon further reflection, the idea seems more dystopian than utopian to me. It would be really interesting to get @Lauren Razavi's from @Global Natives perspective on this because she is trying to increase the mobility rights of people everywhere with Plumia.
"If the sales tax became even higher due to the elimination of income tax, these countries would become even more unaffordable for many people coming from developing nations than they already are." <-- true, and other places would be cheaper to live. Just like right now. I'm not sure how this changes?
"Examples of countries that have sales tax and very low income tax are the United Arab Emirates (UAE), Saudi Arabia, Bahrain, Qatar, Oman, and Monaco. None of these countries are particularly known for benefiting people forced to cross borders but rather benefit the rich." <--this seems like more a case of authoritarian regimes than sales tax??
"Since sales taxes apply to most goods and services, regardless of income level, they take a higher percentage of income from those with lower incomes" <-- but the ones with lowers incomes would keep all of their incomes and would spend less. And in the case of the fairtax they also get a rebate that would act like a UBI.
"Relying solely on a sales tax can increase the incentives for tax evasion and the growth of black market activities." <-- I don't understand how this would happen as sales tax right now is really hard to get around unless you pay with cash?
Finally, in a world in which there are open borders and people can work remotely, how would you propose we tax them? Because income tax only works if you work in the place you live, because that place gets your taxes. Sales tax seems the best way to do this to me because everyone who lives in a place spends money in a place, but I'm definetely open to suggestions!
Other factors, such as authoritarian governments, play a role, but tax havens and countries that have little to no income tax haven't benefited people forced into migration. By looking at countries with little income tax, we can get an idea of who benefits. Relying solely on income tax incentivizes an informal economy and bartering: individuals may be more inclined to engage in off-the-books work, bartering, or provide services for cash without proper documentation. It also leads to tax haven abuse, giving opportunities for individuals and corporations to evade taxes legally or illegally by shifting their income to these jurisdictions.
The FairTax proposal is interesting, but it is primarily associated with the United States. Many countries around the world, including most European nations, have a value-added tax (VAT) system in place. VAT is a type of consumption tax applied to goods and services at each stage of production and distribution. Canada, Australia, and New Zealand have something similar with Goods and Services Tax (GST). Experimenting with UBI could work without getting rid of income tax.
Countries with the healthiest social democracies have a mixture of income and sales tax, so I would use them as an example. I agree that we need to figure out ways for expats, especially those coming from wealthy countries and benefiting from living elsewhere, to pay taxes. However, relying solely on sales tax would benefit the already rich more than the poor. Furthermore, despite the increasing number of expats moving from country to country, they constitute a very small minority. Laws are already in place in many countries for individuals who genuinely want to live in a different culture. For instance, in many countries, after residing there for 183 days, individuals are considered tax residents. I propose making the immigration process easier, so people can obtain residency and start paying income tax as well.
I'm not sure how "relying solely on sales tax would benefit the already rich more than the poor." If a rich person wants to buy a $20 million mansion they would have to pay 30% in taxes. That same rich person only makes $80,000/year in income according to the books right now, and is thus only paying 30% in income tax. Meanwhile a poor person would be getting a UBI and would essentially pay $0 in tax. (I wonder if you could also make it so that groceries aren't taxed and housing below a certain threshold isn't taxed?)
You're right that there is there are some expats moving to country to country, but they are a minority because it's nearly impossible. Yes, I could move to Italy thanks to their digital nomad visa. But they only have that visa because I will be supporting the local economy by spending my US earned money there. I am economically beneficial to them. (Even if I would be much more economically beneficial to them if my income tax were going to them instead of to the US!)
And this is why no one wants to take in refugees, because they won't be making money and won't be paying taxes. They aren't "economically beneficial." So I'm trying to figure out how people would be economically beneficial to the place they live so that we can't have that argument anymore. It doesn't have to be a consumption tax, but I also don't think it can be an income tax? But again, just thinking out loud here.
I think groceries and households under a certain threshold not getting taxed is a good idea.
Maybe it’s unrealistic in our world, but rather than focusing on how to tax the average person so they contribute more when moving around, I think we need to find ways for the 1% to pay the taxes they owe. I read that if “The top 1% of Americans just paid the taxes they owed, not paid more taxes, … we as a nation could raise an additional $175 billion every year.”
And when it comes to migrants and immigration, there are already studies that show immigrants boost an economy, but people still think otherwise. Here’s one that’s pretty interesting. “Arrival of migrants over the past five years has boosted Belgium’s gross domestic product (GDP) by 3.5%.” https://www.nbb.be/doc/ts/publications/economicreview/2020/ecorev2020_special.pdf
I'd never come across the concept of Fair Tax, but it makes a lot of intuitive sense. Do you have any recommendations on further reading (especially good critical discussion of the downsides)? I also really like the open borders + updated tax policy angle. I think if you give it treatment in Oblivion it could serve as a really interesting piece of design fiction (another concept I just came across and really like: https://en.wikipedia.org/wiki/Design_fiction).
I think it would really resonate with you. It's all about the idea that the future isn't set in stone, but rather created by visionaries and futurists and designers, etc, through works of fiction and design and philosophy that's grounded in our present capabilities. I'm really liking it so far.
Elle, you genuinely surprised me. I did not expect your article to veer away from the idea of open borders to an argument in favor of the Fair Tax. Normally, the side that advocates for open borders is very opposed to the idea of a consumption based tax. So, I was pleasantly surprised to see you making an argument for both in the same piece. It shows that you have thought about the issue and come to your own conclusions rather than repeating someone else's dogma.
Well thought out and intriguing. Thank you. You made my day! I've thought this for a long time and believe open boarders would be the best. Probably would be easiest if welfare and government handouts where equal from country to country.
The key problem with a “consumption tax” is that it’s what tax experts call a “regressive” tax -- one that falls more heavily, as a percentage of income, on lower-income income persons. This is obvious when one considers that people with lower income tend to spend most or all of it on non-discretionary items like food, clothing, and shelter, so unless you exclude those categories from the tax, the poorer members of a society will be contributing a higher percentage of their income to the government than the wealthy. The value-added tax (VAT) in most countries in Europe is a current example of a consumption tax, though income disparities in most of Europe are less dramatic than in the Americas. So there’s a cart-before-the-horse issue with financing a borderless society with a consumption tax.
What an intriguing idea. I wonder, would we also tax services at this rate? For instance, a haircut, or getting nails done, or flying, or many of the myriad things we do each week that don’t require “buying” something concrete.
As a Floridian I know that we will jack up our houses and drive jet skis before we fall into the sea! Lol
And yes, open the borders and give everyone automatic work permits! Sooo many Canadians will flock to the US because it’s too cold and that will be great for America.
Also your tax model is basically the Florida model. Florida has no income tax, but the wealthy pay a lot in taxes in Florida compared to the poor, because so much is tourism and property tax, and Florida is doing very well with this system.
One thing that has to be addressed is the tendency for human reason to be overridden by human passions. These ideas you present are good logically but will face backlash as they do in reality because of prejudice, fear, and stubbornness. How do we speak to those in our fictional societies? I don't mean to press for an answer now. Just something to consider going forward.
My personal belief is that it's easier to fix economic issues than it is to fix social issues. For example, we're not going to be able to solve racism, and then open our borders. But we might be able to make an economic case for opening our borders, and then, thanks to increased diversity in our country, we eliminate racism over time.
I also am purposely trying to think big, and focusing more on what we can create, rather than getting stuck in the weeds of how we get there from here. Jules Verne just invented the submarine without describing how he made it—the inventors went on to figure out how to create it!
This connects to how - in the UK at least - the perception of migration being a problem is found mostly in towns where there is very little impact from immigration an refugees. London, which is full of people from all over the world and is massively diverse, doesn't obsess over immigration policies. A random town in the middle of England populated 100% by Very British People, meanwhile, frets about the 'dangers' of immigration.
The ability for humans to be both highly logical and entirely irrational gets in the way of so many nice things. :)
“Very British People” 😂 Yes that is true in the US too! And I’m sure worldwide! Making the world more diverse is what will make the world less racist. And from there, make the world less diverse as we mingle!
Nov 7, 2022·edited Nov 7, 2022Liked by Elle Griffin
Yes - I know of a few scifi writers trying to address this as suggesting the bar should be lowered for "utopian" to allow for a lot of mess before things reach a better place. I remember Kim Stanley Robinson making this point - and he writes great, hopeful scifi that is filled with the chaos of human beings behaving irrationally or out of fear or greed, but all that ugliness being overcome somehow (usually a mixture of Big Science and compassion and cooperation).
So I think "utopian" can be defined as where the story ends up, not all the aspects of how it gets there? And every good story needs a source of conflict of some kind in order to create tension, so it can't all be good & rational at every point, surely? There are quite a few stories from the Golden Age of scifi that fall flat because they treat their characters - men, usually, (*sigh*) - as super-rational beings, and the results are....kinda dull?
Haha - I love you wrote this, because I've had so many conversations recently around it, and was thinking of writing something up. And now I can just point folk to this newsletter instead! Back of the net. #lazy #badworkethic
But yes, there is so much to discuss and unpack here! One conversation I had was with some travel writers about how travel writing in the rest of the 21st Century will be dominated by themes of migration, and everything in between (ie. seasonality, recreational and otherwise). I've hung out with a lot of travel bloggers and digital nomads of all kinds, and I think I've seen a little of what some of it could look like - for example, a reappraisal of "owning" things, which you shift to either renting them or being part of a chain or collective where that thing gets passed around for the benefit of all. Seems like our idea of ownership, like borders, can become a lot more fluid than it is now, and the world will not break apart...
Within digital nomadism there's a very influential essay by the writer Venkat Rao, which you may find interesting: https://www.ribbonfarm.com/2011/07/31/on-being-an-illegible-person/ It argues that for some people, stability *is* movement - and it's only when they stop in one place for too long that their lifestyle starts coming apart.
I loooooove when someone else writes an article so I don't have to 🤣 I definitely count myself among the so-called global citizens who vote with my feet, moving to the best places in the world while working remotely. Why should I be taxed according to where I make money instead of where I live? (And yes, it's interesting how you redefine ownership when you're mobile!)
Almost everything I do with my podcast and writing is aimed at encouraging borderless thinking and hoping to make the immigration process less racist and classist. While I see many benefits in more continents following the example of Schengen states, open borders, and getting rid of income tax would not solve the world's problems.
Let's take a look at some social democracies. For example, in Belgium, where you pay 21% tax on most goods, people still have to pay 25-50% income tax. Currently, the VAT (Value Added Tax) in Norway is 25.00%, and general income is taxed at a flat rate of 22%. If the sales tax became even higher due to the elimination of income tax, these countries would become even more unaffordable for many people coming from developing nations than they already are.
Examples of countries that have sales tax and very low income tax are the United Arab Emirates (UAE), Saudi Arabia, Bahrain, Qatar, Oman, and Monaco. None of these countries are particularly known for benefiting people forced to cross borders but rather benefit the rich.
A much fairer solution would be to create a significantly higher tax on luxury goods and services and prevent corporations from establishing their headquarters in tax havens.
Here are some other dangers of relying on sales tax without income tax:
Since sales taxes apply to most goods and services, regardless of income level, they take a higher percentage of income from those with lower incomes
Higher sales taxes can discourage consumer spending as individuals have less disposable income available. Yes, we need to consume less, but the wealthy could afford to keep spending whereas the poor would suffer.
Relying solely on a sales tax can increase the incentives for tax evasion and the growth of black market activities.
By relying solely on sales tax, the progressive nature of income tax is lost, potentially exacerbating income inequality.
In other words, we would be creating a borderless word for the wealthy. I really enjoyed your piece, but upon further reflection, the idea seems more dystopian than utopian to me. It would be really interesting to get @Lauren Razavi's from @Global Natives perspective on this because she is trying to increase the mobility rights of people everywhere with Plumia.
"If the sales tax became even higher due to the elimination of income tax, these countries would become even more unaffordable for many people coming from developing nations than they already are." <-- true, and other places would be cheaper to live. Just like right now. I'm not sure how this changes?
"Examples of countries that have sales tax and very low income tax are the United Arab Emirates (UAE), Saudi Arabia, Bahrain, Qatar, Oman, and Monaco. None of these countries are particularly known for benefiting people forced to cross borders but rather benefit the rich." <--this seems like more a case of authoritarian regimes than sales tax??
"Since sales taxes apply to most goods and services, regardless of income level, they take a higher percentage of income from those with lower incomes" <-- but the ones with lowers incomes would keep all of their incomes and would spend less. And in the case of the fairtax they also get a rebate that would act like a UBI.
"Relying solely on a sales tax can increase the incentives for tax evasion and the growth of black market activities." <-- I don't understand how this would happen as sales tax right now is really hard to get around unless you pay with cash?
Finally, in a world in which there are open borders and people can work remotely, how would you propose we tax them? Because income tax only works if you work in the place you live, because that place gets your taxes. Sales tax seems the best way to do this to me because everyone who lives in a place spends money in a place, but I'm definetely open to suggestions!
Other factors, such as authoritarian governments, play a role, but tax havens and countries that have little to no income tax haven't benefited people forced into migration. By looking at countries with little income tax, we can get an idea of who benefits. Relying solely on income tax incentivizes an informal economy and bartering: individuals may be more inclined to engage in off-the-books work, bartering, or provide services for cash without proper documentation. It also leads to tax haven abuse, giving opportunities for individuals and corporations to evade taxes legally or illegally by shifting their income to these jurisdictions.
The FairTax proposal is interesting, but it is primarily associated with the United States. Many countries around the world, including most European nations, have a value-added tax (VAT) system in place. VAT is a type of consumption tax applied to goods and services at each stage of production and distribution. Canada, Australia, and New Zealand have something similar with Goods and Services Tax (GST). Experimenting with UBI could work without getting rid of income tax.
Countries with the healthiest social democracies have a mixture of income and sales tax, so I would use them as an example. I agree that we need to figure out ways for expats, especially those coming from wealthy countries and benefiting from living elsewhere, to pay taxes. However, relying solely on sales tax would benefit the already rich more than the poor. Furthermore, despite the increasing number of expats moving from country to country, they constitute a very small minority. Laws are already in place in many countries for individuals who genuinely want to live in a different culture. For instance, in many countries, after residing there for 183 days, individuals are considered tax residents. I propose making the immigration process easier, so people can obtain residency and start paying income tax as well.
I'm not sure how "relying solely on sales tax would benefit the already rich more than the poor." If a rich person wants to buy a $20 million mansion they would have to pay 30% in taxes. That same rich person only makes $80,000/year in income according to the books right now, and is thus only paying 30% in income tax. Meanwhile a poor person would be getting a UBI and would essentially pay $0 in tax. (I wonder if you could also make it so that groceries aren't taxed and housing below a certain threshold isn't taxed?)
You're right that there is there are some expats moving to country to country, but they are a minority because it's nearly impossible. Yes, I could move to Italy thanks to their digital nomad visa. But they only have that visa because I will be supporting the local economy by spending my US earned money there. I am economically beneficial to them. (Even if I would be much more economically beneficial to them if my income tax were going to them instead of to the US!)
And this is why no one wants to take in refugees, because they won't be making money and won't be paying taxes. They aren't "economically beneficial." So I'm trying to figure out how people would be economically beneficial to the place they live so that we can't have that argument anymore. It doesn't have to be a consumption tax, but I also don't think it can be an income tax? But again, just thinking out loud here.
I think groceries and households under a certain threshold not getting taxed is a good idea.
Maybe it’s unrealistic in our world, but rather than focusing on how to tax the average person so they contribute more when moving around, I think we need to find ways for the 1% to pay the taxes they owe. I read that if “The top 1% of Americans just paid the taxes they owed, not paid more taxes, … we as a nation could raise an additional $175 billion every year.”
And when it comes to migrants and immigration, there are already studies that show immigrants boost an economy, but people still think otherwise. Here’s one that’s pretty interesting. “Arrival of migrants over the past five years has boosted Belgium’s gross domestic product (GDP) by 3.5%.” https://www.nbb.be/doc/ts/publications/economicreview/2020/ecorev2020_special.pdf
I'd never come across the concept of Fair Tax, but it makes a lot of intuitive sense. Do you have any recommendations on further reading (especially good critical discussion of the downsides)? I also really like the open borders + updated tax policy angle. I think if you give it treatment in Oblivion it could serve as a really interesting piece of design fiction (another concept I just came across and really like: https://en.wikipedia.org/wiki/Design_fiction).
Honestly the wikipedia page is insanely detailed: https://en.wikipedia.org/wiki/FairTax
There are also a couple books: https://en.wikipedia.org/wiki/The_FairTax_Book
I had never heard of design fiction—but that's totally what I'm doing. Love the term!
I came across it in this book: https://mitpress.mit.edu/9780262534819/the-future/
I think it would really resonate with you. It's all about the idea that the future isn't set in stone, but rather created by visionaries and futurists and designers, etc, through works of fiction and design and philosophy that's grounded in our present capabilities. I'm really liking it so far.
Ooooooh amazing find!
https://growingupboomer.net/2021/11/29/boomers-and-the-end-of-civilization-as-we-know-it/
Ok, as long as they’re realistically factoring in the huge revenue and administrative cost this entails.
Thanks, Elle; I enjoy your work! -K
Elle, you genuinely surprised me. I did not expect your article to veer away from the idea of open borders to an argument in favor of the Fair Tax. Normally, the side that advocates for open borders is very opposed to the idea of a consumption based tax. So, I was pleasantly surprised to see you making an argument for both in the same piece. It shows that you have thought about the issue and come to your own conclusions rather than repeating someone else's dogma.
The party lines make no sense to me. In my mind, a consumption tax enables open borders!
Well thought out and intriguing. Thank you. You made my day! I've thought this for a long time and believe open boarders would be the best. Probably would be easiest if welfare and government handouts where equal from country to country.
I have some thoughts on that in my next essay! 🥰
The key problem with a “consumption tax” is that it’s what tax experts call a “regressive” tax -- one that falls more heavily, as a percentage of income, on lower-income income persons. This is obvious when one considers that people with lower income tend to spend most or all of it on non-discretionary items like food, clothing, and shelter, so unless you exclude those categories from the tax, the poorer members of a society will be contributing a higher percentage of their income to the government than the wealthy. The value-added tax (VAT) in most countries in Europe is a current example of a consumption tax, though income disparities in most of Europe are less dramatic than in the Americas. So there’s a cart-before-the-horse issue with financing a borderless society with a consumption tax.
The FairTax solves for that with a monthly rebate program that makes it so that lower income households effectively spend 0% tax. https://en.wikipedia.org/wiki/FairTax#Monthly_tax_rebate
It's worth reading the entire wikipedia page for the FairTax, they did a good job of really covering everything that would be involved!
What an intriguing idea. I wonder, would we also tax services at this rate? For instance, a haircut, or getting nails done, or flying, or many of the myriad things we do each week that don’t require “buying” something concrete.
According to the FairTax, yes!
As a Floridian I know that we will jack up our houses and drive jet skis before we fall into the sea! Lol
And yes, open the borders and give everyone automatic work permits! Sooo many Canadians will flock to the US because it’s too cold and that will be great for America.
Also your tax model is basically the Florida model. Florida has no income tax, but the wealthy pay a lot in taxes in Florida compared to the poor, because so much is tourism and property tax, and Florida is doing very well with this system.
Also so many Americans will flock to Canada 🤣
More in the summer, yes! 😂
Why are all the amazing governments in really cold places lol
One thing that has to be addressed is the tendency for human reason to be overridden by human passions. These ideas you present are good logically but will face backlash as they do in reality because of prejudice, fear, and stubbornness. How do we speak to those in our fictional societies? I don't mean to press for an answer now. Just something to consider going forward.
My personal belief is that it's easier to fix economic issues than it is to fix social issues. For example, we're not going to be able to solve racism, and then open our borders. But we might be able to make an economic case for opening our borders, and then, thanks to increased diversity in our country, we eliminate racism over time.
I also am purposely trying to think big, and focusing more on what we can create, rather than getting stuck in the weeds of how we get there from here. Jules Verne just invented the submarine without describing how he made it—the inventors went on to figure out how to create it!
This connects to how - in the UK at least - the perception of migration being a problem is found mostly in towns where there is very little impact from immigration an refugees. London, which is full of people from all over the world and is massively diverse, doesn't obsess over immigration policies. A random town in the middle of England populated 100% by Very British People, meanwhile, frets about the 'dangers' of immigration.
The ability for humans to be both highly logical and entirely irrational gets in the way of so many nice things. :)
“Very British People” 😂 Yes that is true in the US too! And I’m sure worldwide! Making the world more diverse is what will make the world less racist. And from there, make the world less diverse as we mingle!
Yes - I know of a few scifi writers trying to address this as suggesting the bar should be lowered for "utopian" to allow for a lot of mess before things reach a better place. I remember Kim Stanley Robinson making this point - and he writes great, hopeful scifi that is filled with the chaos of human beings behaving irrationally or out of fear or greed, but all that ugliness being overcome somehow (usually a mixture of Big Science and compassion and cooperation).
So I think "utopian" can be defined as where the story ends up, not all the aspects of how it gets there? And every good story needs a source of conflict of some kind in order to create tension, so it can't all be good & rational at every point, surely? There are quite a few stories from the Golden Age of scifi that fall flat because they treat their characters - men, usually, (*sigh*) - as super-rational beings, and the results are....kinda dull?
Haha - I love you wrote this, because I've had so many conversations recently around it, and was thinking of writing something up. And now I can just point folk to this newsletter instead! Back of the net. #lazy #badworkethic
But yes, there is so much to discuss and unpack here! One conversation I had was with some travel writers about how travel writing in the rest of the 21st Century will be dominated by themes of migration, and everything in between (ie. seasonality, recreational and otherwise). I've hung out with a lot of travel bloggers and digital nomads of all kinds, and I think I've seen a little of what some of it could look like - for example, a reappraisal of "owning" things, which you shift to either renting them or being part of a chain or collective where that thing gets passed around for the benefit of all. Seems like our idea of ownership, like borders, can become a lot more fluid than it is now, and the world will not break apart...
Within digital nomadism there's a very influential essay by the writer Venkat Rao, which you may find interesting: https://www.ribbonfarm.com/2011/07/31/on-being-an-illegible-person/ It argues that for some people, stability *is* movement - and it's only when they stop in one place for too long that their lifestyle starts coming apart.
I loooooove when someone else writes an article so I don't have to 🤣 I definitely count myself among the so-called global citizens who vote with my feet, moving to the best places in the world while working remotely. Why should I be taxed according to where I make money instead of where I live? (And yes, it's interesting how you redefine ownership when you're mobile!)