The Object Tax is an approach to tax reform. The program starts by creating an abstract tax model that can be implemented as an income tax. We then invite third parties to create new implementations of the tax. This process allows us to engage in tax reform with minimal disruption.
The abstract model involves abstract thinking about taxes.
The model starts with the assertion that all financial objects be taxed at a progressive rate at sometime between income and a tax year of consumption.
The model is very abstract. The financial object could be anything. It could be a cow, it could be a dollar bill, it could be a gold coin. It could be stock in a company, an adorable loveseat, a painting or anything.
All financial objects will have a tax attribute. The financial attribute indicates if the item was taxed and how much the tax was.
Accounting object by object gets tedious. We want a way to group objects.
We group objects by creating a thing called an "account." An account is a collection of objects.
NOTE: An account is an object. So one can include accounts in accounts or daisy chain accounts together.
A Tax Aware Account is a collection of objects that records summary information about the tax status of objects in the group.
The Tax Aware Account could be hosted by a bank or financial firm. It could be maintained in a standard five column ledger. Accounts could be written on papyrus scrolls of even chiseled as cuneiform into the sides of obelisks.
The Object Tax says that people are liable for a tax when they withdraw money from a Tax Aware Account for consumption. The way one collects the tax would depend on the nature of the account.
If the account is hosted by a bank, the tax would be an automated transfer to the government.
If the account is maintained by an accountant, it might be a quarterly tax payment.
There is room for third parties to innovate.
The object tax creates an abstract model of the current income tax. (The tax can be implemented as an income tax, which minimizes disruption).
The project invites third parties to develop innovative new implementations of the tax. These third party products would go through rigorous testing to assure they collect the same about of tax as the standard income tax.
Software firms will develop implementations of the tax for different markets. Accounting firms would develop a product in which the Tax Aware Accounts are recorded on standard ledgers.
A bank might create an implementation in which the tax aware account is a bank account. Trading firms such as E*Trade might incorporate tax aware accounts into their trading platform.
Groups that that advocate bartering will create software products to track one's bartering efforts. Barterers tend to have items they are holding for trade and items they wish to consume. A barterer might trade an old license plate for a string of beads, then trade the string of beads for a chicken. They would pay a tax on the estimated value of the eggs they consume from the chicken. The barterer pays tax on the eggs consumed but not on the trading chain that resulted in the eggs.
People with complex finances are likely to have more than one account. Developers will create products that daisy chain Tax Aware Accounts together.
The object tax creates an abstract tax code that can be implemented in numerous ways. This design should result in a new generation of innovative financial tools aimed at improving individual finance.
The products would go through rigorous testing for certification. The public would then be free to choose which products they use. People would use the products they find the most useful.
I suspect most workers would choose a Tax Aware Account hosted by a bank. People with complex finances would use accounts with software that daisy chains accounts together. Those who wanted to live off the grid, would have products that let them pay their taxes and use nothing but cash (or silver coins).
Separating the tax code from the implementation will result in a myriad of new software tools that let people pursue the lifestyle they dream of pursuing.