Anal Magician

The question was very long, and it described in detail that indirect taxes should supposedly irritate people less, so why then do these strange libertarians prefer to deal with what irritates people more.

There are three aspects here.

First, it is easier to evade direct taxes. Once I decide not to pay taxes, in the case of direct taxes, I can achieve success relatively easily because it depends largely on me. Indirect taxes are harder to evade because paying them depends more on the activities of third parties. It is one thing to earn only “under the table,” and quite another to manage to buy all necessary goods “under the table.” The level of hassle is incomparable.

Second, the more direct the taxes, the easier it is to understand exactly how much you are paying. And the lower the uncertainty, the further the planning horizon. The ability for long-term planning increases labor productivity in the long run. In other words, it is easier for people to get rich. The more indirect a tax is, the harder it is to say exactly how much you are paying and, accordingly, how profitable a particular activity is, especially in the long term.

Third, the more direct the tax, the less information about your activities you disclose to the tax authorities. The most direct tax is the poll tax. All that is known about you as a taxpayer is the fact of your existence. If you pay a sales tax, you report the amount you sold. If it is a profit tax, you report your profit, how much you bought for, and how much you sold for. But if it is an indirect tax like VAT, you already have to report in detail from whom and at what price you bought, and then to whom and at what price you sold. The more information about your activities is known, the easier it is for the state to plan how much more they can shave off you.

There is, however, one very indirect tax, which, by paying, tells the state even less than paying a poll tax. This is monetary emission. Therefore, some minarchists allow precisely such a model for constructing the state budget: there is no redistribution of money by the state, there is simply an annual emission of money by the state in a small fixed amount, comparable to economic growth. From this money, a certain extremely narrow list of state expenditures is funded, and if for some reason the money is not enough, the state takes off its hat and goes to beg for donations, or performs a budget sequestration.