Tax-Free Statism
— Transforming the relationship between the people and the government from “taxpayers and rulers” to “shareholders, employees, and customers versus management” —
Version 0.1
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Summary
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Introduction
The current structure of national finance is fundamentally based on collecting taxes and raising funds through government bonds to cover any shortfall in tax revenue.
While the Constitution of Japan guarantees property rights, it also stipulates that “the people shall be liable to taxation as provided by law.” Consequently, in present-day Japan, taxation—despite being an intervention by public authority into private property—is positioned as a system operating in accordance with the law.
Tax-Free Statism calls this very premise into question.
The issue is not merely:
“Does the government have the financial resources?”
The fundamental question is:
“Why must the people be compelled to pay money to the government—separate from any payment for specific services received?”
Tax-Free Statism is a philosophy that redesigns the state. It moves away from the concept of the state as an entity that collects taxes from the people,
reimagining it instead as a massive public service enterprise
owned, supervised, and utilized by the people.
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The Basic Philosophy of Tax-Free Statism
The basic philosophy of Tax-Free Statism can be summarized in a single sentence:
The people are not the government’s taxpayers; they are its shareholders, employees, and customers.
In the current state model, the relationship between the people and the government is primarily structured as one of “rulers and the ruled.”
Tax-Free Statism transforms this into a relationship akin to that of a joint-stock corporation. Company: Tax-Free State
Shareholders: The People
Management: The Government
Employees: Civil servants, legislators, etc.
Customers: The People
Products/Services: Administration, social security, public services
Revenue: Compensation for services, etc.
Profit: Returns to the people / Reinvestment in public services
Shareholders’ Meeting: Public oversight of the government
Shareholder Rights: The people’s rights regarding government management
What is important here is that the people are not limited to a single role.
The people are
shareholders, employees, and customers all at once.
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- Private Property and Taxation
The right to private property is a fundamental right in a free society.
Article 29 of the Constitution of Japan stipulates:
“The right to own or to hold property is inviolable.”
At the same time, the nature of property rights is defined by law to ensure consistency with the public welfare, and Article 30 establishes the obligation to pay taxes. Therefore, under the current constitutional order, the mere fact that taxation infringes upon property rights does not automatically render it unconstitutional.
“Tax-Free Statism” goes a step further and re-examines this premise.
Are “the legal authority to collect” and “the desirability of citizens surrendering their property to the government” one and the same?
Tax-Free Statism distinguishes between the two.
It aims not for a system that merely enables taxation through law,
but for a state structure that can function without the government forcibly collecting the people’s property in the first place.
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- From Democracy to Capitalism
In Tax-Free Statism, the most important element is not tax reform itself.
Rather, it is transforming the mechanisms by which the government is selected and overseen.
Under the current parliamentary democracy, citizens elect legislators who form the parliament, and the parliament determines laws and budgets.
This is not a system in which citizens directly approve individual policies. Furthermore, under the Constitution, Diet resolutions are passed based on mechanisms such as a majority of members present; the system does not require the direct approval of a majority of the entire citizenry for a measure to be enacted.
Consequently, the philosophy of “Tax-Free Statism” raises the following question:
To what extent should the people grant the government the authority to forcibly collect their assets?
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- Raising the Issue of “12.5%”
Tax-Free Statism raises an issue regarding the current representative system:
“There is a significant gap between the will of the entire citizenry and the decision-making processes that actually drive the government.”
For instance, the decision-making process is indirect, involving the following steps:
• Only a portion of the electorate votes.
• The candidate receiving the most votes among them wins.
• Winning candidates determine the composition of parliamentary seats for political parties.
• Bills are passed in the legislature based on a majority of seats.
If one simplifies this structure by assuming a “50% voter turnout, followed by a majority of that, and then a majority of that,” the resulting figure is 12.5%.
However, this calculation is not intended to precisely describe Japan’s current electoral system as operating at exactly 12.5%; rather, it serves as a model to illustrate the indirect nature of decision-making.
The issue raised by Tax-Free Statism is not the figure itself, but rather:
“To what extent can the people themselves exercise direct control over critical decisions regarding their own assets?”
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- Viewing the Government as a “Manager”
Tax-Free Statism conceptualizes the government as the manager of a joint-stock company.
A manager maintains the company, returns profits to shareholders, and provides goods or services to customers.
The same applies to the state:
The government manages the nation for the benefit of the people.
The people hold the following rights regarding the government:
• To oversee management operations.
• To determine and limit the manager’s compensation.
• To evaluate public services.
• To monitor government spending.
• To replace the manager when necessary. In short,
the government is not an entity that stands above the people, but rather one entrusted by the people with the task of administration.
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- Citizens as Shareholders
Citizens are the shareholders of the government.
If the government manages the nation effectively, the results are returned to the citizens.
Social security, pensions, and public services are not merely handouts from the government;
they are reframed as benefits received by citizens in their capacity as owners of the collective enterprise known as the nation.
Under this framework, government assets, revenues, and expenditures must ultimately be linked to the interests of the citizens.
Therefore,
the relationship is clearly defined not as “citizens for the sake of the government,” but as “government for the sake of the citizens.”
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Citizens as Employees
A nation requires people to actually run it.
National and local civil servants, as well as national and local legislators, are positioned as those engaged in this national administration.
“Tax-Free Statism” emphasizes the principle that
public office is a role entrusted by the people.
Consequently, a system is established wherein citizens, acting as shareholders, can oversee government officials’ compensation, the size of organizations, and administrative costs.
Rather than government administrators or employees prioritizing the expansion of their own interests over those of the public,
the objective of national administration becomes the maximization of the citizens’ interests.
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Citizens as Customers
And perhaps the most crucial concept in Tax-Free Statism is
viewing citizens as customers.
The government provides public services—such as administration, public safety, the judicial system, education, social security, and infrastructure—to the citizens.
In the private sector, a company can collect payment for its products from customers.
However,
a mechanism stating, “The company is operating at a loss, so we will forcibly collect money from customers’ bank accounts in addition to the product price,”
cannot be adopted as a standard commercial practice.
Tax-Free Statism focuses precisely on this distinction. Instead of forcibly collecting assets from citizens to cover government fiscal deficits, the state’s finances are built upon the services the government provides and the payments received in exchange for them.
This is the fundamental concept of “Tax-Free Statism.”
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- The Difference Between “Tax” and “Payment for Services”
Tax-Free Statism does not reject all forms of citizen contribution.
The crucial point is
distinguishing between compulsory taxes and payments made in exchange for services.
For example,
• fees for using administrative services
• fees for using public facilities
• charges for public services
• payments for goods and services provided by the state
can all be structured as a relationship between service and payment.
In contrast,
the fiscal approach of “collecting additional funds from citizens because government spending is insufficient”
is fundamentally rejected under Tax-Free Statism.
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- Revenue Sources for a Tax-Free State
In Tax-Free Statism, “eliminating taxes” is not synonymous with “eliminating state revenue sources.”
In fact, the opposite is true.
To avoid reliance on the compulsory levy known as taxation,
the state itself must possess revenue streams and capital.
This is where the concept of “National Shares” (State-Owned Shares) comes into play.
National Shares are envisioned as a state capital system
combining three distinct characteristics: government bonds, equity (stocks), and crypto-assets.
• National Shares as bonds → Function as the state’s fiscal foundation
• National Shares as equity → Lead to the concept of citizens owning state capital
• National Shares as crypto-assets → Derive value from market fluctuations rather than interest or dividends
However, National Shares are not cryptocurrencies or stablecoins in themselves.
They are positioned as a state capital system designed to realize a tax-free state.
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- Tax-Free Statism and National Shares
The relationship between Tax-Free Statism and National Shares can be summarized as follows: Tax-Free Statism
= A philosophy for redesigning the relationship between the people and the government
National Shares
= A system to support the state financially and in terms of capital
Therefore, the relationship is as follows:
Tax-Free Statism is the philosophy of “how to manage the state,” while National Shares is the system for “how to support the state financially.”
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- Viewing the State as a “Company Owned by the People”
The vision of the state under Tax-Free Statism is
a massive public service enterprise owned by the people.
The government acts as the management of this enterprise.
The government does not sustain itself by collecting taxes from the people;
instead, it maintains the state through management activities such as:
• Managing state capital
• Providing public services
• Receiving payment for necessary services
• Generating revenue through economic activities
• Returning the results to the people
Under this concept, the relationship shifts:
It is not a case of “the government supporting the people,” but rather “the government—owned by the people—earning for the people.”
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- Preventing Misappropriation by Management
In a joint-stock company, management cannot freely use corporate profits for personal gain.
Similarly, if we view the state as the collective property of the people,
we need a mechanism allowing the people—as shareholders—to oversee issues such as:
• Excessive compensation for government officials
• Unnecessary administrative spending
• Excessive benefits granted to specific companies or organizations
• Public works projects that have become vehicles for vested interests
• The bloating of government organizations
What matters in Tax-Free Statism is
not merely “eliminating taxes.”
If the government can still spend without limit even after taxes are abolished, the problem remains unsolved.
Therefore,
a tax-free state is not a state with unlimited government spending.
Rather,
it must be a state where the people’s oversight of government management is strengthened.
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- The Objective of Tax-Free Statism
The objective of Tax-Free Statism is not simply “a zero tax rate.” Its objectives are to: - Respect the private property of the people.
- Eliminate reliance on compulsory government levies.
- Position the people as the owners of the state.
- Establish the government as a management entity entrusted by the people.
- Value public services as genuine services.
- Enable the people to oversee government spending.
- Build state capital.
- Return state profits to the people.
- Enhance government operational efficiency.
- Ultimately transform the fundamental premise of state finance—that a nation cannot be sustained without collecting taxes.
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- Conclusion
“Tax-Free Statism” is not merely a simple argument for tax cuts or the desire to abolish taxes.
It represents a fundamental shift in the concept of the state itself—regarding for whom it exists, who owns it, and who manages it.
In the current state model, the central relationship is:
Citizens → Taxpayers → Government.
Tax-Free Statism transforms this into:
Citizens → Shareholders, Employees, and Customers; Government → Management.
Consequently,
The government ceases to be an entity that extracts taxes from the people and instead becomes an entity that manages the state owned by the people.
To achieve this, it is necessary to redesign not only the tax system but also the state’s capital structure, the methods for selecting and overseeing the government, the delivery of public services, and the very nature of the ownership relationship between the state and its people.
Tax-Free Statism is a political philosophy that transcends the issue of revenue sources, transforming the relationship between the people and the government into a capitalist one.
“National Shares” are positioned as the mechanism to realize this philosophy from the perspectives of finance and capital.
The people own the state. The government manages the state. The people are shareholders, employees, and customers. And the state does not take from the people but creates value for them.
This is Tax-Free Statism.