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Government Could Be Funded Without Taxation

The State can collect revenue through means other than taxing income and property, and still raise the revenue needed to fund a minarchist state.

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By Jack Parkos | United States

The libertarian ideology is made up of various factions and ideologies, a major one being Minarchy. Minarchists advocate for a small state whose sole purpose is to protect natural rights, including our right to life, liberty, and property. This state would only provide basic functions of government: courts, police, military to protect from crimes such as theft, breach of contract, or aggression.

A common issue brought up with a Minarchist state is of how it should be funded. As libertarians, we are opposed to income tax, capital gains tax, property tax etc. But we also believe in a small state to protect rights. So there appears to be a conflict in funding the state and keeping our principles. However, there are many solutions.

In the early days of the United States, the government was funded through lottery revenue.  The first of these lotteries was held during the Colonial area in Boston Massachusetts in 1745. The revenue from the lotteries was used to build bridges, fix roads, and fund other projects. This would be an efficient way to fund a Night-Watchman state.

Just like in Colonial America, a government lottery would be completely voluntary to participate in. People would purchase lottery tickets from the government and put money into a pool. Then, the winner would be drawn and would keep a certain amount of the prize money, and the rest would go towards funding the state. The amount going to the state may vary, but this would be an efficient way to fund. The lotteries would run similarly to raffles at fundraisers. Skeptics of a lottery system may counter that the government would not be able to function with these means of funding. But it must be remembered that this is a nightwatchman state with a small budget, requiring less revenue.

Fundraising, in general, could be a good way to fund the state. Many parents participate in fundraisers for things like kid’s sports teams, and it would make sense  they would do these to fund police or courts. If a service is good enough, people will be willing to pay for it. Perhaps the people or the government could do silent auctions on items and raise money like they do now. These could be run by the people and have the government funded via a donation or the government itself could run an auction.

Another way the government could function is fining people who commit crimes. Of course, a minarchist would never advocate a fine for a victimless crime, but rather for actual crimes; theft, breach of contract, assault etc. Let’s say, for example, someone damages another man’s property and is found guilty in court. In addition to paying for the damages, he may also pay a small fee to cover court costs. Some may scoff at this idea thinking of it as enforced taxation. But it must be remembered that this is the guilty party paying. This person chose to commit a crime that harmed another party knowing the consequences, this being one of them.

This is a system already used. Instead of abolishing fines, we have them only be put in place for actual offenses. So a person would not be fined or even punished for using drugs, but if they broke a contract or harmed someone and is found guilty by a jury, the guilty party would have to cover court costs. This system would be a great way of keeping courts running, ensuring justice, and protecting rights.

The minimal state will require funding, but this funding does not have to be taken from your income. There are plenty of ways to fund a basic government that do not require such a system. In the past civilizations have had systems similar to these. It worked well to fund a small, more localized government in early America. If we can shrink the government and reduce budgets, there is no reason it would not work today.


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  1. Joseph Williams August 25, 2018 at 5:02 pm

    Another idea is to set aside a pot of money and collect the interest off of it. In the 80’s the state of Wyoming set aside a billion dollars to be used for scholarships called the Hathaway fund. While it would cost a lot of money initially and may be difficult using said fundraising and lottery methods, its an idea worth exploring.

    Reply

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