Would citizens under a Parecon pay taxes?

I would argue it would not be necessary.

For example, municipal governments provide infrastructure services to its citizens such as water and sewer, road maintenance, etc. Under a capitalist economy, a municipal government must collect taxes to pay for the salaries etc. In order to provide those services. They are clearly needed. But under a Parecon, no ‘capital’ needs to be raised to pay for any initiative, only a demonstrable need, a solid proposal and approval of it by an IFB. Once approved, employees would be paid their salaries for the work they carry out.

At the federal level, some countries have coastal regions and a fishery. Those that do, generally provide services from scientists to manage fish stocks, etc. This service ensures that appropriate quotas would be set for each fisherman so as not to deplete the fish stocks. Under a parecon no capital needs to be raised but some justification that it meets a need.

The same would apply to most if not all government services, be they at the national/federal, state/provincial or municipal level.


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Yes. As Claude explains all of what economists call “public goods” like parks and highways are handled during the annual participatory planning procedure which also handles “private goods” like shoes and shirts. Public goods are “demanded” during annual planning by neighborhood consumer councils, and federations of consumer councils at the ward, city, state and national levels. And their cost is covered, or “paid for” out of the income of all these different consumers of public goods. For example, if a neighborhood consumer council asks for new swing sets to go into the neighborhood park, the cost of those swing sets is spread out among all the households in the neighborhood, and their share of that cost is deducted from the income of each household that is left for the household to demand private goods for the household. The same follows for the cost of public goods demanded at the ward, city, state, and national level. One can call this “taxes” if you want. But there is no separate paying of taxes in a participatory economy, this is all handled during the annual planning procedure.

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Why do they need to ‘paid for’ by consumers? Some infrastructure projects might take decades to repay and would amount to a tax on consumers. For private goods I would argue otherwise, but for public goods, I don’t see a need to ‘repay’ these.

I believe the crux of the matter comes down to how money is created under a Parecon. Under our current capitalist system, it is created when an individual borrows money from a bank. No debt, no money creation. That’s how the federal reserve is set up to operate. But in a Parecon, I would argue that the creation of money happens when a business issues a payroll cheque to an employee, which is where real value is created, when something of value is produced that someone else is willing to pay for from their own earnings.

I understand that it would not be advisable to apply this approach to the production of all goods and services. It could lead to all sorts of issues. But for a ‘public good’, why could it not be simply ‘created’, and paid for via the payroll, and consumed by consumers at no cost.

A system of prioritization would need to be in place in some instances. For example, water and sewer is needed is all municipalities, so it is, in and of itself, a priority. But other projects, such as which city gets its infrastructure rebuilt (as we know cities are operating with sewers that are well over 100 years old) may need to go through some sort of prioritization process if there isn’t enough labour and materials to complete all of the urban renewal projects simultaneously.

Think about what a compelling argument this would be (you will no longer pay any taxes) to convince someone, especially from the middle class, to adopt a Parecon over our current capitalist economy.

So that being said, have I missed something in terms of this approach failing in some way?


I don’t want to get into the whole “money in parecon” and money creation discussion. But about paying for public goods:

Just as there is a cost to society of producing private goods, there is a cost to society of producing public goods. So the idea that people should pay for them in some way is as sensible for public as for private goods. What is tricky is getting people to honestly report how much they value public goods so we can figure out how much of them to provide. At least in theory we can find out how much people value private goods by seeing how much they are willing to pay for them. But it is trickier with public goods. However, I outline two different ways in Democratic Economic Planning to do that which are both what economists call “incentive compatible,” i.e. will induce people to report honestly how much they value them so we can provide the efficient amount. One incentive compatible procedure is very simple, the other is more complicated. But either will work. When people pay is a secondary issue. But I don’t think we want people never to pay for public goods or else there is a perverse incentive for people to say they want more public goods… why not an infinite amount?!.. than they truly do.

This has nothing to do with HOW people pay. We could collect entrance fees at national parks. But we don’t have to. We can pay for maintaining national parks out of tax revenues and let people in free of charge when they show up at the entrance. But that doesn’t mean they aren’t paying. They paid with their taxes.

Yes, this is definitely the weak link in the chain, and I’m not sure how it could be overcome.


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Check out pp. 133 - 138 in Democratic Economic Planning. I think we have a solution… actually two. One is simple to implement and the other is more complicated. The more complicated procedure might be worth using in some situations, as explained in that section. BOTH solutions are what economists call “incentive compatible.”

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I think it makes sense to allot extra income “for need” with the intent that people could use that to “vote” for the public goods they want. I imagine this would feel similar to having these things “for free”, but like Robin said there are costs to all of this stuff so I think it should be priced.

In regards to the word “tax”, to me a tax means giving the state money that can be used for whatever the state wants. In a system like this, people are paying for the public goods they want directly instead of going through the state layer. Due to this, I think it’s fine to say there are no taxes in Parecon.

Right wing libertarians oppose taxes as a totalitarian policy that forces people to do something they don’t want to do… pay for something they would rather someone else pays for instead of them, because once a public good exists everyone is going to be able to benefit from it.

However, this is not only nonsense, it is extremely counterproductive to give into argument. One of the MAJOR problems with market economies is that they produce far too many private goods and far too few public goods. And one of the MAJOR positive features of a participatory economy is that we will finally correct for this terribly inefficient bias in market economies that has now been going on for centuries.

Ask yourself this: If it is very beneficial to produce far more public goods, and therefore fewer private goods than in the past, how to do we propose they be paid for? Because, as you point out, like private goods, public goods do cost society scarce productive resources and hours of work to produce.

The name for how we pay for public goods is TAXES. And once they are paid for by taxes everyone gets to benefit from them. There is nothing wrong with taxes in general. There are two possible ways taxes could be “wrong.” We might collect too much or too little. And the problem in market systems is we collect too little, not too much. And however much we collect, we could be collecting too much from some people and too little from other people.

So the conversation should not be about avoiding using the word “tax” because people don’t like to hear it. Do we avoid using the word “work” because it is what we call labor activity when it is not very pleasant to perform? The conversation should be about whether we are producing too much or too little public goods… and therefore we are collecting too much or too little “taxes” to pay for them. And whether we are collecting too much taxes from some people and too little from other people.