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5 - Exit, Voice, and Electivity

Confronting the Rise of Private Money and Private Taxation

from Part II - International Governance Challenges and Solutions

Published online by Cambridge University Press:  18 December 2025

Tsilly Dagan
Affiliation:
University of Oxford
Ruth Mason
Affiliation:
University of Virginia
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Summary

In modernity, large-scale group-based identity formation has arisen chiefly through religion, nation, and/or a political state. The digital transformation of society, however, has changed group-based identity formation. This chapter explores the connection between the evolving nature of identity formation with a parallel evolution in the social construct of money. We associate the power to create money (and taxation) with the sovereign state. In this way identity, money, and tax come together. What happens when they come apart? Identity may become attached to the creation of private money, raising the normatively unappealing prospect of ‘private taxation’. This chapter proposes a different path that would allow individual taxpayers to elect to allocate some fraction of payments on domestic tax liabilities (calculated under typical domestic tax rules) to the state of their choosing, in virtue of which they would receive a one-to-one credit offsetting domestic tax liability. Such a mechanism would allow taxpayers to ’vote’ directly with their tax dollars, thereby allowing individuals to associate with non-geographically proximate groups through the civic duty to pay taxes – but within the framework of fiat currency and sovereign state taxation.

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