A problem with all systems of government is that whenever a person is given power over something, he can do whatever he wants with that power. An example might be that citizens vote to fund a police force, but then the police extract protection money from all the local businesses in excess of what the citizens were intending to pay in taxes when they set up the police force. If you set up a higher government over the police to police the police, then what stops that higher government from doing something similar to what the police were doing?

Voting causes another set of problems, in that votes can be rigged, and voters can be ignorant.

But suppose that tax payers were able to vote for their own tax rates, and voting power was proportionate to taxes paid? And suppose the vote took place via crypto, so that the results of the vote could neither be rigged nor ignored?

In order to avoid freeloaders, each tax payer would not individually pay what he thought he should pay, but all the tax payers collectively would pay whatever the consensus rate was. In this case, theoretically, about 50% of the taxes paid would be voluntary. This is because if more than half the taxes paid were involuntary, then the tax payers would have the power to lower their tax rate.

I think this system would not work until we already had a world where it was normal to pay for things via crypto. Then a government could set up a system for their own country within some preexisting crypto infrastructure (like ADA, or ICP).

Practical details about how it could work:

Crypto cannot fully track everything that happens in the real world. So, I think in order to do this, people would have to do something like declare an "income wallet" and an "expense wallet". Taxes would be extracted from the difference between the income going into the "income wallet" and expenses leaving the "expense wallet." There would have to be occasional audits to punish people for cheating. The government could optionally declare some items as tax deductible, such as items flagged with "groceries", "healthcare", or possibly "rent", so that people could pay for these through tax deductible expense wallets.

Examples:

An employee receives all their salary through a declared "income wallet." To pay for living expenses, they transfer a portion of their salary to their declared "expense wallet", with which they pay for items that are fl

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