How about a new system of funding government. It is a simple system. Thoroughly explaining all of its permutations would not be practical. But here is an overview of how it may work in the United States. Its a rough example of the underlying principles for customizing a formula to fit most forms of government. Of course laws would have to be modified to fit this kind of system.

The federal, states, counties, and local governments would each continue to collect fines and user fees such as tolls and license fees from within their respective jurisdictions. But sales taxes, value added taxes, capital gains taxes, both personal and business income taxes, and all of those kinds of taxes that require government administration for loads of invasive auditable documentation, would be gone. Instead private entities would pay a voluntary fee to a local level of government. Higher levels of government, such as counties, states, and the federal government, would receive a share of those fees collected by lower levels of government within their jurisdiction; perhaps by voluntary payment too. Everyone can choose to not pay anything too!

Wait!!! You are probably wondering why would anyone volunteer to pay taxes. That may become more true after considering how the government would exert no duress under this system unlike many of the taxes currently paid 'voluntarily' by most Americans today. The reason is simple. If you won't help pay for government, then it won't be there for you.

Now you are probably wondering about the age old question which asks what is an appropriate amount someone should pay to their government before they can expect it to work for them. This system provides an answer.

Renegades, who most directly create the need for government, would continue to pay an involuntary fee for government according to penalties imposed by government for breaking laws. Think of speeding tickets as a mundane example of that. Of course the government would continue to prosecute all criminals to the best of its ability even if the criminal cannot pay restitution. But lawbreakers alone cannot be expected to pay for government. Everyone should pay for government according to how much we have to lose without the peace and stability offered by government.

For the voluntary funding system I am trying to describe here, people and businesses would pay to a local government a percentage of the value of each transaction they may want enforced. To do that the value of the transaction would be declared in the form of a contract and registered with the local government. Each participant in a contract registers their part independently. Participants of a contract who do not register their part of the transaction within a period of time would not be able to sue if another participant breaks the contract. Damages awarded by the government would be based on the value registered. By the way, real property taxes can be similarly replaced using an annual claim fee. Essentially, taxes on private entities would be replaced by user fees.

Local governments would pay a percentage of the transaction fees they collect to the next higher level of government, such as counties. Counties would pay a percentage of their share of that income to their state government. States would pay a percentage of that again to the federal government; and so on. In return, the higher levels of government would honor and help enforce the transactions registered by the local governments within their respective jurisdictions if there is a dispute. Funds not used to enforce contract law would be used to fund other functions of government.

The main benefit for current tax payers to having higher levels of government collect taxes from only lower levels of government is more powerful representation. Besides the direct effect voters may have on each level of government, constituents get a well organized advocacy system, which are their more local governments, for controlling spending by higher levels of government. Local, county, and state governments would also get a direct incentive for helping to keep overarching government spending under control rather than just trying to get access to so called pork barrel spending.

Keep in mind that government is supposed to have a monopoly on the use of force. That means private entities would not be able to do things such as confiscate property or evict anyone without the government's authorization. That also means gangsters cannot go around 'breaking kneecaps' to enforce contracts. So anyone who does not register their part of a transaction cannot expect satisfaction if they feel wronged by other participants in a transaction.

There would probably be communities formed either virtually or on real properties which trust each other enough to forgo paying for the government to enforce their transactions. That should not be considered a problem. In theory such friends do not create a need for the basic functions of government. Nevertheless they risk being defenseless when unfriendly people decide to try taking advantage of their vulnerability.

Relatively small transactions such as those involved for most retail sales can be registered in bulk by a middle party. Consumers could enter into a registered contract with a credit/debit card company who, for example, agrees to register all transactions they facilitate on behalf of their customer. There are endless ways consumers can be protected without having to individually register every single purchase.

So for the most part the government would truly be voluntarily funded by a decentralized collection system which gets a share of almost all economic activity. The government would not need to track income or hunt for tax evaders. Local, county, and state governments would be incentivised to help keep government spending from becoming bloated. People and businesses would have more financial privacy.