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In my world, there used to be very powerful and influential wizard that maintains the balance in the world. Some kind of Pope figure. But unfortunately, he cannot escape death from old age. He dies, and the balance was broken.

The world becomes divided and several kingdoms have arisen. Now a kingdom further upsets this balance of power and started to levy taxes from all of their townspeople.

The concept of magic is common in this world, just as common as learning to solve a rubiks cube. Not everyone can use strong magical spells but anyone can learn to do so. (But difficult. Just like a student can become an engineer, or drop out of school completely)

As you imagine, a lot of people will be using magic in their everyday lives. For convenience, business, hunting, etc.

When using magic in my world, the human body emits an invisible aura that determines how powerful a magic has been used. For instance, casting a minor healing spell produces little amount of this aura, and casting stronger, destructive spells emits more. To put it simply, magic power has "tiers".

Now the government has a way of measuring its quantity and quality. I won't go to the specifics but let's just say the taxation distribution is assigned per household regardless the number of magic users in that family. Just for simplicity sake, let's rule out possible inconsistencies in calculating magic like "What if a friend used magic in another household?" and the likes.

Just to be clear, the tax coming from magic adds to the normal tax.

How would this work out differently than any other taxation system in history?

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closed as too broad by Bellerophon, Philipp, sphennings, Azuaron, L.Dutch Aug 1 '17 at 17:16

Please edit the question to limit it to a specific problem with enough detail to identify an adequate answer. Avoid asking multiple distinct questions at once. See the How to Ask page for help clarifying this question. If this question can be reworded to fit the rules in the help center, please edit the question.

  • $\begingroup$ What do you mean with "work out"? What aspect exactly are you interested in? $\endgroup$ – Philipp Aug 1 '17 at 16:34
  • $\begingroup$ How would this work out differently than any other taxation system in history? In the last full paragraph, you hand-waved away pretty much all of the difficult parts of taxation, so what about this tax do you feel distinguishes it from say, postage stamps, alcohol taxes, gas taxes, or income taxes? $\endgroup$ – Cort Ammon Aug 1 '17 at 16:36
  • $\begingroup$ If you are asking "How do you think...?" your question is probably too opinion based. $\endgroup$ – sphennings Aug 1 '17 at 16:37
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    $\begingroup$ One potential flaw with this system is that it taxes a non-monetized operations. It would be a Capitation tax. It could be easily abused by a government and they were historically unpopular. $\endgroup$ – Alexander Aug 1 '17 at 16:42
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    $\begingroup$ You might want to think about this through analogy: "Is it feasible for the government to impose taxes on digging a hole?" No... unless someone is paying for that hole to be dug, then you tax the transaction. $\endgroup$ – Azuaron Aug 1 '17 at 16:57
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If you wish to use magic, you must apply for a permit.

The permit is very cheap, or even free, as administrative costs in issuing and tracking them come out of the magic tax. If you are caught doing magic without a permit, you face fines, the severity of which depend on the "amount" of magic you're doing. (And possibly type, depending on what you want to enforce. Though using destructive magic harmfully would be a separate penalty.)

Every year (or quarter or whatever, depending on how long energies take to dissipate), permit-holders must renew, at which point their auras are read and the tax is levied.

There will be rogues and there will be people trying to cheat the system, but that's what ATF is for. (Arcana, Tetragrammaton, and Fate, of course.)

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Have the government's most subtle wizard figure out a way to create a Token for every single citizen. These good luck tokens are given at very birth, and the removal or loss of one is a crime. They serve as identification.

Here is the important part. The tokens also monitor the amount of magical energy passes through any given person. Of course if your buddy comes through and casts something big, it's tied to his token, not yours.

These tokens are basically simple magic meters, just like the electricity meter on the side of your domicile. They are just more mobile. You could even have the very powerful and subtle Wizard teach an entirely new system of magic, which rely on the tokens or amulets. That ensures accurate monitoring and an even more refined level of control.

These can be simple meters under a benevolent ruler, or they can also serve as spying devices under the dystopian ruler. you can do a lot with that.

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As with most taxes, people will work to avoid them. In the real word, people do things like working "under the table" for cash. Millionaires change the structure of their holdings to avoid "millionaire taxes" and industries close or move elsewhere to avoid taxation.

More common are the use of clever lawyers and accountants to find loopholes in the law, and of course one can always bribe the tax collectors to fiddle the books so it looks like you paid, when you really only paid them off.

The actual details of how these tax dodges are done depend heavily on how the tax is calculated (since you have not explained the details, you can adjust your story so the calculations and collections are similar to how our nations do this, and then work your tax avoidance schemes to mirror conventional tax avoidance schemes).

One thing that annoys people to no end are high taxes and intrusive regulations designed to uncover or prevent tax evasion. Perhaps the best compromise for the kingdom is to recognize people don't like taxes, keep the tax rate low enough to prevent triggering large scale tax evasion and allow legal loopholes for tax reduction so people put their energies to the sorts of uses the government desires, rather than planning a tax revolt.

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