Blockchain Technology May Soon Revolutionize Budget Allocation
For most individuals, paying taxes is considered an arduous chore since it involves a filing procedure riddled with obscurity. That fact, however, could quickly change with the integration of blockchain technology into the current taxation program.
Not Quite the Tea Party, but Still Revolutionary
The first real protest against taxation was the Boston Tea Party, an event that eventually gave rise to the American War of Independence. Britannica describes it as a war against the monopoly of East India Company. It is pretty clear, looking back, that improper taxation and a general lack of clarification motivated the uprising.
Over two centuries later, the world faces a similar problem of transparency again. The solution this time though, is perhaps not a declaration of independence, but rather, the adoption of blockchain technology. As BlockGeeks put it, “The blockchain is undeniably an ingenious invention” and “Originally derived for bitcoin, this technology is finding varied uses across several diverse fields.”
In cryptocurrencies, a blockchain is a ledger of transactions between multiple people. This is done in real time and the data, once updated onto the ledger, is immutable. Any new data added to the blockchain is also visible to everyone on the network. Simply put, a blockchain is a self-auditing ecosystem of digital value, a system that reconciles transactions in batches. Each group of such transactions is called a block.
The United States government, for one, could enable taxpayers to set their preference ratios for the national budget with the help of such an innovation. As a result, taxpayers who toil hard to earn and pay taxes will feel more involved and a part of the democratic system. Such a system thus has the potential to strengthen democracy in an unprecedented fashion.
The Center on Budget and Policy Priorities explains that the budget consists of primarily two parts, the mandatory spending programs, and the discretionary spending programs. Social Security had a 24 percent share in the last budget. Healthcare budget amounted to $1 trillion, an estimated 26 percent of the 2016 budget.<
Furthermore, besides the $605 billion allocated for Defence, the departments of education (two percent), science and research (two percent), infrastructure (two percent) were the part of the budget spending.
Using a blockchain-based system, taxpayers can choose their preferences for discretionary spending. This way, the user can prioritize certain aspects of the overall budget. For instance, a person interested in STEM and higher education could allocate a higher share of spending on education.
At the time of filing, they would also be able to view real-time preference statistics of other taxpayers. Since every department in the discretionary spending has to be allocated some money, contributions will have to be made in favor of all of them, only to varying degrees. A platform of this scale could give the taxpaying public a sense of fulfillment and satisfaction.
After finding commercial applications of blockchain technology in logistics, transport, and finance, it is only logical that they are employed in civil and public matters as well. At the rate of current adoption of the technology, a taxation revolution in this field is very likely.