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Two different things. Taxes raise revenue, increasing the government's ability to pay for things. Inflation erodes the government's ability to pay for things. Y

Two different things. Taxes raise revenue, increasing the government's ability to pay for things. Inflation erodes the government's ability to pay for things. You as a consumer/taxpayer might experience the two similarly, but to say they're the same (and therefore that having one reduces need for the other) is ridiculous. [ETA after parent ninja-edited instead of responding properly. Above is a response to the original flippant one-sentence version.] It's a bit strange to point out that inflation mostly hurts "regular folks" and then advocate the inflationary tactic of issuing more money in lieu of taxes. Is that really so fair, or good, or practical? I'm not totally against deficit spending, but it's a bit like a shotgun where a readily-available scalpel might be a better choice.

EGreg 7y ago
That is why I said “not literally”. Literally inflation is defined as an increase in the Consumer Price Index. Colloquially, however, inflation is the word used to mean the government printing money and spending it into the local economy. That by definition increases the government’s ability to pay for things. Meanwhile taxes are simply there to remove money from the economy. Imagine if the government took all the collected tax revenues and burned it in a giant hole, then issued fresh crisp bills to pay for things. It would pretty much clear things up what the relationship is. The idea that our federal taxes are what is used to pay for federal spending is outdated ever since we got off the gold standard: https://en.wikipedia.org/wiki/The_Grace_Commission https://en.wikipedia.org/wiki/The_Grace_Commission Their conclusion back then was: With two thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services that taxpayers expect from their government Let me summarize my own position: 1. A generally accepted unit of currency (most often fiat, but can also be M2, M3 money, credit cards, bitcoins, etc) represents a high-probability chance that if something (eg food) is available then that amount of it will be available to you. 2. The job of an economy is to distribute resources. We have a constraint that we want humans to have their basic needs met. So far, wages have worked reasonably well but we have had to introduce disability, social security and other welfare schemes for poor people. As automation increases, demand shocks for human labor may appear in various sectors, making wages a far less reliable way to get money to the people. 3. Thus, we must gradually move towards simply printing money an giving it to people (Universal Basic Income or a series of Single Payer systems for various necessities). We must have it in place so we can ramp it up as wages become worse and worse for a growing underemployed class. 4. Then we either have to deal with rising prices OR tax someone. Tax who? The most obvious would be pigovian taxes and fines, to finally stop destroying the environment and polluting rivers and CO2. But after this, we will have to tax the most RESILIENT sources of accumulating capital, namely the rich and corporations. So you see, you are thinking backwards. The 21st century economy will be built by thinking “how will everyone eat” and working backwards from there. Money in the hands of person X doesnt disappear when she spends it. It just moves one hop. Taxes are there to either punish certain behavior or fight accumulation of money in one particular sector without everyone in that sector quit and walk away or stop building better robots. That is a sustainable economy and proper description of the role of taxes and money.
- notacoward 7y ago
  > That is why I said “not literally”. Not until after I had responded. > That by definition increases the government’s ability to pay for things. For that one thing, but at the expense of reducing that same ability for everything going forward. Funny that you use "since we got off the gold standard" as a dismissal, then cite a document from that time as supposed proof of your point. This is just sophistry. The funny thing is that I actually agree with a lot of what you say about e.g. Pigovian taxes and UBI, but I don't think it's productive to misrepresent the relationship between inflation and taxes, or make self-contradicting claims, or gaslight people about what you had said earlier. Opposing points of view are fine, but you seem to be undermining something close to my own.
  - EGreg 7y ago
    Why not just respond to what I actually said? I am not gaslighting anything. I originally hit edit after posting to clarify my words. Now I’m done so please address my points 1 by 1 I cite a document from after we got off the gold standard to support my point because I tend to prefer to support points I make with strong and easy-to-follow evidence

EGreg 7y ago

That is why I said “not literally”. Literally inflation is defined as an increase in the Consumer Price Index. Colloquially, however, inflation is the word used to mean the government printing money and spending it into the local economy. That by definition increases the government’s ability to pay for things. Meanwhile taxes are simply there to remove money from the economy. Imagine if the government took all the collected tax revenues and burned it in a giant hole, then issued fresh crisp bills to pay for things. It would pretty much clear things up what the relationship is. The idea that our federal taxes are what is used to pay for federal spending is outdated ever since we got off the gold standard: https://en.wikipedia.org/wiki/The_Grace_Commission https://en.wikipedia.org/wiki/The_Grace_Commission Their conclusion back then was: With two thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services that taxpayers expect from their government Let me summarize my own position: 1. A generally accepted unit of currency (most often fiat, but can also be M2, M3 money, credit cards, bitcoins, etc) represents a high-probability chance that if something (eg food) is available then that amount of it will be available to you. 2. The job of an economy is to distribute resources. We have a constraint that we want humans to have their basic needs met. So far, wages have worked reasonably well but we have had to introduce disability, social security and other welfare schemes for poor people. As automation increases, demand shocks for human labor may appear in various sectors, making wages a far less reliable way to get money to the people. 3. Thus, we must gradually move towards simply printing money an giving it to people (Universal Basic Income or a series of Single Payer systems for various necessities). We must have it in place so we can ramp it up as wages become worse and worse for a growing underemployed class. 4. Then we either have to deal with rising prices OR tax someone. Tax who? The most obvious would be pigovian taxes and fines, to finally stop destroying the environment and polluting rivers and CO2. But after this, we will have to tax the most RESILIENT sources of accumulating capital, namely the rich and corporations. So you see, you are thinking backwards. The 21st century economy will be built by thinking “how will everyone eat” and working backwards from there. Money in the hands of person X doesnt disappear when she spends it. It just moves one hop. Taxes are there to either punish certain behavior or fight accumulation of money in one particular sector without everyone in that sector quit and walk away or stop building better robots. That is a sustainable economy and proper description of the role of taxes and money.

notacoward 7y ago
> That is why I said “not literally”. Not until after I had responded. > That by definition increases the government’s ability to pay for things. For that one thing, but at the expense of reducing that same ability for everything going forward. Funny that you use "since we got off the gold standard" as a dismissal, then cite a document from that time as supposed proof of your point. This is just sophistry. The funny thing is that I actually agree with a lot of what you say about e.g. Pigovian taxes and UBI, but I don't think it's productive to misrepresent the relationship between inflation and taxes, or make self-contradicting claims, or gaslight people about what you had said earlier. Opposing points of view are fine, but you seem to be undermining something close to my own.
- EGreg 7y ago
  Why not just respond to what I actually said? I am not gaslighting anything. I originally hit edit after posting to clarify my words. Now I’m done so please address my points 1 by 1 I cite a document from after we got off the gold standard to support my point because I tend to prefer to support points I make with strong and easy-to-follow evidence