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I think we can all agree the tax system in most countries is very unfair. My suggestion to make it fair is to simply abolish all taxes in nations with sovereig

I think we can all agree the tax system in most countries is very unfair. My suggestion to make it fair is to simply abolish all taxes in nations with sovereign currencies. The government just prints the money it needs for it's budget each year and uses it. Inflation is basically your tax rate and everyone can look at the government budget and plan accordingly. This has the added benefit of getting rid of the entire redundant industry of tax CPAs and tax lawyers, freeing hundreds of thousands of smart people to actually produce new wealth in the economy. It makes all illegal activities taxed just like legal activities. It combines all the benefits people are wishing for when they promote a flat tax or wealth tax or simpler taxes into one easy system. Even a child could understand this tax code intuitively.

samatman 6y ago
I've considered this as well. It has one big problem, which is huge headaches around lending at interest. This is surmountable if the rate of issuance is reasonably predictable, but compound interest is already difficult for many people to understand, this would make it worse. The problem that eventually the numbers get silly isn't a problem, because, first of all, it happened: a coke should cost a nickel, not a buck. Second, just drop a zero from time to time, easy, and an opportunity to change up the look of the currency.
- topkai22 6y ago
  There is economic theory and research supporting some of this under label “modern monetary theory” (https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory)* My fundamental problem with the whole concept is that it is predicated on the idea that a nation is able to borrow in its own currency. If that is not true, seriously bad consequences (like hyper inflation) occur. Proponents say “well the US can borrow in its own currency, we don’t have to worry about that”. Real problem is that without monetary discipline, there eventually does becomes a point where other countries DO stop using your currency as a reserve currency, and they do stop being willing to make loans in your currency. And that point is not well known. And is most likely to happen when your country is already in crisis. So formally relying on printing money to pay for things remains a hugely risky endeavor in my mind. * I’ll note that the limited proponents of modern monetary theory I’ve heard of do not advocate for the elimination of taxes or unlimited printing or money. Thier argument is that the deficit is meaningless of itself, we should reduce the deficit (via taxation) if inflation has gone outside a target range and increase the deficit if it has gone under the target range.
grey-area 6y ago
This is an interesting idea. I wonder what behaviour it would incentivise? In theory it is regressive as it is flat rate, but given how easy tax is to avoid our current system is more regressive.
glerk 6y ago
This wouldn't work without a way to compel people to be paid in government currency and accept it as a form of payment. One of the inherent values of the sovereign currency is that you have to use it to pay taxes with. Without taxes, there would be little use for holding the government currency. People and businesses would probably start trading in gold or cryptocurrencies rather than holding the devaluing government currency.
throwawaysea 6y ago
I think you're proposing Modern Monetary Theory (https://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory) or a variant of it. There have been numerous critiques written of MMT written over time - some examples: - https://www.pragcap.com/modern-monetary-theory-mmt-critique/ https://www.pragcap.com/modern-monetary-theory-mmt-critique/ - https://www.investors.com/news/economy/modern-monetary-theory-mmt-inflation-spending/ https://www.investors.com/news/economy/modern-monetary-theor... - https://fee.org/articles/modern-monetary-theory-is-a-recipe-for-hyperinflation/ https://fee.org/articles/modern-monetary-theory-is-a-recipe-... It has also been discussed on HN previously (https://news.ycombinator.com/item?id=19450959 https://news.ycombinator.com/item?id=19450959).
hackeraccount 6y ago
I suspect the political appeal of this would be limited because inflation doesn't hit everyone to the same degree - and there's not way to control that degree of impact. With taxes and spending you can far more easily pick out who you're hurting and who you're helping. Those tools are knife while what you're suggesting is for politicians to use a rock. Also as a practical matter having the government need to raise taxes to pay for spending is a (for government any way) relatively immediate form of feedback. Taxes go up and those who are taxed start complaining right when they hear what the tax bill will be. Inflating costs is imprecise - the "cost" comes on slowly and the "fix" for it - almost always raising interest rates is very painful and happens very quickly. So painful that politicians have historical needed a buffer - an appointed federal reserve in the US - to actually do it.

samatman 6y ago

I've considered this as well. It has one big problem, which is huge headaches around lending at interest. This is surmountable if the rate of issuance is reasonably predictable, but compound interest is already difficult for many people to understand, this would make it worse. The problem that eventually the numbers get silly isn't a problem, because, first of all, it happened: a coke should cost a nickel, not a buck. Second, just drop a zero from time to time, easy, and an opportunity to change up the look of the currency.

topkai22 6y ago
There is economic theory and research supporting some of this under label “modern monetary theory” (https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory)* My fundamental problem with the whole concept is that it is predicated on the idea that a nation is able to borrow in its own currency. If that is not true, seriously bad consequences (like hyper inflation) occur. Proponents say “well the US can borrow in its own currency, we don’t have to worry about that”. Real problem is that without monetary discipline, there eventually does becomes a point where other countries DO stop using your currency as a reserve currency, and they do stop being willing to make loans in your currency. And that point is not well known. And is most likely to happen when your country is already in crisis. So formally relying on printing money to pay for things remains a hugely risky endeavor in my mind. * I’ll note that the limited proponents of modern monetary theory I’ve heard of do not advocate for the elimination of taxes or unlimited printing or money. Thier argument is that the deficit is meaningless of itself, we should reduce the deficit (via taxation) if inflation has gone outside a target range and increase the deficit if it has gone under the target range.

grey-area 6y ago

This is an interesting idea. I wonder what behaviour it would incentivise? In theory it is regressive as it is flat rate, but given how easy tax is to avoid our current system is more regressive.

glerk 6y ago

This wouldn't work without a way to compel people to be paid in government currency and accept it as a form of payment. One of the inherent values of the sovereign currency is that you have to use it to pay taxes with. Without taxes, there would be little use for holding the government currency. People and businesses would probably start trading in gold or cryptocurrencies rather than holding the devaluing government currency.

throwawaysea 6y ago

I think you're proposing Modern Monetary Theory (https://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory) or a variant of it. There have been numerous critiques written of MMT written over time - some examples: - https://www.pragcap.com/modern-monetary-theory-mmt-critique/ https://www.pragcap.com/modern-monetary-theory-mmt-critique/ - https://www.investors.com/news/economy/modern-monetary-theory-mmt-inflation-spending/ https://www.investors.com/news/economy/modern-monetary-theor... - https://fee.org/articles/modern-monetary-theory-is-a-recipe-for-hyperinflation/ https://fee.org/articles/modern-monetary-theory-is-a-recipe-... It has also been discussed on HN previously (https://news.ycombinator.com/item?id=19450959 https://news.ycombinator.com/item?id=19450959).

hackeraccount 6y ago

I suspect the political appeal of this would be limited because inflation doesn't hit everyone to the same degree - and there's not way to control that degree of impact. With taxes and spending you can far more easily pick out who you're hurting and who you're helping. Those tools are knife while what you're suggesting is for politicians to use a rock. Also as a practical matter having the government need to raise taxes to pay for spending is a (for government any way) relatively immediate form of feedback. Taxes go up and those who are taxed start complaining right when they hear what the tax bill will be. Inflating costs is imprecise - the "cost" comes on slowly and the "fix" for it - almost always raising interest rates is very painful and happens very quickly. So painful that politicians have historical needed a buffer - an appointed federal reserve in the US - to actually do it.