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> if the loopholes were closed, … almost everyone in the economy would win 1. Tax is not zero-sum. They take as much as they can from everybody. 2. Any additi
by jl2718 5y ago
> if the loopholes were closed, … almost everyone in the economy would win
1. Tax is not zero-sum. They take as much as they can from everybody.
2. Any additional spending would likely also have zero benefit to most people.
3. Greater tax income is only used to take on larger debt, which gets paid for mostly by wage workers.
I am against loopholes for a different reason: they are anti-competitive, essentially a government-granted monopoly on investment and participation in the economy. But even a more “fair” tax is mostly a bad idea.
Taxation is an anachronism. It is an inefficient and coercive way to fund public goods, and even now it’s a relatively small part of cash flow. The most efficient and effective way to finance the government is through bond sales. We don’t need taxes. Seriously, we don’t. Last year, the treasury collected $17.8T from bond sales and $4T in taxes. Bonds are valued by debt (liabilities) to GDP, so ask yourself how much real GDP growth would come from tax elimination.
This should not be just a theory. It requires no modification to the constitution, and no operational changes outside of the treasury, which mostly just keeps doing what they’ve been doing already to fund the government. Congress sets the debt limit. Treasury manages bond sales. Nothing changes. My friends at the IRS might need new jobs, but I got this idea from them anyway.
- CHY872 5y agoHow would the bonds be paid for if not for taxes? (Genuine question. Printing money?)
- jl2718 5y agoYes; through bond sales just like they do right now. This requires some explanation. “Legal tender for all debts public and private” is what gives money its value. People must use dollars if they want the legal system to enforce contracts and rights, and will continue to do so as long as there is benefit to that. But what about inflation? In simple terms, price inflation is when demand for goods and services grows faster than supply. Most dollars are not in that demand pool, as they all start out in the investment pool. The nature of investment is that efficiency gains must match the cost, or the investment loses. So an efficient economy balances both sides with investments which increase supply, and payments to workers, which increases demand. In this scenario, monetary inflation can be used to supply investment dollars up to the point where that balance is achieved. (Obviously not all verticals are affected the same way.) Government can be seen as the public goods investor, which is supposed to increase productivity economy-wide more than their own spending. So if that’s true, and all dollars are created under that constraint, inflation is impossible. Big if, of course. Even if not, there should be a very wide berth for ‘unproductive’ investment to inflate demand equal to the over-efficient gains in supply. What about the environment? Good point. Productivity has externality cost, some more than others. Firstly, we should be maximizing investment efficiency because financial waste correlates well with environmental waste. Secondly, there could be a strong case made for selling externality rights, and this alone could probably replace all tax revenues in the budget. I don’t know how that would work legislatively. If you ask me, this is what killed Al Gore’s campaign. He suggested that we make corporations pay for their waste, instead of people pay for their work. So… bonds and maybe Pigouvian auctions.