5 ms·

Why do I have to pay taxes if the government can just print all the money it needs?

haskellandchill 4y ago
You don't have to pay taxes, you just have to deal with the consequences.
yamtaddle 4y ago
To the Feds? To temper inflation. To state and local governments? Because they can't print money and do actually need taxes in order to spend.
- rglover 4y ago
yazaddaruvala 4y ago
Inflation is a tax. It’s just regressive (the poorest are paying the most). income tax and ideally a wealth tax get the richest to pay the most. Obviously the US could use some fixing in both regards.
- Spivak 4y ago
  > It’s just regressive (the poorest are paying the most). What? If I have $1,000,000, inflation is 10%, and prices readjust I just lost $100k in purchasing power but if I have $1000 I lost $100 in purchasing power. Proportional taxes aren't regressive. Inflation hits wage earners hardest because it lags behind prices but that's not the same thing.
  - lp0_on_fire 4y ago
    In a pure economic sense someone who lost 10% of their $1000 in savings is doing far worse than someone who lost 10% of $1,000,000 in savings. To the first person that 10% could be the difference between whether or not they have enough to pay rent that month. To the second it's the difference between whether or not they put a down payment on their second home.
    - Spivak 4y ago
      No disagreement, but that fact doesn't make a proportional tax regressive.
      - naveen99 4y ago
        In a binary world, there is regressive and progressive only. Regressive = not progressive (enough). For people that can do math, just follow market response.
  - yazaddaruvala 4y ago
    Any entity with $1,000,000 in cash is making a calculated risk play. They could easily put that cash into gold, bonds, stocks, etc. They are betting on cash inspire of the inflation. Any person with $1,000 is living paycheck to paycheck and has no choice but to keep it in cash (if they can keep it at all). So really you have to compare $1,000,000 in bonds/averaged stock performance to $1,000 of income per month. The latter is far more impacted as the cost of gas and food increases 10%.
deleted 4y ago
[deleted]
opportune 4y ago
Practically speaking the way the government prints money is by creating treasuries that the Federal Reserve purchases. When the federal reserve purchases them, the government gets the amount of the treasury created de novo. With no taxes all government expenditure would be printed money. That would mean the monetary base increases by the government spending per year. That hasn’t been a problem until recently because only a portion of the government was funded this way, and increasing the monetary base wasn’t (until it did) causing inflation above Fed targets. Let’s say government spending is 25% of GDP. The federal reserve has our monetary base at around 5.5T out of 20T GDP currently. So we’d have to double our monetary base to fund the government this way for one year. This would cause very high inflation - we basically did fund the government 50% this way for 2 years because of COVID and look where that got us. Imagine inflation then with 100% funding in this manner over long periods.

You don't have to pay taxes, you just have to deal with the consequences.

To the Feds? To temper inflation. To state and local governments? Because they can't print money and do actually need taxes in order to spend.

rglover 4y ago

yazaddaruvala 4y ago

Inflation is a tax. It’s just regressive (the poorest are paying the most). income tax and ideally a wealth tax get the richest to pay the most. Obviously the US could use some fixing in both regards.

Spivak 4y ago
> It’s just regressive (the poorest are paying the most). What? If I have $1,000,000, inflation is 10%, and prices readjust I just lost $100k in purchasing power but if I have $1000 I lost $100 in purchasing power. Proportional taxes aren't regressive. Inflation hits wage earners hardest because it lags behind prices but that's not the same thing.
- lp0_on_fire 4y ago
  In a pure economic sense someone who lost 10% of their $1000 in savings is doing far worse than someone who lost 10% of $1,000,000 in savings. To the first person that 10% could be the difference between whether or not they have enough to pay rent that month. To the second it's the difference between whether or not they put a down payment on their second home.
  - Spivak 4y ago
    No disagreement, but that fact doesn't make a proportional tax regressive.
    - naveen99 4y ago
      In a binary world, there is regressive and progressive only. Regressive = not progressive (enough). For people that can do math, just follow market response.
- yazaddaruvala 4y ago
  Any entity with $1,000,000 in cash is making a calculated risk play. They could easily put that cash into gold, bonds, stocks, etc. They are betting on cash inspire of the inflation. Any person with $1,000 is living paycheck to paycheck and has no choice but to keep it in cash (if they can keep it at all). So really you have to compare $1,000,000 in bonds/averaged stock performance to $1,000 of income per month. The latter is far more impacted as the cost of gas and food increases 10%.

deleted 4y ago

[deleted]

opportune 4y ago

Practically speaking the way the government prints money is by creating treasuries that the Federal Reserve purchases. When the federal reserve purchases them, the government gets the amount of the treasury created de novo. With no taxes all government expenditure would be printed money. That would mean the monetary base increases by the government spending per year. That hasn’t been a problem until recently because only a portion of the government was funded this way, and increasing the monetary base wasn’t (until it did) causing inflation above Fed targets. Let’s say government spending is 25% of GDP. The federal reserve has our monetary base at around 5.5T out of 20T GDP currently. So we’d have to double our monetary base to fund the government this way for one year. This would cause very high inflation - we basically did fund the government 50% this way for 2 years because of COVID and look where that got us. Imagine inflation then with 100% funding in this manner over long periods.