3 ms·

This is an interesting theory. Basically, as I understand it, you already want to do these things, but since the government can compel you to pay tax on them in

This is an interesting theory. Basically, as I understand it, you already want to do these things, but since the government can compel you to pay tax on them in its currency, you stick to that currency out of convenience/necessity. If the taxation system is not comprehensive (or you can evade it), you will use the official currency as little as possible, diminishing the amount of useful things transacted in it and thus its value.

carlosjobim 2y ago
Yes! That's exactly how I meant. And it doesn't matter too much if the taxes are high or low, what's important is that they are collected on every activity. I think the prime example is sales taxes in the different states in the US. They are so low (0%-7%) as to be marginal, and collecting them surely costs the consumer economy much more than the gains the state governments have from them. The rational policy would be to abolish sales taxes and transfer that tax burden by increasing other taxes – but the purpose of the sales tax is primarily to make sure business is always conducted in the government currency, and thereby giving the US Dollar a value. Try to use a foreign currency, bullion, or whatnot to purchase consumer goods in any big box store and you'll be shown the door. The same in most of Europe. Then try to use your foreign dollars or euros to buy consumer goods in the third world, and your money will be more than welcome.
- robertlagrant 2y ago
  > collecting them surely costs the consumer economy much more than the gains the state governments have from them Undoubtedly, but why would the tax collection apparatus care about that? They still gain more money than they would if they didn't do it.
  - carlosjobim 2y ago
    They would gain even more by increasing sales tax to 30%, but yet they haven't.

3 ms·

This is an interesting theory. Basically, as I understand it, you already want to do these things, but since the government can compel you to pay tax on them in

by kbolino 2y ago

carlosjobim 2y ago
Yes! That's exactly how I meant. And it doesn't matter too much if the taxes are high or low, what's important is that they are collected on every activity. I think the prime example is sales taxes in the different states in the US. They are so low (0%-7%) as to be marginal, and collecting them surely costs the consumer economy much more than the gains the state governments have from them. The rational policy would be to abolish sales taxes and transfer that tax burden by increasing other taxes – but the purpose of the sales tax is primarily to make sure business is always conducted in the government currency, and thereby giving the US Dollar a value. Try to use a foreign currency, bullion, or whatnot to purchase consumer goods in any big box store and you'll be shown the door. The same in most of Europe. Then try to use your foreign dollars or euros to buy consumer goods in the third world, and your money will be more than welcome.
- robertlagrant 2y ago
  > collecting them surely costs the consumer economy much more than the gains the state governments have from them Undoubtedly, but why would the tax collection apparatus care about that? They still gain more money than they would if they didn't do it.
  - carlosjobim 2y ago
    They would gain even more by increasing sales tax to 30%, but yet they haven't.