4 ms·
Why have taxes at all if the government can just print money?
by toenail 2y ago
Why have taxes at all if the government can just print money?
- avidiax 2y agoThis is a pretty complicated matter. In principle, a government could do this. There would then be an invisible tax in the form of high inflation. High inflation causes practical and psychological problems and undermines the appearance of stability of a currency. For one thing, it would be terrible to save any money. So fungible assets like stocks or foreign currency would see a disproportionate demand. You'd be buying and selling stocks just to buy some groceries or a car. Any event like COVID that creates more demand on savings would send the stock market crashing. Another aspect is that the government would lose the ability to manipulate tax policy. Charity would have no special status, strategic industry would have to be directly subsidized, etc. Government would lose an important lever. There also would be little reason to accept payment in this government's currency. Why accept the government's rapidly inflating currency when you have no taxes to pay in that currency and would prefer to transact in a stable currency? Why accept a government contract denominated in their own inflationary currency?
- janalsncm 2y agoTaxes remove money from the economy to prevent demand-pull inflation.
- dennis_jeeves2 2y agoIt gives the appearance that the government is doing something useful. If the government just printed money the peasants would start revolting.