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To: BulbaMan who wrote (38157)4/18/2012 8:21:25 PM
From: Robert C. Jonson2 Recommendations  Read Replies (1) | Respond to of 40321
 
Simply printing money to pay necessary government expenditures, with legal constraints on money supply growth, should work a heck of a lot better.
Without revenues coming in to back up the printed money, how would our gov't. persuade China and others it had value?



To: BulbaMan who wrote (38157)4/19/2012 2:57:22 PM
From: fred hayesRead Replies (1) | Respond to of 40321
 
Interesting discussion. Sorry I'm late to it, but I have to ask how the new system would assure that the most productive contribute the most to the cost of government. Now, as I recall, about half pay no income taxes at all (some get credits) and the top one percent pay around one-third of the total. According to some people, that is not nearly enuf. Surely step 2 would be to come up with a bunch of other complex administrative systems to solve this problem.



To: BulbaMan who wrote (38157)4/20/2012 6:47:51 AM
From: nigel bates1 Recommendation  Respond to of 40321
 
"To sum up, the current income tax system is complex, inefficient and unfair"


Indeed - but so would be taxing via inflation, since again it would be a tax easiest for the most wealthy to avoid, and would skew investment decisions quite considerably.


Also if you're only abolishing income tax, you would get considerable tax arbitrage. if you wanted to replace other taxes as well, it would require a rate of inflation which would be hugely distortionary.


Bear in mind too that governments already raise money in this way (although not on a consistent or predictable basis).



To: BulbaMan who wrote (38157)4/21/2012 1:32:40 PM
From: Chris08Respond to of 40321
 
1. If this were such a good idea, I suspect it would already have been instituted somewhere and as far as I know it never has. I know of no economist, even the sillier among them, who ever advocated this.
2. Taxes are useful to redistribute income. Without them inequality would probably be far greater than it is today in the US and it is already far too great. Taxes change the "natural" distribution of income.
3. Taxes require political decisions re how the government money is allocated and spent. If it could simply be created how would the allocation (budget process) be decided? There would be too great a temptation to fund any and all initiatives. Taxes limit how much the government can spend and forces choices to be made.
(Just a few of the reasons, I think, that simply printing money has never been a serious consideration.)



To: BulbaMan who wrote (38157)4/21/2012 2:26:38 PM
From: BiomavenRead Replies (1) | Respond to of 40321
 
>printing money

I think this is just going to produce hyperinflation - the system is going to be unstable. If government expenditures are say 30% of GDP, then assuming roughly constant V, the money supply will grow exponentially even if GDP is constant - perhaps by 15% per year. That doubles prices every 5 years or so, which is enough for people to buy ahead of the price increases because of inflationary expectations. That would then increase V, ratcheting up inflation further.

I think the last country that tried something like this was Zimbabwe. Here's what you can get for $4.45:

ebay.com 

Peter


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