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Comment by cryptica | Hacker News Reader

Taxes don't make sense in a fiat system where the government could just print as much money as it needs anyway. Income tax hurts income earners, not asset holders.

The system should not incentivize people to own more assets, it should incentivize them to produce more value.

With the right regulatory framework and good separation of institutions, it would be much more efficient for the government to just print the money it needs directly.

I don't buy the argument that this would cause capital flight. The government has many tools at their disposal to prevent that. It doesn't matter in the long term if rich people dump all their stocks all at once and move overseas; that would create significant opportunities for smaller local investors to replace them because most of the value-producing companies are on the ground; the infrastructure and the workers cannot be moved easily and that's where the real value is.

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> Taxes don't make sense in a fiat system where the government could just print as much money as it needs anyway

There was an interesting discussion of this is a book my income tax professor in law school recommended to those who were interesting in the theoretical and philosophical issues of tax systems.

The usual argument against the government printing money is that it causes inflation.

Suppose, for example, you have a $1 000 000 000 000 in circulation. Each dollar is worth 1/1 000 000 000 000 of the value of the total economy.

If the government prints, say, $52 631 578 947 dollars, there is then $1 052 631 578 947 in circulation, each dollar now worth 1/1 052 631 578 947 of the total economy, and the government having 52 631 578 947 of those dollars, giving the government 52 631 578 947/1 052 631 578 947 of the economy, or 5% of economy.

In many ways this is very similar to a 5% flat tax, except there is no need for taxpayers to file returns, no need for complex regulations about what is or is not taxable income, and you can't evade it by keeping your transactions off the record.

From an individual point of view, losing 5% of my purchasing power to inflation isn't really worse than losing 5% of my purchasing power to taxation.

Inflation has another problem, though. As the value of a dollar, as a percent of the total economy, keeps going down, people need more and more of them to get the same things. We'd have to be frequently changing prices, changing pay, and changing everything else that is denoted in dollars.

That was probably a bigger problem in the past, and will be a smaller problem in the future. As more and more transactions go entirely electronic, we could probably internally do everything in some sort of pseudo-dollar that's pegged to a fixed fraction of the total economy or something like that that the electronic systems convert automatically to current dollars on the fly. So you go to the store to buy bread, which the store internally priced using pseudo-dollars, and the electronic price display tag under bread on the shelf converts that 2020 dollars and displays that.

> Inflation has another problem, though. As the value of a dollar, as a percent of the total economy, keeps going down, people need more and more of them to get the same things. We'd have to be frequently changing prices, changing pay, and changing everything else that is denoted in dollars.

don’t we already have inflation and deal with these problems anyway?

Interesting argument and its true that income taxes hurt production and producers.

My biggest challenge with the idea of governments printing the money they need is that there would be no accountability. It is reasonably apparent that governments are not accountable enough for their actions.

i.e. why would they only stop at what they need when they could print 1M and give it to everyone or people who vote for them. And when that 1M is worthless, print another 10M for everyone.

As imperfect as the tax system is there is still a theoretical trace of accountability. Budgets need to be paid through taxes, taxes impact people, people vote for governments, governments create budgets.

I think we need to move towards a system with MORE accountability, less wasteful spending and less deferred debt. Interestingly enough this probably means broadening the tax base, where both rich and poor pay more of the share of total tax. Only then will people have "buy in" to the government and the desire to hold them to account

>> My biggest challenge with the idea of governments printing the money they need is that there would be no accountability.

I think this is a good argument but there could be some kind of institutional structure to create accountability.

Kind of like the separation between the Federal Reserve and the Government. We need a structure that makes it difficult for the government to get the money. I think there is a difference between making it difficult and making it complicated. Right now it's not difficult for the government to get money somehow, it's just complicated but this complication just creates more bureaucratic jobs and makes the economy less efficient.

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