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Comment by mywittyname | Hacker News Reader

Inflationary/deficit spending.

The MMT argument for taxation is that it's necessary to encourage demand for a currency, thus making it more valuable. But there's no fundamental reason that a government which controls its own currency must collect taxes to pay for various services.

Congress could pay state and local governments directly each year.

If you're willing to throw away some property rights, then state and local governments could theoretically lease land as a means of raising revenue without direct taxation. (this is a terrible idea)

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Predictable large inflation each year with no taxes may make theoretical sense in some models. But it seems like it would not be compatible with human psychology.

My favorite MMT detail is the currency lock up accounts to reduce inflation. Basically they prevent people from spending money until inflation decreases. They claim it's not confiscatory as people will get their money back eventually and not taxation because it's the same amount of money. Despite their claims it is indeed both of those things as the real value of the money has decreased.

The government's fiat currency would be worthless without a complicated system of taxation in order to create demand for it. No private individual or business would be interested in selling their goods or labour to state and local governments in exchange for fiat, unless they are forced to have that fiat in order to pay taxes - and here is included mortgages to the banks, since it is 100% a tax as well.

This is what people forget about (especially tech minded people), when they think up new systems of taxation that would be more fair and effective: Any fair and effective tax would destroy the currency, since people and businesses could easily pay their share and then instantly convert their remaining wealth into non-fiat assets, or even safer fiat assets. In order to prop up the value of the fiat currency, the tax system needs to be extremely bureaucratic and reach into every and any kind of economic activity imaginable. That way there is a constant need for businesses to keep that fiat on hand and do their accounting with that fiat.

> If you're willing to throw away some property rights, then state and local governments could theoretically lease land as a means of raising revenue without direct taxation. (this is a terrible idea)

Why is it a terrible idea?

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