The world currently handles a reasonably predictable inflation rate of American currency. Cost of goods and services adjust, investors plan, the world goes on. If this were the taxation practice we adopt and everyone were informed of it, we would adapt and plan for it. This would be a much simpler way of implementing a flat net worth tax. We could not only simplify the tax code, we could eliminate it completely. I do not think a flat net worth tax is fair, but I believe we could make the system progressive through offering tax credits where we need them and adopting a basic living income.
How do you know there would be inflation? Removing taxes from the picture, all else being equal, we would expect to see prices fall as the cost of doing business drops. I suspect that for the most part the difference would come out in the wash and the two systems would look much the same, except that without taxes markets will run more smoothly.
It is probably the crazy revolutionary in me that likes this idea, however, our national, state and city governments are already borrowing huge amounts of money, which is the same as printing cash.
The biggest disadvantages would be 1) government overspending and overprinting leading to uncontrolled inflation and devaluation; 2) replacing progressive taxation with a flat tax.
Cutting the buying power of the poorest person through inflation would be like a tax increase for them because they aren't paying federal income tax now.
People invoking the specter of post-WW1 Germany are ill informed about economics. Yes, the prices of goods would increase, but we could easily limit the government to printing a certain amount of money each year (a certain % of the GDP, perhaps). We *already* deal with 3% steady inflation a year and are in no danger of completely devaluing our currency.
- The tax collection system could be abolished, saving billions a year
- Tax evasion would be impossible
- Short term (but possibly devastating) economic turbulence as lenders experiment with how to adjust interest rates to account for increased inflation
- Saving money becomes much more difficult, making retirement very hard for most people.
Not sure if it would work, but seems plausible
Probably the most effective way of instituting an asset tax.
- People would want to buy our stuff but they wouldn't want to invest in us.
- It would encourage people to work but not to invest.
- It would make cheating on taxes impossible (other than buying foreign currency --- but who would want to exchange it with you?)
- Digital currency could reduce menu costs.
One more thing: Debt amounts to a voluntary tax (one that you must pay interest on).
Inflation would destroy the economy, not save it.
You fail to understand, the spending value of money isn't based on how much you have, but on how much gold is backing it up.
If you have $100 in the economy and $100 worth of gold in the reserve, it's worth $100... If you now have $200 but still only have $100 of gold, you still only have $100 and each bill is worth $0.50.
You don't understand how the value of money works. It needs backing, and THAT needs to increase, not the number of bills.
You would devalue our currency so the Government would need $10 trillion just to fund what only took $3 trillion before this idea... It's what happened to Germany in only a few years after WW1, where a trillion marks can be left in a basket, and someone would steal the basket first and leave the worthless money.
On a global scale, you would destroy the US....
The Roman 2000 years ago understand this concept better than you.
With this plan, the US Dollar would inflate to a point of virtual worthlessness. If you look at Germany after the Treaty of Versailles, we see the result of a government that resolved to print massive amounts of paper money in order to provide payment for their debts. In that situation, the Deutschmark became so useless, it was more cost effective to burn it for heat instead of using it to by tinder. Really, we'd do more harm than good to the economy if we did this, and I think we can all survive paying taxes.
The US should revise the tax code and make it simpler for sure. No one would be encouraged to save and inflation would just eat away at those savings. When Germany after WWI printed so much money in order to pay their debt, citizens had to carry wheel barrels of money just to buy a loaf of bread. Hayek had to have 200 pay raises in 8 months in order to keep up with inflation, in the long run it ruins the country's currency
As we all know very limited and scarce resources are available to us so if the govt starts printing too much of currency then of course the inflation WILL rise but also the purchasing power of the people WILL rise which will lead to over and wasteful utilization of our precious resources which will worsen the circumstances.
Dude you yourself imagine if your pocket money is increased by 10,000!! Sounds cool but this will encourage wasteful expenditure I will then even wash my hands with mineral water... :D
If inflation where to happen printing as much money as we need to solve our debt a loaf of bread would cost million, just like Germany in world war II where items costed million, billions, even trillions to get simple items because of inflation. If inflation where to take place the whole country would be plunged into chaos, not being able to buy necessities like food clothes or shelter. People would die and the country would probably collapse.
If you were to cut out taxes from the revenue of our nation and allow them to print as much as they want, inflation would become so rampant that soon the extra savings from your nonexistent taxes would be just that, nonexistent. The government has no reason to stop paying themselves more money, and through them others. As Alexander Tytler allegedly said (a British lawyer and writer), "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy."
Where would the money for hospitals, schools, and roads and stuff come from? And printing money and won't help anything. Inflation will make our money useless and we will plummet into third-countryum. We won't have any schools, roads, hospitals, andwe will have lost the respect of all the other contries since our currency is worth so little. It will be terrible.
Today, the monetary base grows roughly at the rate of inflation, i.e. a few percent. Taxes in US are ~25% of GDP. So, the proposal under consideration would grow the monetary base (and inflation) at a ~25% rate. This has two problems: 1) it would be a flat tax on monetary wealth (we may like it or not, but that is); 2) It would be quite difficult to update all prices at such high rate, which is likely to produce bad unfairness.
Today, the monetary base grows roughly at the rate of inflation, i.e. a few percent. Taxes in US are ~25% of GDP. So, the proposal under consideration would grow the monetary base (and inflation) at a corresponding rate. This has two problem: 1. It would be a flat tax on monetary wealth (we may like it or not, but that is); 2. It would be quite difficult to update all prices at such high rate, which is likely to produce bad unfairness.
IF the government stopped printing money it would dry up immediately.Only because its not circulating properly.The rich are useing the poor to make goods to sell to the government class who make nothing.In exchange they get more money to buy things from the poor .The money is constantly printed and given out. The rich pay little to no taxes witch means they must have ware housed the money some where.I personally beleve the banks have Enough money to pay 1 million for every shack in America.Look at tiny house nation 350000 for 950 sqaure foot.The only reason the money is still worth something is because the poor don't have it.