ability of the income tax system to fund federal government expenditures
Reader comment on: Make $51,000, Pay No Federal Tax
Submitted by roger erickson (United States), Mar 12, 2010 15:44
Lord sakes. You have this so backwards it's frustrating. Taxes do NOT fund the government issuing it's own currency & taxes. Please repeat that 500 times.
Back when we were on a gold standard, we were, indeed tricked into borrowing $ from oligarchs hoarding most of the gold, so we behaved as though we were funding currency issuance with taxes.
When did we finally abandon the stupid gold std? 1971? Our currency is not convertible upon demand into anything. Taxes don't FUND anything! Since 1971, currency is issued at will, via Federal gov spending, and taxes only serve to recover any funds deemed excess, solely in order to dampen excess aggregate demand.
Who has to yield back more/less of their income remains an issue, but the US Treasury doesn't need ever $1 of taxes in order to function. They could declare a permanent tax holiday and regulate both aggregate demand and Fx rates through other strategies. It's entirely a political decision.
Has the author of this article even bothered to think through any real implications of a nominal deficit in a sovereign country's own currency? Reality is the opposite of what's implied here.
please see http://www.thenation.com/doc/20100322/galbraith
not to mention http://www.moslereconomics.com/?p=8662/
Henry C. K. Liu does a spectacular job summarizing modern currency (with a few spelling errors): http://www.henryckliu.com/page215.html
Until then, please stick to crying "The sky is falling", or "Wolf! Wolf!". It would be more useful for your country.
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