Is there a difference between deleting money and paying taxes?

[csbrown28]

Let's say that instead of federal taxes being taken from your check each month, you instead were expected to log into your bank account and literally delete the amount of your expected tax liability for that month, would anything operationally change as far as the Federal government is concerned?

If so, what?

 

[celticwar17]

They would have to borrow/print more money, but.... in theory, it could work if they simply did, just borrow more money....

Though government revenue does provide a method of budgeting... though we are not very good at it... eliminating the revenue from the equation completely, we would have even less of a measure whether our government is spend responsibly or not.

This thought experiment is interesting though.... it kind of exposes the tax program as more of a wealth disparity balancer program than anything else.

 

[ecofarm]

They would have to borrow/print more money, but.... in theory, it could work if they simply did, just borrow more money....

Though government revenue does provide a method of budgeting... though we are not very good at it... eliminating the revenue from the equation completely, we would have even less of a measure whether our government is spend responsibly or not.

Government spending responsibly? Good one.

 

[MaggieD]

Let's say that instead of federal taxes being taken from your check each month, you instead were expected to log into your bank account and literally delete the amount of your expected tax liability for that month, would anything operationally change as far as the Federal government is concerned?

If so, what?

Something very BIG would change. Tens of millions wouldn’t have bank accounts and money wouldn’t be available. Back to cash in mattresses. Voluntary compliance is futile.

 

[Rosie1]

You're serious? You say instead of taking from your account, you just delete that. Well, it wouldn't be going to the Federal budget. If everyone did not give that money to the feds there would be no services like: air traffic controllers, Congress and the Senate, Federal courts, and too many other services to name. If just you did this, as an individual, the IRS would be after you. Good grief, do we need Civics class in schools again?

 

[celticwar17]

Government spending responsibly? Good one.

indeed, and it would make it even worse

 

[celticwar17]

You're serious? You say instead of taking from your account, you just delete that. Well, it wouldn't be going to the Federal budget. If everyone did not give that money to the feds there would be no services like: air traffic controllers, Congress and the Senate, Federal courts, and too many other services to name. If just you did this, as an individual, the IRS would be after you. Good grief, do we need Civics class in schools again?

I don't think he was saying just eliminating all government services... he's saying to just delete the money from taxes and have the government get all it's funding from bonds and printing...

 

[joG]

Let's say that instead of federal taxes being taken from your check each month, you instead were expected to log into your bank account and literally delete the amount of your expected tax liability for that month, would anything operationally change as far as the Federal government is concerned?

If so, what?

The greatest impact would be on fiscal spending. If people had to actually make the payment, they would vote for less fiscal largesse.

 

[code1211]

Let's say that instead of federal taxes being taken from your check each month, you instead were expected to log into your bank account and literally delete the amount of your expected tax liability for that month, would anything operationally change as far as the Federal government is concerned?

If so, what?

The IRS would be spending a lot more time and money chasing down tax evaders.

 

[MaggieD]

You're serious? You say instead of taking from your account, you just delete that. Well, it wouldn't be going to the Federal budget. If everyone did not give that money to the feds there would be no services like: air traffic controllers, Congress and the Senate, Federal courts, and too many other services to name. If just you did this, as an individual, the IRS would be after you. Good grief, do we need Civics class in schools again?

Yes, we do.

 

[Rosie1]

Well, if we could give only to the parts of the federal budget, we each deemed were individual priorities to each of us, that would probably be nicer too. But, it could not be practically workable.

 

[csbrown28]

The IRS would be spending a lot more time and money chasing down tax evaders.

LOL, that's probably true.

 

[csbrown28]

They would have to borrow/print more money, but....

Print more money? More money than what? They would have if they had collected the taxes?

The government whether they collect taxes or take receipts of money destruction, creates the same amount of money.

...in theory, it could work if they simply did, just borrow more money....

More than what?

The government sells it's liabilities equal to the difference between the amount that is deleted (or paid in taxes the traditional way) and the amount of money it creates.

Though government revenue does provide a method of budgeting.

So would a direction by the Treasury to delete money from your account.

.. though we are not very good at it... eliminating the revenue from the equation completely, we would have even less of a measure whether our government is spend responsibly or not.

Please, define responsible in this context.

This thought experiment is interesting though.... it kind of exposes the tax program as more of a wealth disparity balancer program than anything else.

Thank you, but the thought experiment is really supposed to point at the government isn't operationally constrained by the amount of revenue it collects. The real constraint is inflation. That is, when people delete money, they are in effect making "room", creating increased scarcity and then filling that scarcity with spending.

Let's say you have a fish tank that needs monthly water changes. Obviously, you don't want water on the floor, so before you add water you have to remove some. The point is the water you add doesn't come from the water you remove, what matters is that that you can't add more than you remove, (unless somehow the tank get's bigger each month).

 

[csbrown28]

Something very BIG would change. Tens of millions wouldn’t have bank accounts and money wouldn’t be available. Back to cash in mattresses. Voluntary compliance is futile.

What?

 

[celticwar17]

Print more money? More money than what? They would have if they had collected the taxes?

The government whether they collect taxes or take receipts of money destruction, creates the same amount of money.


More than what?

The government sells it's liabilities equal to the difference between the amount that is deleted (or paid in taxes the traditional way) and the amount of money it creates.




So would a direction by the Treasury to delete money from your account.




Please, define responsible in this context.




Thank you, but the thought experiment is really supposed to point at the government isn't operationally constrained by the amount of revenue it collects. The real constraint is inflation. That is, when people delete money, they are in effect making "room", creating increased scarcity and then filling that scarcity with spending.

Let's say you have a fish tank that needs monthly water changes. Obviously, you don't want water on the floor, so before you add water you have to remove some. The point is the water you add doesn't come from the water you remove, what matters is that that you can't add more than you remove, (unless somehow the tank get's bigger each month).

No, They would either have to print more money or borrow more in order to pay for everything.

I'm kind of confused by your responses.... You do recognize the government would have to print more money(at least a similar amount in addition to the money that was deleted) or borrow more, because it still has to fund it's liabilities and programs?... You almost sound like you don't think this i true.

Are you saying to just print the money that was deleted? In order to make the process of tax money transactions easier? My point about revenue is purely psychological, if there isn't actual revenue and money printing becomes the sole part of the process(in addition with bonds), It becomes easier psychologically to print more money way past your hypothetical revenue.... because it becomes less real.
And that is what I mean by responsibly.... if the government doesn't have revenue in which it can justify or unjustify it's spending... I would think this kind of policy would FURTHER increase irresponsible government spending... more so than the government already is guilty of.

 

[MaggieD]

What?

Well, now that I understand your post better, which what ifs a ridiculous scenario I can understand why you’d say What? I thought you meant people would go into their bank accounts and send an amount to the Feds. Disregard my answer. Your question makes no sense.

 

[James972]

Let's say that instead of federal taxes being taken from your check each month, you instead were expected to log into your bank account and literally delete the amount of your expected tax liability for that month, would anything operationally change as far as the Federal government is concerned?

If so, what?

goofy question because you clean forgot to say what govt would then do to fund itself.

 

[code1211]

LOL, that's probably true.

Right now, most people see the net pay they receive AFTER everything is deducted.

If the lines on the paycheck stub were moved to the actual check for the taxes, that might raise awareness.

Right now, I would bet that 99% of wage earners cannot quote the dollar amount of Federal Tax they are paying each week or pay period.

What if Federally provided services were like a cafeteria or a movie theatre in which you paid before you enjoyed the products. Pick this one, leave that one alone.

The Obamacare model in which everyone pays for everything is like ALL government payments. Use a few, pay for all. Waste a bunch in the process.

The Free Market Model is like almost everything else. Pay for what you want or need. Skin in the game usually guarantees critical thinking in the purchase process.

If enough people don't buy something:

In a free market, it just disappears from the market.

In Federally funded services, if enough people don't buy it, laws are passed to make people buy it or teams are employed to recruit buyers or free users.

There is something bordering on insanity in this.

 

[Baralis]

Operationally I see little difference since tax payments are simple accounting calculations. As we know people do not tend to send brief cases of cash to the IRS. As long as the government knew the amount being "deleted" to satisfy tax dues nothing would essentially change. They would simply "add" those numbers into the equation on their end.

 

[Lafayette]

Let's say that instead of federal taxes being taken from your check each month, you instead were expected to log into your bank account and literally delete the amount of your expected tax liability for that month, would anything operationally change as far as the Federal government is concerned?

If so, what?

You betcha:
*The Treasury would not be able to pay interest on its T-Note debt, and all foreign trade would stop. (China now holds $1.24T of total US debt of $2.43T. "T" for trillion!)
*As a result, the exchange rate would drop likely affecting negatively all trade.
*Foreign countries holding dollars would sell them immediately, and the currency would nose-dive. Having repercussions on employment within companies that export.
*Unemployment would rise a point or two immediately due to layoffs at hi-export companies (like Boeing), but inevitably a deeeeep recession would drive them back up to the 10% level.

Further hypothetical answers from the BBC, here:

What are the consequences of a US default?

No one really knows exactly what would happen, but the likelihood is that markets around the world would plunge and global interest rates would rise.

This is because if the US government could not repay the money it owed bondholders, the value of the bonds would decrease. And the yield - the return the government pays to an investor - would rise. This is because it would be perceived as a less safe investment.

This would prompt interest rates around the world, which are often tied to those of US Treasuries, to spike.

Furthermore, the impact on the US's creditors could be dire. Japan, for instance, owns about $1.14 trillion of US debt - which is equivalent to 20% of its annual economic output.

In the US, Goldman Sachs estimates that $175bn would immediately be withdrawn from the US economy and it could lead to a very deep recession.

Fortunately, none of the above will happen. The US will never ever dare not paying its debt. Why?

It would spark a national economic catastrophe and a deep, deep recession ...

 

[Lafayette]

Well, if we could give only to the parts of the federal budget, we each deemed were individual priorities to each of us, that would probably be nicer too. But, it could not be practically workable.

Not in the least workable.

It would be highly efficient if it were a Benevolent Dictator who would set national priorities, then told everybody what to do and how to do it for a common good. But, exceedingly dull.

We humans were given not only a brain - all animals have brains. But also "intelligence", which differentiates humans significantly. How much intelligence depends upon natural factors but also upon a reasonable level of education ...

 

[csbrown28]

You betcha:
*The Treasury would not be able to pay interest on its T-Note debt, and all foreign trade would stop. (China now holds $1.24T of total US debt of $2.43T. "T" for trillion!)

Why can't the US government just credit the accounts of bondholders with new money it creates?

 

[csbrown28]

goofy question because you clean forgot to say what govt would then do to fund itself.

The government creates money by crediting bank accounts. You know this already (you may not agree with it, but you know it).

The difference between what it creates and what citizens set on fire is the deficit and it would be exactly the same (all other things being equal).

 

[Lafayette]

Why can't the US government just credit the accounts of bondholders with new money it creates?

And who would chose how much and to whom? The Secretary of the Treasury?

The US Treasury simply sells T-notes to banks, and banks make the funds available. If there is no Demand for those funds, they do not seep into the economy and do not help. Which is exactly what happened post-GreatRecession.

The Replicants in the HofR refused adamantly any further stimulus-spending from 2010 onwards in order to thwart Obama's reelection. That failed, of course. But, neither did the economy create any net new-jobs from 2010 to 2014 because there was no stimulus-spending to do so!

I think Europe has proven that governments should do "the least possible" to interfere in a market-economy. Because by doing so, they screw it up the most.

Getting into economic Deep-Sneakers is a lot easier than getting out. (Every recession proves this point - and yet we remain blind to the fact when it comes to economic governance.) But governments should also do the most possible to assure that those who suffer most are NOT 14% of the population.

And I am am convinced that to do so would reduce crime-rates magnificently in the US! Where there is a great need to do so!

 

[HonestJoe]

Let's say that instead of federal taxes being taken from your check each month, you instead were expected to log into your bank account and literally delete the amount of your expected tax liability for that month, would anything operationally change as far as the Federal government is concerned?

Ignoring the practical consequences of implementing the policy, if that money was literally deleted from the system, the main consequence would be spiralling inflation as there’d be less money but the same assets.
Government wouldn’t have any income but still have expenses and debts. Their obvious solution would be to print more money, both balancing out the “deletion” (and thus the inflation) and giving them the income. If they printed the same amount they would have received in taxation, the practical difference would be theoretically zero but I doubt any government would be able to resist printing a little more than people delete to increase popularist spending or line their own pockets.

I can’t help wondering what you believe would change as a result of this policy. I’m not sure why it’s even being suggested it in the first place.