Hacker News Reader

Comment by dools | Hacker News Reader

And yet, this doesn't "cost" governments anything, because governments don't need tax to fund spending.

In fact, corporate taxes are stupid, they should be 0%, so should income tax. I like Randall Wray's model of a broad based consumption tax offset by transfer payments to low income earners, a job guarantee and a tax on the volume of your house. Genius.

It's a pity no-one understands how the economy actually works, though!

View on HN

The greatest trick the devil ever played was income tax. It disincentives productive endeavor. 0% corporate and income taxes would usher in a huge productive renaissance. In the US, It could be entirely funded with a 2% wealth tax on the top 2% (personal wealth above ~$10 million). All those IRS workers would be freed up to engage in productive activity too.

It doesn't need to be "funded". Government spending creates money and taxes destroy it. The role of taxation is to drive demand for currency, and drain money out of the economy. It can also be used to disincentivise behaviour. But tax cuts don't need to be "funded", because governments have no issue with affordability -- they issue the currency.

Video on how this works: https://www.youtube.com/watch?v=i35uBVeNp6c

Book on how this works: http://www.amazon.com/Modern-Money-Theory-Macroeconomics-Sov...

But doesn't a consumption tax just dis-incentivize consumption? Is that bad? (willing to accept LMGTFY link!)

Minus what seems to be a bizarre loss of website data this weekend, I've always been a fan of a national sales tax, with all associated exceptions where it makes taxation less regressive.

http://fairtax.org

Another way to put that is that it would encourage saving and investing. In the long term, that's better than encouraging spending, since the money would go towards growing the economy. (Assuming it isn't invested in beanie babies and lottery tickets.)

Everyone has to consume. Consumption is a necessity, and is unavoidable (and therefore unevadable). Some level of taxation is required since it determines the level to which government can spend without devaluing the currency, and it's also a tool that can be used to drain money out of the economy. But it's not required to "fund" anything -- what you want out of a tax is one that allows you to apply policy effectively. Putting tax legislation in place and enforcing it are two very different beasts. Having a consumption tax with sufficient offsets for low income earners is far less likely to result in evasion because everyone must consume, and no-one will refuse being GIVEN money (income tax is sort of the opposite: we don't tax consumption, but we tax income and try to tax high income earners more, which they do their best to evade; low income earners would never "evade" their transfer payments).

Prices and spending habits will adjust accordingly -- you're giving people a huge tax break in one area and adding a burden in another. There wouldn't be any impact on aggregate demand, but fiscal policy would be much easier to implement.

Video on how this works: https://www.youtube.com/watch?v=i35uBVeNp6c

Book on how this works: http://www.amazon.com/Modern-Money-Theory-Macroeconomics-Sov...

Reply on news.ycombinator.com