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Comment by dragonwriter | Hacker News Reader

> How are state and federal grants not made up of tax dollars?

State is different because the funding situation of state and federal governments are not equivalent, but marginal federal spending is not tied to marginal increases in tax revenue even in principal, so quite literally changes in federal spending do not come from tax dollars.

If you assume that (1) the lifespan of the federal government is finite, and (2) the federal government will have no unpaid, transferred, forgiven, or externally covered debt from now until and including the eventual final shut-down, then it follows that any spending must eventually be covered by taxes, but while (1) is a reasonable assumption, (2) is...less clearly justified.

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I am still confused how this isn't tax payer funded. If it comes from the government, it's tax payer funded.

> I am still confused how this isn't tax payer funded

Because federal government spending doesn't depend marginally on taxes.

> If it comes from the government, it's tax payer funded.

This would be true if changes in government spending were tied to changes in taxes, but it isn’t because they aren’t.

For state government operational spending its closer to being a general truth.

That’s ridiculous. Why have taxes at all if spending is not dependent on them?

Because you need to pretend the spending does depend on them. Otherwise the magic of Fiat currency starts to waver

> Why have taxes at all if spending is not dependent on them?

In aggregate, to offset, to the extent viewed desirable, the money supply effects of the creation of money in spending, and in terms of specific distribution of taxes to effect a desired (re)distribution of net income.

Also, though the above would be sufficient on its own, because prior to the abandonment of commodity-representational currency for pure fiat, the metaphor of the fisc, a finite purse (from which we get the adjective “fiscal”) was a reasonable model of government finances, and there is a lot of inertia in popular models of the world. So, even though it is no longer an apt model, lots of people — both in the electorate and even in government — still view the world through a framework in which that is exactly how things work, which affects their decisions as electors or government decision-makers.

Ok, so we're at the point where we just create money I guess. I didn't understand any of this mumbo jumbo but I'll follow for a second.

Even if this is all true and it's effectively free - we're saying the tax payer isn't paying for it. However isn't there still an unfairness when it comes to who BENEFITS from said broadband?

In MMO's they have a concept called a "gold sink" where in order to fight inflation they create very expensive things and methods/payments that essentially waste money to keep the economy from crashing.

If most money nowadays is calculated digitally (which it is, most transactions are spreadsheets and databases instead of actual cash or goods) and the way most new money that is created is created in similar fashion (it is). Then the constrains of money creation are limited to faith in the system, value speculation (mostly by other countries for what they can trade it for) and inflation. Most monetary systems crash due to overprinting of money and excess inflation which causes a lack of faith in the system. Having something akin to "Gold Sinks" is part of keeping things running, taxes are a perfect way to do that, though the distribution could use some tweaking to get better results, especially if one cares about wealth redistribution.

To incentivize certain things and disincentivize others.

Because jobs and income streams depend on their calculation, collection and regulation.

It appears you have defined the taxpayer out of existence. Assuming that the government goes to extremes and does away with the idea of taxes as the primary source of funding, what term will you accept to pithily describe "someone has to give up the resources that were used for this project, despite not personally wanting the project to happen"?

Well, any Federal funds are categorically not tax payer funds. The Federal government spends money into existence as it is a currency issuer (through the Federal Reserve).

Wait, what? No; that's not how that works at all. Where did you read that?

The shortfall between Federal government spending and tax receipts is the deficit. The government has to borrow that money, which it does by having the Treasury issue debt securities.

This is correct. I attempt to provide references here: https://news.ycombinator.com/item?id=27685631

Not sure where these claims come from either.

Federal government deficit=private sector surplus. The money is conserved. Federal surplus=private sector surplus. People who want to balance the federal budget either don’t know what they are talking about, or are cynically trying to redistribute money to the wealthy.

Wonderful. Than I suggest that we cancel all taxes and just use the printed money to fund everything.

Then what the hell are they doing with all the money I send them?

Taxing your money away is a means of fighting inflation. Taxes and tax breaks also shape behavior. Sugary beverage taxes, tobacco taxes, mortgage interest deductions.

Federal taxes also legitimize the currency by providing stable demand for the currency.

Hopefully helping our poor and needy.

Lining their pockets.

This is (mostly) untrue.

US Federal Taxes go to the Treasury[1][2], which then spends it on Federal government programs. If spending is more than receipts, the US Federal Reserve issues securities (ie, sells bonds) to raise money[3].

Quantitative Easing by the Federal Reserve does cause money to "appear", but this is different to the general process for funding federal government programs[4] (Note that the money can disappear if/when the Reserve chooses to resell those assets).

[1] https://fiscaldata.treasury.gov/datasets/monthly-treasury-st...

[2] https://www.reuters.com/article/us-usa-trump-taxes-revenue-e... ("Of the $3.46 trillion in receipts taken in by the U.S. Treasury during fiscal 2019")

[3] https://www.stlouisfed.org/open-vault/2019/november/where-fe...

[4] https://www.forbes.com/advisor/investing/quantitative-easing...

Also, municipal broadband is often funded by issuing bonds that are paid back with revenue from providing Internet service.

Which is how we get those socialist big government monstrosities like water delivery and sewage handling.

It’s doubly confusing when you see signs up on the highway claiming “your tax dollars at work” next to highway projects when they come from fed and state taxes, but apparently those are not tax dollars...

The government is using its power of taxation to convince lenders that it can cover its debt. If that isn't taxpayer funded, then nothing I charge on my credit card is funded by my salary. Saying federal spending isn't "taxpayer funded" because there is a deficit is sophistry.

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