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Comment by HPsquared | Hacker News Reader

If there was no taxation, there would be no "compelling" reason for anyone to keep using the currency (which would be also losing value directly by the increase in money supply from government spending). In other words, even under MMT taxation is necessary to limit inflation.

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Is that 100% true though?

Some estimate maybe only 10% of Chinese individuals pay tax. Individual taxes account only about 8% of China's tax revenues.

Bulk of the tax burden comes from consumption and business.

I'm all for that. If I make a million dollars but I live frugally and invest my money, why should I pay 50%?

Sure the argument for individual taxes are about social wellness but how do you justify that when businesses are avoiding billions of tax legally.

Make no sense.

That's fair enough, I was more referring to overall taxation in the economy creating a stable demand for the currency, it doesn't have to be levied on personal income specifically.

Because you likely made a million dollars using the benefits of the government. I.e. you had an educated workforce who drove on government roads to get to the factory, you were able to protect your ideas via copyright with the threat of government enforcement, etc.

Nobody gets rich by themselves unless they are a pirate.

> Nobody gets rich by themselves unless they are a pirate.

Is your claim that pirates generate economic value even in the absence of other people?

Or is it a claim that pirates lived in anarchical democratic communities whose thriving in the absence of government exemplifies Taleb's idea of anti-fragile?

Sure, how about they can send me a bill for my share of roads and educated workforce (granted, this could be provided much cheaper via selective immigration while the US still has the leverage of being attractive to immigrants)? I'd like to not pay my share of e.g. invading far-away countries, or supporting those not paying taxes, or many other such things.

"If there was no taxation, there would be no "compelling" reason for anyone to keep using the currency ..."

This is correct.

Remember: no matter what you have and no matter how valuable it is - you cannot pay your taxes with anything but your local currency. This is not a coincidence.

You cannot pay your taxes with gold bricks or with diamonds or with the Mona Lisa. You cannot trade highly liquid stocks or valuable real estate. You must sell those things to buy dollars.

It will never be otherwise. The point of the dollars is to have something that you must buy in order to pay your tax dues.

This actually expands further than taxes and expands to all government services. Water bill, inspections, sewer. Those institutions will always only accept dollars, and that backstops the value.

Thought experiment: rampant inflation happens and the dollar inflates 10x. My $1M house is now worth $10M. It's reassessed (because I don't live in California) and now my tax bill is suddenly $100,000 / year instead of $10,000! I need to acquire $100,000 or I go to jail. So I start selling assets into dollars. This deflates the dollar. Everyone does this simultaneously and the dollar goes back to its natural value.

I believe all US debts to private creditors can be settled in dollars. Any debtor can take a creditor to court if the creditor tries to demand payment in other forms.

Not sure why you’re getting downvoted.

Having to pay taxes in US dollars or go to jail is a strong incentive for people to continue their business operations with US dollars.

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