United States | News & Politics

Again, I'm sorry, I'm not trying to be smug or a smartass here, but I'm not missing any points.

Government has only one way to raise revenue, taxes

A government doesn't need revenue. As I said, a government like the US creates its own currency in whichever arbitrary amount it decides, whenever it wants. A government can spend as much as it wants in its own currency, without raising taxes first, and without going into debt. Want more doctors? It can create dollars to pay them. Want more roads? More dollars. You get the point.

My point isn't that taxes are useless, they're useful for several things such as forcing the private sector to use your currency (since they have to pay taxes with it). They're useful to disincentivize certain behaviours (alcohol and tobacco taxes), to boost your industry and internal market (import taxes). And even better, they can be a great tool to reduce inequality (taxes on wealth, progressive taxes on income, taxes on inheritance, higher VAT for luxury products...). Another important thing they do is removing money from the private sector, this is important to prevent macroeconomic imbalances, you can't have ONLY government expenditure without taxes.

But the thing is, we CAN pay for things without taxes. Government budgets don't have any real reason to be linked to either debt, or taxes. And in fact as I mentioned already, they pay for lots of things without debt or taxes. They pay for wars this way, they pay for bank bailouts this way, they pay for COVID emergency measures this way. A government can pay ALL of its debt without raising A SINGLE dollar in taxes from the citizens. Why they don't do that, is actually a good question.

Sadly, the right wing and neoliberalism have convinced us somehow that "governments budgets are paid by taxes", when it's backwards. The private sector can't have dollars without the government creating them first. Budget deficits aren't bad. In fact they're so normal that they happen in every developed country every year, and they're a GOOD THING! Yes, government budget deficit is a good thing for us! We're the private sector. The ONLY way for the private sector to be able to have more money circulating or in savings, is if the state CREATES this money and spends it first in the private sector. If a government has more revenue than expenditure one year, they're literally extracting currency from the economy, how's that a good thing?

The hard and interesting question then isn't "how are we gonna pay for things?". Paying for things is very easy for the state, literally just create the dollars. The question is: how much deficit should we be running? How much deficit is the best for the economy? And where should be running this deficit, maybe less for military and more for healthcare and education and pensions and infrastructure?

The question on taxation shouldn't be "how are we gonna pay for it?" But rather "how much money should we remove from the economy"? Or "what behaviours should the government disincentivize?" Or "where in the economy do we want to extract currency to reduce inequality?" "Should we be charging lower taxes on poor people and higher taxes on richer people and on big companies?"

This reality-based understanding of government budgets, deficits, debt creation, money creation and taxation, instead of the neoliberal dogma, opens up so many cans of worms and exposed so many non-issues. I'll say it again: "GOVERNMENT BUDGET DEFICITS AND DEBT AREN'T A BAD THING".