Oddbean

I had a thought the other day... Governments get involved in all the financial transactions in order to tax them. Your company makes money, it gets taxed. You get paid a salary from the remainder, it gets taxed again. You spend it on something, it gets taxed again. That company takes it in and it gets taxed again. Over and over, tax after tax after tax. And all of this requires complete loss of privacy, they have to know all of your transactions so they can tax them accordingly, and the accounting and compliance costs spawn a huge financial industry which is actually.... entirely unnecessary. Instead, all this loss of privacy, all this compliance cost, all the tedious filling out of tax forms where you aren't sure if you are doing it right and they hope you do it wrong so they can also collect fines and interest... the whole thing could go away. And I'm not talking about anarchy. I'm talking about a funded government that doesn't need to collect taxes. Just use inflation: The central bank prints 3% more money each year and gives it to the government. Now before you all yell at me about how inflation is a horrible thing... this is a compromise. It is far better than the invasive tax systems we have today, and if the amount of money government gets is fixed by a constitution, and the fiat system (there would still be one) didn't expand via fractional reserve lending but only by this predictable monetary inflation, it strongly prevents government overgrowth, and also moderates boom-bust interest rate cycles, and still stimulates economic activity because the currency continues to lose value. This is just the start of a crazy thought. I haven't thought it through deeply. But I do really like getting rid of the invasive tax compliance back-monkey.

Two thoughts: they’re doing both right now, so eliminating taxation and everything that comes with it would be an incredibly huge win. It won’t happen because so many of the jobs you correctly identified as not only unnecessary but counterproductive would go away.

I like your idea, but I think most governments don't because: 1) through the tax system they get to spy on what people are doing and who is getting rich and powerful. 2) part of them taxing you is actually not that they need your money as much as it's them wanting you to stay poor enough that you need an income and hence have to stay in their rat race.

There are a number of good jurisdictions without personal tax, and often also without any reporting obligation. For a company or trust the privacy and low compliance cost is a major part of the appeal and part of the consideration!

They already use inflation 😅. 3% doesn't sound like a lot, but that growth rate is exponential over 100s of years. But there is a bigger problem: The premise of your idea is to reduce bureaucrazy and control. The system likes bureaucrazy as it hides responsibility and autocrats absolutely wanna keep that control. There is an additional thought about taxes: atleast here in Switzerland you can lower your taxes if you follow the rules of the system very closely. This goes much deeper than just transactions. E.g. you can get cheaper taxes if you had to pay for expensive medicine, but only if the doctor that gave it to you also created a specific government-regulated certificate. The goal is to ultimatively control the behaviour of the people and it works.