[Jon Dorian]

We all know that taxation is thievery. Nothing new here. However, have you ever wondered why taxation is so destructive? Wonder no more. Tax destructiveness power goes far beyond the capital it destroys. There is a magnification effect every time one dollar is destroyed by taxes.http://www.freedomandpower.ws/index.php/taxes/672-you-the-tax-collector-part-1-of-2

[Saeko]

Wow, this article is such a load of the typical lolbertarian bullshit.

Taking all compliance costs into consideration for all Canadian taxpayers (individuals, business and corporate) they calculated that the total compliance cost to fulfill the Canadian tax mandate for 2007 was between 16.7 and 22 billion CAD. Now let's place this number into perspective. In 2007 the total "tax revenue" in Canada was about 450 billion CAD. According to OECD numbers, the total governmental administrative cost to collect taxes in 2007 was 1.22 %. If we now add the average between the range calculated above by the Fraser Institute (or about 4.3% of collected taxes) we reach the real compliance cost of 5.5% or 25 billion CAD.

In other words, in 2007 Canadians wasted 5.5% of their hard earned already-taxed wealth in tax paperwork alone. Let's be clear. We are not talking about paying an extra 5.5% in taxes; we are talking about burning 5.5% of all collected taxes in bureaucracy that produces exactly nothing! Allow us to ask you this. Would you, willingly, toss into the garbage or burn 5.5% of your income for no reason? Of course not! Then why are you collecting taxes and performing paperwork for the government if this is exactly the very same thing?

Let's crunch these numbers. 5.5% of 25 billion CAD / 35,154,300 (the population of Canada) = 36 CAD per person.

Yes, apparently 36 CAD is exactly the same thing as 5.5% of your income. In order for that to be true the average Canadian would have to make only about 655 CAD per year.

This article is also full of the incredibly stupid logic that libertarians often rely on.

This article in a nutshell:

[*]In a free-market, people will act rationally, without the use of force and fraud, and everyone will be better off because everyone is the best judge of his own interests.
[*]Everyone except poor people, that is, who don't know what's good for them and need libertarians to explain to them that they are being poor on purpose just so they can go on welfare and steal everyone else's money, which will magically cease to exist once it is stolen.

[*]When the government taxes money, that's exactly the same thing as burning it in a trash can. It literally ceases to exist.
[*]Poor people inevitably vote for the politician who will give them the most of this non-existent money.

[*]Just look at how much money the government spends paying its employees! That proves that it is inefficient.
[*]Just look at how little money the government spends paying its employees! That proves that it is inefficient.

[quetzalcoatl]

You actually have a glimmer of an insight here.

One of the purposes of taxation is to extinguish money. Why would you want to extinguish money? To reduce inflation, when there is too much money chasing too few goods. You can also extinguish money by reducing the spending of the sovereign; these two actions are functionally equivalent in their effect.

Conversely, when there is underemployment and productive overcapacity (slack in the economy), you would want to create money. This is done by some combination of reducing taxes or increasing spending. Monetary operations of the Central Bank are ineffective in this regard.

From a nation-state perspective, the primary purpose of taxation is to create demand for the national currency (in which taxes must be paid). Taxation has some additional lesser functions; breaking up concentrations of capital, and discouraging rentier income investment.

Some relevant concepts:

1) Taxation does not fund government spending of a nation with monetary sovereignty. (The UK has monetary sovereignty, Greece does not)
2) It is not functionally necessary to issue debt, when sovereign spending exceeds tax income. We do this as part of legal or functional arrangements, which are themselves holdovers from obsolete "sound money" theories.
3) Governments create money by reducing taxes or by spending. In the private sector banks create money by lending to individuals. Monetary operations of the Central Bank has a very limited effect on the money supply. Thus individuals who equate QE with 'running the presses' are either demagogues or severely misinformed.
4) Money cannot be both a measure of value and a store of value. These are basic category errors. The 'value' of money can never be fixed, since the quantity of money and the supply of goods are constantly changing in reaction to market forces.
5) A gold standard will never again be instituted in any major economic entity. Period.

If you carefully work out the implications of these concepts, the clouds will be lifted from your vision.

As regards to taxation being theft, yeah okay. So what?

[Truth To Power]

One of the purposes of taxation is to extinguish money.

Taxation doesn't extinguish money. It just transfers it from the taxpayer to the government.

Why would you want to extinguish money? To reduce inflation, when there is too much money chasing too few goods.

But if you look at actual inflation reduction, as in the early 1980s, there was no reduction in government spending. So you're wrong.

You can also extinguish money by reducing the spending of the sovereign; these two actions are functionally equivalent in their effect.

Neither extinguishes money.

Conversely, when there is underemployment and productive overcapacity (slack in the economy), you would want to create money. This is done by some combination of reducing taxes or increasing spending.

Neither action increases the money supply.

From a nation-state perspective, the primary purpose of taxation is to create demand for the national currency (in which taxes must be paid). Taxation has some additional lesser functions; breaking up concentrations of capital, and discouraging rentier income investment.

Modern Monetary Theory (MMT) understands money somewhat, but does not understand taxation at all. The purpose of taxation is to transfer purchasing power from the taxpayer to the government.

Some relevant concepts:

1) Taxation does not fund government spending of a nation with monetary sovereignty. (The UK has monetary sovereignty, Greece does not)

False. Any transfer of purchasing power from the private sector to the public sector funds government spending.

2) It is not functionally necessary to issue debt, when sovereign spending exceeds tax income. We do this as part of legal or functional arrangements, which are themselves holdovers from obsolete "sound money" theories.

It is true that instead of issuing debt, government could issue money. But they are two different actions, with different effects.

3) Governments create money by reducing taxes or by spending.

No, they do not.

In the private sector banks create money by lending to individuals.

Or to firms or governments.

Monetary operations of the Central Bank has a very limited effect on the money supply. Thus individuals who equate QE with 'running the presses' are either demagogues or severely misinformed.

Speaking of which...

4) Money cannot be both a measure of value and a store of value.

It is self-evidently both, as a result of its basic function as the medium of exchange. However, its usefulness as a store of value over time depends on monetary policy.

These are basic category errors. The 'value' of money can never be fixed, since the quantity of money and the supply of goods are constantly changing in reaction to market forces.

And non-market forces. It is a category error to claim anything is a better measure of value than money, as value is by definition what a thing can be exchanged for, and money is by definition the medium of exchange.

5) A gold standard will never again be instituted in any major economic entity. Period.

Never is a long time, but that is probably true.

If you carefully work out the implications of these concepts, the clouds will be lifted from your vision.

Cast out first the beam that is in thine own eye.

As regards to taxation being theft, yeah okay. So what?

There are some "taxes," such as a land value tax, that consist of voluntary payments for benefits received, so they are not theft.

[SueDeNîmes]

I wonder if the traction Libertarianism gained with the growth of the internet is now backfiring with the proliferation of absurd bloggy things like this?

[Truth To Power]

I wonder if the traction Libertarianism gained with the growth of the internet is now backfiring with the proliferation of absurd bloggy things like this?

I'm sure the Internet is facilitating a winnowing of ideas; it's a major reason Islam is in crisis. In this case, the soi-disant "libertarian" (actually propertarian) view that "taxation is theft" is exposed as a cheap cover for an ideology that is not about anything but rationalizing privilege, injustice, and parasitism by the rich, and is deeply antagonistic toward genuine liberty.

[quetzalcoatl]

For someone whose cognition has been impaired by prolonged exposure to Austrian economics, t-to-p does have a fair grasp of money. We agree that the value of money is dependent on constantly changing forces, which is why its value cannot be fixed. Inflation responds to many pressures, including high interest rates imposed by the Fed (as in the Volker regime). Increased government spending will increase the money supply, while high interest rates will constrict it. Fed manipulation of interest rates are much less effective in increasing the money supply during a long-term disinflation/deflation environment; lower interest rates are only effective to the extent that there is already a demand from borrowers. In a deflationary environment such a demand is severely depressed.

The notion that QE = printing money or running the presses is ignorant or demagogic. Government spending could be compared to printing money, of course, but it is the balance that matters. In a severe recession/depression, the amount of money created should at least equal the amount of money extinguished by market forces. (Many trillions of dollars were extinguished during the '08 crash). The amount of money spent by the US government did not come near to countering that massive money holocaust, and much of the so-called stimulus did not even enter the real economy but was diverted to the banks.

I repeat my objection that money cannot be both a measure of value and a store of value. By 'category error', I intend to say that it is logically impermissible. An erg is a measure of energy; an erg is not a battery and does not contain any energy itself. The idea is absurd, not self-evident. The value being measured by dollars resides exclusively in the real wealth of the country, not in the dollars themselves.

Your understanding of taxation is also false. The government does not need tax dollars in order to spend, since it creates those dollars by the very act of spending itself. There is no kitty your tax dollars go into, from which government spending is drawn. The two operations are totally separate and unrelated in their real-world mechanics. It is true, to be fair, that the vast majority of voters and legislators believe that they need to tax in order to fund government spending, and that belief influences their actions. This is the one remaining ace-in-the-hole for the misleadingly-named sound money doctrines. The logical structure of fiat money will necessarily obviate such self-imposed false concepts over time. I suspect this is the real reason for the desperation of the gold bugs: they see their entire world view dissolving before their eyes.

[Truth To Power]

For someone whose cognition has been impaired by prolonged exposure to Austrian economics, t-to-p does have a fair grasp of money. We agree that the value of money is dependent on constantly changing forces, which is why its value cannot be fixed.

It's true that the value of money cannot be fixed, because money is the measure of value. There is no higher standard of value against which to fix it.

The notion that QE = printing money or running the presses is ignorant or demagogic. Government spending could be compared to printing money, of course, but it is the balance that matters. In a severe recession/depression, the amount of money created should at least equal the amount of money extinguished by market forces. (Many trillions of dollars were extinguished during the '08 crash). The amount of money spent by the US government did not come near to countering that massive money holocaust, and much of the so-called stimulus did not even enter the real economy but was diverted to the banks.

All true.

I repeat my objection that money cannot be both a measure of value and a store of value. By 'category error', I intend to say that it is logically impermissible. An erg is a measure of energy; an erg is not a battery and does not contain any energy itself. The idea is absurd, not self-evident.

It would be more accurate to say that the erg is a measure of energy and does not contain any energy. But an erg does contain energy: one erg of it.

The value being measured by dollars resides exclusively in the real wealth of the country, not in the dollars themselves.

No, it's like ergs of energy. An erg contains an erg of energy, and a dollar contains a dollar of value.

Your understanding of taxation is also false.

Nope.

The government does not need tax dollars in order to spend, since it creates those dollars by the very act of spending itself.

That is just a kind of sleight-of-hand. It needs tax dollars in order to transfer purchasing power from the taxpayer to itself.

There is no kitty your tax dollars go into, from which government spending is drawn. The two operations are totally separate and unrelated in their real-world mechanics.

The mechanics don't connect, but that's irrelevant to the economic relationship. It's like a leaky submarine that is pumping out ballast to maintain neutral buoyancy: there is no connection between the leak and the ballast tanks, but if it stops pumping ballast, it's going down.

[quetzalcoatl]

The mechanics don't connect, but that's irrelevant to the economic relationship. It's like a leaky submarine that is pumping out ballast to maintain neutral buoyancy: there is no connection between the leak and the ballast tanks, but if it stops pumping ballast, it's going down.

Very nice metaphor, thanks.

There is a connection, just not precisely the one you think. Government spending is constrained, not by tax revenue, but by the resulting inflation when too many dollars chase goods and services. Increasing taxation functions to counter this by extinguishing money in the economy. It's a subtle but important distinction. It means governments should be looking at things like inflation and the velocity of money, rather than deficits. Deficits are irrelevant; they are effects, not causes. The campaign to 'fix the debt' rides on these misconceptions, and enables much mischief.

Indeed, the submarine is sinking. A most striking representation of this fact:



Central Banks are failing to meet their target inflation rates of 2%...regularly, over time. Switzerland now has negative interest rates on deposits. This is telling us something very important that we cannot hear.

[Truth To Power]

The mechanics don't connect, but that's irrelevant to the economic relationship. It's like a leaky submarine that is pumping out ballast to maintain neutral buoyancy: there is no connection between the leak and the ballast tanks, but if it stops pumping ballast, it's going down.

Very nice metaphor, thanks.

There is a connection, just not precisely the one you think. Government spending is constrained, not by tax revenue, but by the resulting inflation when too many dollars chase goods and services.

Correct. That's why taxation is needed to divert purchasing power from the private economy to the public treasury. As long as public expenditures exceed economic growth divided by velocity (which is typically a pretty small fraction of GDP), taxes are needed.

Increasing taxation functions to counter this by extinguishing money in the economy. It's a subtle but important distinction. It means governments should be looking at things like inflation and the velocity of money, rather than deficits. Deficits are irrelevant; they are effects, not causes. The campaign to 'fix the debt' rides on these misconceptions, and enables much mischief.

No, there's a difference between issuing money and borrowing money: the interest that has to be paid on the latter, which banksters demand to collect.

Indeed, the submarine is sinking. A most striking representation of this fact:

Right.

Central Banks are failing to meet their target inflation rates of 2%...regularly, over time. Switzerland now has negative interest rates on deposits. This is telling us something very important that we cannot hear.

Correct, except that those of us who understand money can hear it: debt money is nothing but thievery by private banksters.