The Goode tax plan

Suppose that you have $100 in your pocket, and you want to buy an $80 widget. So you head off to the widget store. You plan to buy an $80 widget and return home with the widget and $20 change.

Suppose that on the way to the widget store, you are intercepted by one of the government’s mobile tax agents. The agent demands 20% of the money in your pocket at gunpoint. You arrive at the widget store with only $80. Enough to purchase the $80 widget. You return home with your new widget but no change.

Suppose, instead, that on the way to the widget store, inflation occurs. The government prints 25% more money to pay for its latest government spending spree. There is now a 25% increase in the money supply, but no corresponding increase in real wealth. As a result, prices rise across the board by 25%. The price of the $80 widget goes up to $100. You arrive at the widget store with $100, just enough to purchase the $100 widget. You return home with your new widget but no change.

From your point of view – that of a wealth producer and consumer – what is the real difference between these two scenarios? Financially speaking, none whatsoever. In either case, you get a widget and no change.

From the government’s point of view – that of a wealth plunderer and parasite – what is the real difference between these two scenarios? Financially speaking, none whatsoever. In the first case, the government gets your $20. In the second case, the government prints $25 that has the same spending power as $20 did pre-inflation.

But there is a difference, of course. It’s the difference between, on the one hand, a central bank and a printing press and, on the other hand, an entire government department with more offices, officers and orifices than you can shake a stick at.

The Goode tax plan is to get rid of the Inland Revenue Department altogether.

The Goode tax plan is for the government to raise revenue by printing it.*

I’m no economist. Perhaps there’s something seriously amiss with my tax plan. Perhaps I overlooked to consider the adverse consequences of my tax plan on savers and those on fixed incomes. Or something. Feel free to educate me in the comments. But my tax plan is based on a premise that I expect no one to deny, viz., that inflation is a tax.

(*Of course. I put forward my tax plan only as a transitional measure. I don’t actually think the government should be in the business of taking money or printing it. Taxation should be phased out. I’m a libertarian, duh.)

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3 Responses to The Goode tax plan

  1. Brandon Hutchison says:

    “I’m no economist but…”

    This plan is inflationary but to what extent?
    It would seem the rate of inflation would be the same as the current tax take as a percent of overall income? What is this ? 20% 25%?

    An inflation rate of that size destroys savings … great for people in debt… but devastating for those who have saved money and live off interest… eg retirees

    I don’t understand why you have difficulty with the idea of taxing real income? It is very consistent with being a christian… taxation is a cost of living in a community…

  2. reed says:

    I don’t understand why you have difficulty with the idea of taxing real income? It is very consistent with being a christian…

    Submitting to taxes is as christian as submitting to being slapped. That doesn’t mean slapping people is consistent with being Christian.

  3. Rosjier says:

    He raises a good point though,
    “An inflation rate of that size destroys savings”
    Not to mention people on a fixed income, take your $100 to the supermarket to feed your family, and inflation means you can no longer do that.
    Printing money hurts low-income families a lot harder than anyone else…

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