For what it's worth, the US income tax system as we know it was created in 1913.

The US managed to fund a military, roads, bridges, schools, hospitals, and other good stuff before that year, right?

> The US managed to fund a military, roads, bridges, schools, hospitals, and other good stuff before that year, right?

Mostly, no, the United States did not. The states did some (less than they alone, ignoring the feds, do now), the US did a little (far less than now, and funded by extensive use of simultaneously regressive and contractionary tariffs and excise taxes) at normal times and when it scaled up imposed special taxes for the purpose (including, starting in the Civil War, income taxes.) For the military part specifically, prior to WWI (and, to—IIRC—a lesser extent between WWI and WWII), the US had (especially aside from the Navy) very little standing military, relying on expanding out from a small cadre via conscription and rushed training in crises.

Back then we had a LOT more tariffs. Free trade is a new thing. Tariffs are taxes too, just way more regressive since they raise the prices of almost everything.

Indeed, yet it holds these concepts hostage whenever someone suggests we eliminate entire classes of taxes.

The truth is the tax system has two primary objectives:

1) to prevent upper middle class from the type of long term wealth accumulation that allows the plebs to enter (and challenge) the elite

2) To fund a hyper scale bureaucracy that constantly seeks the lower bound on the efficiency curve

To be clear, a large component of the "hyper scale bureaucracy" is nominally privatized within the military industrial complex.

> to prevent upper middle class from the type of long term wealth accumulation that allows the plebs to enter (and challenge) the elite

The capitalist middle class (the petit bourgeoisie, the thing thar Americans tend to call the upper middle class because Americans refer to a very large segment of the working classc , including the whole of the proletarian intelligentsia, as “middle class”) aren't plebs, they are, more like the equites.

> How do you fund

From the GP...

> The government takes some of that value by simply creating more dollars.

which have no value, because the value they have derives largely from the ability to pay taxes with them.

OP's comment makes no sense.

Why does the value of a currency derive largely from the existence of income taxes?

Because they induce a demand that might otherwise be satisfied by a different currency.

The low inflation in the US before income taxes were introduced falsifies the argument, no? No other currency was widespread in the US prior to income taxes. I still don't actually understand the argument, to be frank.

The US used to exchange gold for dollars which gave them inherent value.

That is no longer the policy and other currently existing currencies do posses the potential to compete with USD. Why would I choose to settle my debts in a rapidly-inflating currency that is backed by nothing?

Well, I agree that the combination of printing money with no taxation isn't going to work due to inflation.

I just didn't understand the statement that a currency's value "derives largely from the ability to pay [income] taxes with them". That statement by itself is historically false, as the gold-backed currency shows. It still makes no sense to me even without gold-backing. As long as the money supply is kept relatively stable, all you need is for a few government services to operate exclusively in USD (e.g. welfare, where funds are raised via land tax or carbon tax for example), and for a reasonable amount of trust in the government, and to perhaps kickstart the group delusion of trust with initial gold-backing, and you're all set. I can make sense of the statement strictly in the context of money printing, where you need the offsetting deflationary impact from taxation (not necessarily income taxation), but that meaning wasn't so clear from the original statement that I was responding to.

It's true that it's not strictly necessary that the "backing taxation" for this scheme be specifically on income, but due to historical circumstance this the largest pillar currently supporting the US system. Theoretically income should be related to productivity so it is a reasonable backing to balance against inflation. The onus is on those who'd like to replace the system to justify a better alternative.

Government debt; so long as that exists then the value of the currency will be derived from the ability to fund that debt through raising revenue - i.e. taxation. Without governement debt, different story.

How are those concepts related? Currently I fund, under threat of armed men coming to my house to arrest me, a framework that largely aims to undermine, regulate, and eliminate my rights.

The states unconditional right to your labor has no mechanism to encourage preservation of rights.