I think you are confusing cost inflation with an increase in the money supply. The way the US government funds deficit spending is not by increasing money supply (though it could) but by issuing debt in the form of US Treasury bonds. That is a transfer of money from bond investors to the government. No new money is made. This is distinct from the way that banks issue loans which is by creating new money in the form of credit (but that credit money gets "burned" as loan principal is paid back). So federal taxes do not actually control inflation in the way you are describing. Since federal deficit spending is not financed by increasing the money supply, it can only cause price inflation if it increases aggregate demand over the current productive capacity of the economy. An example would be paying more for healthcare subsidies when there's a shortage of doctors. Or subsidizing demand for housing with more mortgage subsidies when there's a housing shortage. Taxes could also increase inflation if they have the effect of reducing supply of some goods or services (like tariffs do).

Fun small print. As though that's not the exact mechanism of the brutal inflation the US has suffered the past 5-6 years. The US money supply says it all. There are no other serious buyers for $20 trillion in new garbage paper debt every ten years. It's inflation by currency destruction plain and simple and there are no other paths. It's also why gold is $5,000 instead of $500.

All forms of debt are money creation. All loans are money creation. Fractional reserve banking is money creation. It doesn't have to be "oh now we are making dollar bills" to count.

As the political arm of the government chooses to run deficits in excess of growth plus inflation, then (a) that causes more inflation, and (b) the central bank raises rates, increasing the cost of government borrowing, causing bigger deficits.

This escalates as a result of the central bank trying to control the effects of high government spending by applying a mis-matched policy tool (interest rates) in place of the politicians who have abdicated their responsibility to use a matched policy tool (taxation). Either it spirals out of control, or more and more of the government budget is devoted to interest expense (direct government transfers of wealth paid exclusively to the debt holders) and less of it is spent on providing actual government services (that benefit all taxpayers).

If the central bank does not raise rates, of course, things go even more badly.

Given that these were constant then then inflation is just a ratio of Productivity(how much things cost) to total money supply (money printing).

So if the government just prints a similar amount of cash relative to the supply as the percentage productivity increase then we get a constant value of for the dollar.

In practice though a small amount of inflation is good in a currency as it encourages spending, if you have deflation this can cause people to speculate on holding cash and not engage in commerce which lowers productivity and thus can cause even more inflation itself.

The real problem is that wages are not growing at the same rate as inflation meaning wealth is being transferred from the working class to the owing class as their businesses get more efficient from the cheapened relative labor costs.

Sure it does. That Treasury debt is often bought up by the FED in huge tranches by increasing the money supply, they call it things like "unlimited QE (quantative easing)". For example, the FED announced unlimited QE on March 23rd, 2020 causing the stock market and real estate market to bounce. Trillions of new dollars were created in these last 5-6 years, and that's why everything costs more. The USG continues to overspend, and too often on dumb shit too (e.g. tax breaks for the ultra wealthy).

This sounds like a 2-party government problem, not a tax problem. Plenty of countries do just fine spending that money to provide healthcare, unemployment, etc to their citizenry. Only really seems to be the US that views this as a negative

https://www.statista.com/statistics/283221/per-capita-health...

US $12k

Germany $8k

UK $6k

Medicaid + Medicare is 22% of all US federal spending. Defense is 13%.

Here is another link to the OECD numbers directly. Is is 12k public, 14.8k Public plus private.

https://www.oecd.org/en/publications/health-at-a-glance-2025...

Can we agree on the 12k and move on now?

The USA is very corrupt, true. But getting rid of the "huge administration" and burning tax receipts is not going to solve that. How could it?

One of the roles of the state in a modern society should be to ensure no one is left behind to starve, wither and freeze amongst the incredible resources we (as a society) have accumulated.

That takes administration. That takes resources. That is what your taxes should be used for.

I agree that far too much is used to give aid to the powerful, but the solution to that should not be to condemn the weak.

Burning taxes and de-funding the administration is exactly that: condemning the weak.

In this model government just prints all the money it needs in order to function. Taxation isn't used to fund government, it's used to give your currency value, and to stop inflation running out of control. Metaphorically, you might as well pile all that tax take up and burn it, because once you've collected it it's performed its function.

This is a very simplistic take on MMR, and I don't think it would work in the real world, but spending does precede taxation.

The government's role is whatever the people voting for it decide it to be - maybe to defend the borders, maybe to educate everyone, maybe keep everyone fed, clothed and sheltered.

The issue is, again I don't really care about the US or your government, some governments come to power on a platform of welfare. As long as they keep giving people "welfare" they will continue to be voted in power. As such, they will distribute wealth created in that country towards the goals of staying in power.

Myself, without being special, I never found myself having the same needs as this majority. Unfortunately, since I'm a minority (middle class), without the means to avoid being coerced into contributing to this plan (not super-rich), I'm left without recourse.

The weak are intentionally condemned through poor education and by voting idiots that promise them bullshit to get elected, not because the government doesn't have enough tax money. This cycle will never break by allocating more money, and the last 100 years have plenty of examples in that sense.

The real solution though is for the legislative branch to not be beholden to those same people and be able to quickly and effectively close tax loopholes as they are discovered.

The majority of leverage (debt) in the stock market is not people making wild bets, its just basic functions from institutions.

But even if we narrow the definition to the boogeyman image you have in your head about "leverage," if you remove it you've just made the market radically less responsive to information and arbitraging prices nearly impossible, and ultimately the economy less efficient in broad strokes.

You'll say "fine, who cares cause it'll stop [insert historical bubble example], and also I saw a reddit comment that said all economists are dumb!"

But most people have no idea how big a role leverage (aka debt) plays in just the basic functioning of the capital markets.

Putting a brake on the market might also sound good to you in theory. But the stock market is how the most important capital flows through the private economy, slowing this down is defacto slowing down the economy. Most people don't understand what slower economic growth means for your quality of life over the long term. Just 1-2% slower growth than the average, and the US's entire system collapses in 15 years (France is currently dealing with this reality in slow motion, their debt is now rated worse than Greek debt).

An easier example to understand: a pie that isn't growing is a zero sum pie. Ambition in a zero-sum world requires violence.

How does that work when a house is used as collateral on a loan? Or artwork?

The loans are just a symptom, the problem is in the Estate Tax, and those loans are being used as a tool to wait out the clock and then dodge dynastic taxes entirely.

Remove the final loophole, and they'll stop playing weird games to get there all on their own. Plus it'll be way less-disruptive to everyone involves in regular loans for regular reasons.

You're missing the loophole, it's the the "step-up basis" rule, which dramatically affects the amount of tax on that liquidate-to-repay event.

1. Repaying 1 day before the owner dies: Liquidate $X, of stock, which 90% of it are capital-gains, heavily taxed.

2. Repaying 1 day after the owner dies: Liquidate $X of stock, which is now considered ZERO gains, almost no tax.

This massive discontinuity also applies when it comes to the transfer of stock to inheritors, and any taxes they might pay for liquidating it. A day before, they get a stock that "has grown X% in Y years." A day later, they get a stock that "has grown 0% in 0 days."

> It could delay paying taxes until you die, but you can't escape it.

But they did escape the taxes, or at least the "gains" portion of them! For decades, the unrealized gains in growing assets were "eventually" going to happen someday... Until, poof, all gains have been forgotten.

That assumption just isn't true: Loans are made based on risk and the expected ability to repay. Collateral is an optional and sometimes partial of reducing the lenders' risk, it bears no firm relationship to the amount being sought.

To illustrate, imagine a Debtor borrows $5,000 and offers up one of their child's crayon drawings as collateral. For private reasons we cannot see, the Lender accepts this deal. Do you truly believe the crayon-drawing has been proven to be "worth at least $5,000"? Would you joyfully jump at the chance to buy that crayon-drawing for a mere $1,250, confident that you could resell it for an easy $3,750 profit?

Probably not, and that's assuming everyone is acting ethically, we haven't even started to talk about how the Debtor and Lender could collude to game the system.

> So just use that amount.

At this point, you're probably thinking: "Very funny Terr_, but we both know the crayon-drawing obviously wasn't covering the full $5,000 loan here."

Yeah, but how did you reach that conclusion, what mathematical steps did you use?

I'm pretty sure you applied an independent judgement of what a likely crayon-drawing "should" fetch in some hypothetical future. That's quite reasonable, but the fact that you had to do it shows that the loan-basics are not sufficient to solve the problem.

Real estate mostly isn't subject to the "I sold one for a huge sum, but the price would tank if I sold them all" effect, unless you own immensely much real estate.

But either way, just a lien on sale of the properties. We can still give the option of paying wealth tax according to valuation directly (in $) instead of in natura (in Y), then there's less to complain about - and as a bonus, we get revealed preferences on how inflated people think the prices of their assets are.

Also the term "asset" exists and is used in accounting

How? What is the difference between "stock" and "inventory"?

We all know that 10 million Ys maybe not sold for $10 billion dollars but it gives you enough leverage to buy a social network and name it Y

1. No, it's not "easier" because it's hard-if-not-impossible to accurately and objectively judge the present-value of many types of assets. Even the case most-familiar to working-class folks, property taxes, nobody really likes/trusts the outcome.

2. We don't tax work, we tax income, because actual transactions between people with "skin in the game" are harder to fake. The extent to which wages are preferred as a subset of income is separate from the wealth-vs-income split.

You can easily get within 10% of the "real" value on most assets. And, in particular, assets like stock have a built in ticker to tell you their exact current value.

This sort of evaluation happens all the time privately. For example, car insurance companies have gotten extremely good at evaluating the value of a car to determine when to simply total it.

The only thing that really makes it tricky is hidden assets or assets with no market value.

The likes of the richest people, who I think most of the "tax wealth" people are thinking of, have the majority of their wealth in equity. It's easy to tax the majority of their wealth.

This does not need to be a perfect system to be very effective at generating revenue and redistributing wealth.

You buy 1 BTC at $60k in 2024. In 2025 it’s valued at $100k, so you pay taxes on $40k gain.

Now it’s 2026 and you finally decide to sell the BTC for the original price of $60k.

Except you’ve paid taxes on $40k in paper gains that disappeared before you sold the asset.

How do we solve that?

(Replace “bitcoin” with “startup stock option” if you really want to illustrate the problem - imagine having to pay taxes on stock options you decide to never exercise)

People advocating for a wealth tax aren't pushing for a tax on gains and losses but rather the total asset value. I've seen 1% and 2% bandied about.

So in 2024, you'd pay $1.2k in taxes (at 2%). In 2025, you'd pay $2k. And in 2026 you'd pay $1.2k

Though, usually, there's also a minimum wealth paired with the tax. Again, I usually only see it for things like individuals with over $100M in assets.

For options, it'd still be the same thing. If the strike price is $1 and the actual price is $60 and the option is vested then you'd be taxed on the $59 per option you hold.

This only gets difficult if you are talking about options in a privately held company. But, again, that's not really the case for a lot of the most wealthy who the wealth tax is targeting.

You hold Enron stock. You’ve been taxed 5% annually on the holdings for the past 5 years. To pay the tax, you decided to take out a loan instead of selling shares to pay the tax (you want to stay invested).

Someone discovers Enron is a fraud, the stock goes to $0 and you go bankrupt because you can’t repay the loans you took out to pay the tax on a (now worthless) asset.

But yeah, if you take out a loan against your home and the housing market collapses and you lose your job (ala 2008) you can end up destitute. The stock market is always a gamble and this doesn't make that better or worse.

And this hypothetical me, having to pay a wealth tax, is way way over the line of needing a financial advisor, so that advisor will be telling me it's a bad idea to take out loans to buy stock.

Right, and at this point in the argument it’s also worth asking ”pay taxes with what?” which also quickly makes the idea of taxing valuations obviously absurd.

It would force any value creator to sell his creation, which basically destroys the mechanism from which all welfare for anyone in our societies currently originates.

How do you handle your neighbor who discovers he has a $2m Pokémon card in his closet? Is he forced to sell it to pay the 5% if he doesn’t have the cash on hand to pay the tax?

It’s a messy proposition. I’ve yet to hear a clear proposal that doesn’t have sticky edge cases.

Generally speaking, that's the point. The wealth tax is trying to combat wealth inequality and the only way for such a policy to be effective is if those with considerable assets wealth decreases with time.

> How do you handle your neighbor who discovers he has a $2m Pokémon card in his closet?

Usually that's handled by having a minimum asset requirement before the wealth tax kicks in. 100M is what I've seen. It'd be a pretty easy tax to make progressive.

> It’s a messy proposition. I’ve yet to hear a clear proposal that doesn’t have sticky edge cases.

I've given the proposal I've seen in a different comment. Perhaps you didn't see it? But in any case, taxes are always messy. It's not as if you can't refine them with more and more amendments to address different scenarios as they come up. I don't think the "messiness" should be what keeps us from adopting such a tax system. There will almost certainly be a game of cat and mouse between the regulators and the wealthy regardless the proposal.

Don't let perfect be the enemy of the good.

In From 1965 to 1995 the richest man in the world had about $30-40b in today's money. This was more than the 1945-1965 era, but way less than the mess pre-war thanks to aggressive action to limit wealth.

Today the richest man in the world has $300b, Rockefeller levels before the 1929 crash.

I think it's more like 800B right now.

Similar things happen with (on the way to) "bankrupt" corporations that have large tax losses that can be applied to future profits.

Also because taxing income (or other cash) is disinflationary. Taxing assets is inflationary because it forces sales.

I can see how taxing assets could result in more selling than would have occurred otherwise.

But all else being equal, an increase in selling tends to put downward pressure on prices. So I don't see why an asset tax would be expected to cause inflation.

Taxes raise inflation as they increase the production costs. If you tax too much wealthy people, they will leave, and take their capital away to invest it elsewhere. This as a result will lead to inflation due to lack of available capital for production.

Are we not tired yet of the various versions of the Reaganomics boogieman? When are we going to grow out of trickle down economics mentality?

There are different kinds of wealthy people. Some built their wealth through talent and luck. Some inherited it. Some gained it through state cronyism and clientelism.

Some own scarce assets (like real estate). Others created new assets (e.g., startup founders).

You can dislike Elon Musk, but his owning a large stake in Tesla doesn’t make others poorer. That’s not true of a landlord who corners housing supply in a city.

Wealth taxes are essentially revenge taxes without a clear objective. France tried one for years. It was costly to administer, riddled with exemptions, encouraged avoidance instead of productivity, and sustained an industry of tax specialists. The revenue was largely recycled into clientelist spending, sometimes increasing the wealth of the same elites (e.g., via housing subsidies).

If the goal is to curb land hoarding, implement a land value tax. If it’s to reduce dynastic concentration, tax large single-heir inheritances more heavily and lower the rate when estates are widely divided. If it’s to reduce cronyism, cut state spending, simplify regulation, and strengthen competition.

You say this like it’s a bad thing.

Except for the fact that, without first solving the problem you responded to, yours is impossible to solve

Those tax dollars just go back to the wealthy in the form of interest payments on government bonds, which they own.