wouldnt it be infinitely simpler and easier to simply print more money? yes, printing money causes inflation, but so does taxation.
when you put a tax onto people you take a part of their wealth, exactly like when you generate more currency and the existing monetary value is simply "spread" onto more pieces of paper – the value of existing money decreases so its basically being taken from the people anyway
considering how much effort and cost it takes to calculate and collect taxes, why not just skip the middle man and simply print the money the government needs in the quantities that would reflect the budget needs?
in the context of fiat(!!!) currencies, whats the point of taxation?
byu/confused_caterpillar inAskEconomics
Posted by confused_caterpillar
1 Comment
Because it’s not actually the same.
Taxes don’t *have* to cause inflation.
Some taxes can cause a change in the price level, but this tends to be a change that happens once, not continuously.
If, for example, we introduce a new 10% sales tax and that sales tax gets passed fully onto prices so that prices increase by 10%, that’s it. Prices will be 10% higher and stay there, while the government can now collect that revenue in perpetuity.
Financing the government via money creation however requires *perpetual* money creation and a *perpetual* increase in the price level. So if the government needs to print money equal to 10% of the money supply, this will translate to about 10% higher prices. And then again next year, and then again the next year, and so on.
Most countries also separate fiscal and monetary policy on purpose and a big reason why is that countries that ended up with hyperinflation did so because governments printed more and more money to meet their fiscal needs.