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An Innocent Question
May 13, 2009 Money

Why does the Federal Government (via the IRS) NOT accept its own currency as payment of taxes? I have my own ideas, which I’ll share later. But this seems strange particularly given the views of heterodox monetary economists that argue the only reason a particular thing is money or has value as money is because the government accepts it as payment of taxes (which, by the way, is simply silly … ask yourself if money would disappear if the folks with the guns in DC decided to disappear too).

"4" Comments
  1. I’m not sure I follow … do you mean one can’t pay his/her taxes in cash?

  2. I’m not sure I follow either. It says right there on the Federal Reserve Note: we will let you pay your taxes with this piece of paper.

  3. But they do NOT allow you to actually do so – it is a sham. See here, “Do Not Send Cash.” http://www.irs.gov/pub/irs-pdf/i1040gi.pdf (page 65)

  4. OK– they do not let you send a wad of bills. You send them a check, and if it’s over a thousand or so you cross your fingers hoping you will not be penalized, not having sent them enough with your Estimated Taxes.

    This is consistent, since there are not enough pine trees in Canada and Maine to print enough bills, even Wilsons, to pay for six trillion.

    Two reflections on cash versus checks:

    1) When you sell ten heifers to an Amish Holstein breeder, you deal in cash, shake hands, and load the heifers on his truck after the cash has been handed over.

    2. The biggest check I ever saw, in a photograph, was Howard Hughes’s, for (thirty?) million to buy TWA.

    Will my friend from Lancaster now have to bring two trucks, one to bring the cash, and another to take the heifers?

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