A while ago, I talked about one reason the U.S. tax system was hypocritical. If Jones makes wheat and maple syrup for himself, he is not forced to pay taxes on this. However, if he and Smith agree to split up the work – with Smith making syrup and Jones making wheat, and then they trade with one another – they are taxed. When I make something myself, I pay no tax. When I make something for someone else, I am taxed.
Therefore, our “modern” government favors self-sufficiency (and poverty) and it favors a reduction in interactions with strangers. Seems ironic, no? After all, don’t those that worship at the Church of the State believe that unfettered capitalism results in a reduction in community, and that only by the good grace of the state can we prevent a war of all against all from destroying the community fabric? And aren’t those in favor of the stimulus and other government programs doing so on efficiency grounds?
Well, here is some hypocrisy on an equally grand scale. Consider government’s legal tender laws. A legal tender law says that merchants are required to accept Federal Reserve fiat notes for payment of goods or the elimination of any debts owed to them. So, if Smith sells his syrup to Jones, and Jones wishes to pay him in Federal Reserve Notes, Smith is compelled at the point of a gun to accept those notes. If Smith wishes to only be paid in gold coins, or only in maple syrup, that is not permissible by law (if he does not accept FRN from a customer). This is hypocritical in and of itself.
But legal tender laws apply only (it seems) to monetary exchanges. People are free to barter as they please and they are free to give gifts as they please (and reject them). If syrup becomes more widely accepted as a medium of exchange, and stores open up as “barter only” where the only items accepted for payment are different sizes and compositions of syrup, this would not be a violation of legal tender laws. But turn the sale of wheat onto an organized exchange where money is exchanged and our syrup merchant would be hauled away for not accepting FRN from a customer. We will talk more in a future post about the oppression of legal tender laws, but for now, simply consider that this other area of government policy favors the Stone Age way of life over the modern way of life, unless you wish to conform with the demands of the currency monopolist. Yep, that’s Progressive.
Great point, I never thought about that before. It seems to punish efficiency and peaceful/voluntary exchange.
One other item that has long bothered my dad. When he buys a new car he pays sales tax on it. If that car is sold 5 more times over its useful life, each buyer must again pay sales tax on it. Why?
I see your point but there doesn’t appear to be a practical way to solve the tax issue, or that is – the ways I can think of would cost more than you’d gain as long as 99.99 % of goods are exchanged for money only.
The FRN matter I agree though seems idiotic, but then again this article seems quite one-sided – there’s got to be some reason for it?
Bear in mind, I’m not American so chances are, there’s something crucial I’m overlooking 🙂
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