It’s hard to say for sure. I think we would see currency appreciation in the 50% tax scenario, since so much money would be taken out of circulation. There wouldn’t be distortion from government purchases and that should make entrepeneurs more responsive to the needs of consumers and businesses, rather than trying to tap into government largesse.

The outcome of the 25% scenario also depends on what the government did with the money. One could envision (or should I say dream?) a situation where the uses were reasonably tolerable, say for the building of roads and so forth. Or one can imagine the government using said money for useless weapons, stuffing the pockets of its cronies, and unnecessary wars. So certainly the result of the scenario involving the more benign use of tax money would be much more favorable than the outcome of the latter scenario.

So unlike the mathematical economists who Sheldon so eloquently criticizes, I cannot give a tidy answer to your question, since so much depends on how the government actually operates, though if forced to answer, I would tend to assume the worst will come of their expenditures.

DSW

Would you say, in the situation you outlined, that A would still have a better standard of living than if he moved to the country taxing and spending 25% of his income?

Under the 50% taxing/no spending government, one would expect to see an accelerated depreciation of the currency, right? Plus, there would be no distortion in the production and distribution of goods resulting from government purchases…. How would that situation affect the decisions of entrepreneurs, do you think?

Assuming that the government could be counted on to NEVER spend the 50% tax it imposes (a very major supposition, I might add), that would indeed be preferable to the 25% tax, if the 50% tax was paid in currency. The “tax” would not impact people, other than it would distort the relative wealth of people to the extent that they started out with different amounts of assets. For example, suppose A started with assets = X and B started out with assets = 2X. Suppose that A had an income that would allow him to save 20% of X at the end of the year and B had an income allowing him to save 10% of X at the end of the year. Before the tax is imposed, A would end the next year with savings of 1.2X whereas B would end the year with 2.1X (i.e. A would become 57.1% as wealthy). After the tax is imposed, A would end the next year with savings of 1.1X whereas B would end the year with 2.05X (A would become 53.7% as wealthy). Thus, in the tax regime, A, who has a greater income, would have a harder time becoming as wealthy as B, who started out with more savings.

D. Saul Weiner

Would it be better to live in a society where the government imposes a 50% tax on all incomes, but never spends the money on anything (just stores it in an underground vault; or, in the case of fiat money, dumps it in an incinerator), or in a society that taxes 25% of all incomes, and spends every dollar it obtains in taxes?

Easily. Every CHOICE is to the perceived self-interest of the CHOOSER. Some choices are voluntary and to the mutual self-interests of the choosers. Some choices are biased by force or ignorance (fraud) which leads to a predator / prey relationship between choosers.

All economic choices are binary. Trade or not? Production or waste? This is mathematically expressible. The relationship describes the eternal war between the productive (those who produce more than they consume) and greedy (those who consume more than they produce). This war is in the final stages of killing civilization and, most definitely, the US. PROOF:

http://www.nazisociopaths.org/modules/article/view.article.php/c1/32

Learn how to THINK (choose correctly) and, YOU may have a fighting chance navigating what is coming:

http://www.nazisociopaths.org/modules/article/view.article.php/c1/33

Bill Ross
(Electronics Design Engineer)

This new upper layer of “leaders” have infiltrated the schools and colleges, the foundations, media, entertainment, the judiciary and most legislative bodies. They are joined together by a love of abstract theories, a desire to hoodwink the public, the appeal of the special privileges their rank provides them, and an emotional need to rule from the top. They appeal to everyone’s most charitable and utopian dreams, but denigrate religion, thrift, hard work, and the free market. They will be the end of America as we know it.

A curiosity attends this elite–they are the smartest and brightest, attended the best schools, and speak very knowledgeably on many subjects–but have little practical experience at anything. They rely on mathematical models, complex reasoning, and claim to be rational, but their programs consistently fail to achieve the predicted results.

Kurt Vonnegut addressed this paradox in “Galapagos,” wherein we learn that the human race was wiped out simply because their brains had gotten too big–as a result of which, their thinking got so convoluted that they could no longer deal effectively with reality: “The big problem, again, wasn’t insanity, but that people’s brains were much too big and untruthful to be practical.” We see these types already usurping control of America. It is certainly a time to go back and rely on common sense and ignore the advice and analysis of experts. The best place to start would be in the area of economics where modelling, theory, and intellectual certainty has laid us waste.