Wisedocks

Why Pay Income Taxes?

I've always wondered why we pay income taxes if the federal government can just print more money when it needs it. After some light digging, I think I've wrapped my head around the core premise.

Income Taxes Give the Dollar Value

That's it. That's the main point. Income taxes give the dollar value. It's not the only reason they exist, but it's a big one.

Think about it this way. One hundred years ago, company towns were all the rage. If you worked for the Pullman Company, you often lived in a Pullman house and shopped at Pullman stores. You were also paid in Pullman scrip, which could only be spent inside the Pullman ecosystem.

Now imagine this scenario: a president abolishes all federal income taxes. One side cheers, the other panics about defunded programs. But corporations see something else entirely, an opening.

If companies no longer need dollars to meet federal tax obligations, they could start paying employees in a private, made-up currency that only works inside their own systems.

Walmart Spark Bucks?

Walmart is practically built for this. They employ millions of Americans. They could pay workers in "Spark Bucks" and accept them at supercenters, neighborhood markets, and gas stations. Murphy fuel stations at Walmart locations could take them too, then exchange Spark Bucks for dollars at corporate headquarters.

Soon, companies closely tied to Walmart, or simply chasing its customers, might follow suit. Property managers, mortgage companies, even smaller utilities could begin accepting Spark Bucks because Walmart is "good for it." Each time Spark Bucks are exchanged for dollars, fewer remain in circulation, increasing their value.

That "exchange" mechanism is what taxes do.

Federal income taxes pull money out of circulation. They don't fund spending the way your paycheck funds your rent. They exist to create and maintain demand for the currency and to keep inflation in check. And because taxes must be paid in U.S. dollars, the government forces everyone, including massive corporations, to keep operating in dollars.

The IRS will not accept your Spark Bucks. So at some point, Walmart still has to pay you in real money.

That's the quiet brilliance of the system. Income taxes help maintain demand for the dollar and prevent corporate currencies from turning into parallel economies. This is, of course, a simplified explanation of a much more complex system.

States, counties, and cities are different. They can't print money. Your taxes do directly fund your local police, schools, and infrastructure. But federal taxes don't fund the federal government in the same way.

It Is Still A Scam

With that said, income taxes are still a scam and we really do need to find an alternative. Worse yet, are the tax filing companies who keep lobbying congress so that we also have to pay them to file our taxes. On that note, don't give your money to the large companies. Use FreeTaxUSA, federal filing is free and they charge like $15 to file your state.