The escalating war of words over who should pay taxes to fund the treasury is stalling economic growth.
The notion that the federal treasury needs your tax dollars is mythology. Since America is a sovereign nation and has total control over the creation of money, the government doesn't need to tax anybody; it makes money. And making money means changing the numbers on the scoreboard of national income.
The only constraint on this power is self-imposed.
All this talk about passing debts on to our children and grandchildren is poppycock. We pass the assets along to them as well. The only consideration for the federal government when creating money is the risk of inflation. Usually, inflation occurs when there is excess demand as characterized by very low unemployment and full capacity utilization.
We don't face those concerns today with unemployment at 9 percent and capacity utilization at77 percent.
There are two reasons that taxes exist. The first is to give value to money, and the second is to provide the federal government with a mechanism to control the economy. When the economy is weak, the government should lower taxes; when the economy is too strong, it should raise taxes. The distribution of those taxes should affect economic activity in the least disruptive way.
If policymakers would view economic management through these relationships, America would grow rapidly, and unemployment would collapse, along with the budget deficit.
Thomas E. Nugent
Hilton Head Island