U.S. Dollar (USD)

In his 1996 and 2000 Republican Pesidential campaign, Steve Forbes was the populist candidate due to introducing the concept of a "Flat Tax." The concept involved replacing the progressive income tax system with a simpler tax in which all tax payers paid the same percentage rate. The arguments involved fairness and a reduction in corruption along with greater participation due to a simplified system.

But what if there was a perfectly fair tax system? What if even the black market was taxed as surely as the middle class? I would expect such a tax to be incurred precisely as the government needed the funds or as the taxable event occurred. Fortunately, such a tax is already exists.

While being flat, this system is also progressive. It taxes money whether in a Swiss bank account or in a Christmas savings. It taxes whether the money was earned through legal or illegal means. It also differentiates between whether the money was held for a long or short period of time. I call this tax the "Flatter Tax."

This tax occurs each time that the government prints more money than it actually has. The taxing occurs by reducing the value of its applicable currency. Those with more currency pay proportionally more tax.

Those with tangible assets (such as property) are not taxed. Imagine if the government published the "flatter tax rate" and stopped the income tax. The markets could stabilize the dollar's fall and the downward trend would become much more predictable. The current unpredictability in the dollar is due to the lack of visibility of the overprinting and deficit spending. Under the Flatter Tax there would be no need for deficit spending. Adjustments in the tax rate for GDP growth would be automatic and immediate.

I know that it is somewhat shocking to think of replacing the current income tax system, but isn't NOW as good of a time as any?

The aging of the baby boomers will cause a major shift in capital from other government expenses to Social Security. The debt could be as large as $70 Trillion.

The amount of US government debt has reached astronomical proportions as commentators like Contrary Investor have detailed. The major foreign holders of US Treasuries have begun pulling back. In the next few months to a maximum of a few years, when the US government attempts to refinance, the riskiness of the debt and the currency will become unavoidable, provoking a flight of capital.