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[edit] The effects of changes in the dollar value are complicated and IMO hard ...

Suggestion by Tim Plaehn on 2007-12-22 10:54:31

The effects of changes in the dollar value are complicated and IMO hard to predict. Reading this article brings a couple of thoughts/questions to mind. First, what factors would change prospects of the dollar from weak to strong. Second, Oil prices are a big cost in our economy and oil is priced in dollars. If other companies are buying oil at lower relative prices due to stronger currencies, what advantages does that give them. Example: At $1.40 for a euro, a barrel of $90 oil only costs $64 euros. Many mideastern oil producing countries have their economies pegged to the dollar, giving other currency economies a financial advantage when the dollar is weak. The same look can be taken at precious metals which are also dollar priced, but whose values may be significantly different in another currency.

Suggestion by Tom Arthur on 2008-01-07 11:12

The most interesting change would be that the idea of a weak or strong dollar would go away. The dollar would be allowed to "weaken" as a method of taxation. The weakening would be published as part of the Federal Budget.

Add comments or discussion related to this suggestion here. </blockquote>

See The Dollar for broader Dollar Dicussion

[edit] Flatter Tax

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 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?

[edit] Effects

The effects of a tax by printing dollars would be difficult to model. Obviously there would be an initial mass move to real estate type investments.

Additionally, only government actions that cause inflation would appear as a tax. Those that do not cause inflation would appear tax free. For instance regulatory functions that make the market more efficient may appear to be "free" in terms of taxes.

Tom Arthur