Taxes are the most obvious way government gets its money. Taxes are money taken out of the collective pockets of the people and put into the collective pockets of the politicians.
Debt is money borrowed. It is the favorite instrument of governments big and small to get money by promising to tax later to pay.
The problem with government debt is that governments aren’t competing in the debt market like everyone else. They are the elephant in the room. They can outbid anyone, and do so without little worry.
Income is money that government earns by participating as an actor in the free market.
That said, there are some markets where government is one of the participants, such as the justice market. In these markets, it’s very reasonable to have people who want to participate pay a fee to the government for its services. Ideally, the fees would match the cost of the services so that government doesn’t have to tax or borrow or inflate to provide the services.
Fines are money collected as punishment for crimes committed by individuals or corporations. Fines are a useful remedy, quite easy to collect and quite easy to impose.
Inflation is the last way that government can raise money. This is what happens when government simply prints new money and issues it. The inflation is a sort of invisible tax. It’s a tax because it reduces the value of all the money everywhere at the same time.
Mar 29th, 2015
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