

Ask HN: Daddy, what's "tax"? - Pistos2

My daughter just asked me this.  I could only laugh.
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bdclimber14
Take half her toys away, and say "I just taxed you."

~~~
codeslush
This is an absolutely beautiful way to define it! Made me laugh. Thank, you.

Now, give her a toy she doesn't like and say this is what you just paid for.

But before you let her get too mad, tell her to go ride her bike and inform
her that the toys she gave up helped pay for the streets/sidewalk on which she
rides her bike.

Not perfect, but could be worse.

~~~
beagle3
And that it also pays for your friend's cigars. Because the banksters have to
be represented in this analogy too.

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beagle3
I'm surprised I'm downvoted for this, perhaps someone would explain why -- a
significant percentage of budget goes to fund politician's friends and
supporters. Specifically, the $700B bank bailout of 2008 went to pay for
reckless bets by bankers. (Which were all too happy to take the profits, when
they were there, to themselves)

How is that not part of the tax system?

~~~
bdclimber14
I was down-voted quite a bit for my original, short, un-opinionated comment,
which really surprised me.

I think anytime you touch on a politically relevant topic, a lot of people
will dislike it, no matter what it is. Unless its like a human rights issues
like current Egyptian affairs.

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Pistos2
"It's like trying to eat, but before you can bite, someone takes some of the
food off your spoon."

~~~
pekinb
"It's like trying to eat, but before you can bite, you have to pay for your
share of the spoon."

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rick_2047
I know most of the people here did not take this seriously, but in an ideal
world this is how taxes would work (I am no economist so take this with a
grain of salt, this is what I think should happen).

"Government needs money to run. They have to develop infrastructures and pay
salary of public servants. Also they have to provide welfare to under
privileged and subsidies to student communities and such. They cannot just
print infinite number of notes so they have to take money from the current
cash flow. The cash flow here means things like purchases, salaries, revenue,
real estate etc. Now, to do that they have to decide how much to take from
whom. They cannot take a fix amount as not every mode of cashflow would be
viable with that fix amount. So they decide how much to pull from where. Thus
on income we have income tax. But that too is not fixed. You pay depending
upon the size of your income and nothing else. Thus ideally, the rich pay more
and poor pay less. On the other hand, you have things like sales tax, where
the government takes a fixed percentage of all the sales made by a company.

In short the government takes some amount of your money each time you make a
transaction... well most of the times. But rest assured, your money comes back
to you. The government gives it back in terms of infrastructure or services or
carnivals or social security or things like that."

I know this is not perfect, nor is it what happens in the real world. But this
is what should happen I think.

~~~
Someone
_They cannot just print infinite number of notes_

Actually, they could. Printing say 1 note for every 9 notes in existence would
lead to an inflation of around 11% and is equivalent to a uniform property tax
of 10%.

The reasons we don't do things that way I can think of are:

\- it would make inflation huge (government spending typically is over 30% of
GDP; that would give over 50% inflation)

\- it was not possible under the gold standard.

\- people would feel it as unjust that one's cash and bank accounts are
'taxed', but e.g. houses one owns are not.

\- because of the former, it would tax the poor way more than the rich.

It would be a really good way to stimulate consumer spending, though.

~~~
mooism2
Also, people would eventually stop using the government's currency, the bank
notes it printed would then be worthless, and the government would have to
start explicitly taxing again. Only now it would have an economy denominated
in a foreign currency.

~~~
rick_2047
In short, _They cannot just print infinite number of notes_

