• DRK

Non-Tax Revenue for the Stimulus Package

Updated: Apr 15

With everything going on today, I would be remiss if I didn't make a post that addresses it. Thanks to the C-Virus, people are losing money and governments are scrambling to deal with it (this means they are losing money too, ultimately). In the U.S., a game plan has been hatched to pass a $2 Trillion stimulus package. Could non-tax alternatives play a part in this? You bet they could, but they probably aren't going to.

This is going to be the largest stimulus package in American history. $2 Trillion given away is not an example of chump-change found at the bottom of a change cup that will never be missed. While this money is sorely needed right now in all facets of society, it will be missed. This means, it will need to be replenished later, which most people aren't thinking about in a time of need. Frankly, they shouldn't have to think about such a thing. Because non-tax sources of revenue are not more prevalent, however, they are going to have to worry about it later, indeed. Government is going to want that money back, and without more non-intrusive ways to collect, it's going to come at you directly, one way or another.

One of the typical routes that governments normally take to generate income is higher taxes. It's too early to know for sure, but there could be a likelihood we see higher levels of taxation in the future to help pay off the $2 Trillion loan that is being handed out. Make no mistake, it's a loan and not a gift. Politicians will have us believe otherwise, as they make a public show of how tremendous of a job they did (particularly those in the House of the U.S. Congress) by giving us all something like a gift, but that is just grandstanding so that you re-elect them again. It's not a gift, because the government is now far deeper in debt. We are all going to have to pay it back.

Granted, government financing of loans is certainly a non-tax revenue source, but should always be holstered when it gets to the point of creating national duress of wide-spread indebtedness, as I mention in the book. Given the magnitude of today's context, this is exactly what could happen. This is to say nothing of the transparency needed to make such a non-tax alternative work properly, and the Federal Reserve is anything but transparent.

As if improperly using a non-tax alternative isn't bad enough, not even using one at all might be worse. The U.S. doesn't even have a national lottery, which has the capability of generating billions, given the results of state lotteries and those of other countries. Then, there is the advertisement industry, which national governments could do well following the example of local governments, many of which have grabbed this ball with both hands in order to generate tax-free revenue. For example, in the U.S., there are many national magazines and newspapers of all types. These mostly steer clear of advertising, but local governments fill the pages in their publications with advertising revenue all the time. There is also the report of the environment clearing up due to the reduced level of economic activity, amid all the self-quarantining. This would be a great time for governments that don't already have an eco-tour industry on federal or state-owned land to begin strategizing for one and then implementing it. Even during this crisis, the outdoors is one place we can all go, in order to get out of the house. A cleaner environment beckons a paid eco-tour industry that can generate revenue. With all the land government owns, there is a lot of potential.

Bottom line, does non-tax revenue have a place at the table in our current situation? The answer is yes! We could rely more on a variety of non-tax alternatives to pay back the stimulus, instead of higher inflation (and a poor non-tax alternative) that will be coming soon thanks to the stimulus (likely with higher taxes to reign in hyper-inflation, as explained in the Modern Monetary Theory (MMT) portion of The Next Step). We just need someone to set the table and start pulling in more non-tax revenue from sources that are good choices and managed well.



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