brent

I ❤️ this reply to me. The very best of X.

Since you are keen on eliminating stupid laws, how about co-sponsoring a bill to end taxation based on citizenship? @RepMGP @RepLaHood

But Americans are happy to tax its citizens who don’t live there!

How long will FATCA survive in this new world? @ExpatriationLaw

When is @theallinpod going to discover citizenship based tax? There’s nowhere @friedberg can move to escape what he fears is coming so long as the US continues to impose its tax based on citizenship vs taxing based on residency. I strongly encourage @chamath, @Jason and @DavidSacks to get involved with the cause to end citizenship based taxation and hold President Trump to his campaign promise to end double taxation.

Project 2025 does call for the elimination of income tax in favor of a consumption tax….

It’s so clear we need to change the basis of taxation. If tax were collected at the protocol level and were a very modest money flow tax of 0.5%, none of this reporting would be needed. Similarly with money flow taxes on deposits into bank accounts. Folks like @DanNeidle worry about cascading if we moved to a money movements tax, but the point is the income tax only serves the compliance industry. Ever more reporting, ever more complication. For what? Nothing. A 0.5% tax on money movements in lieu of if all other taxes would solve so many issues. Economists want some idealistic perfection that isn’t the real world. It’s simply time to rethink taxation from first principles with the paramount aim of simplicity. The income tax is no longer fit for purpose.

In Monopoly, when the banker gives out free money to keep people playing — which in my experience is what happens at some point in the game when people threaten to quit — it only delays the inevitable. The players with all the property always end up with the money again. Printing money doesn’t work. What most people miss is that redistribution of income does not bring down asset prices. The State can tax wealth away from the wealthy and give to the poor but that money will still circulate and wind up back with the wealthy unless coupled with policies to encourage asset ownership more broadly at the same time. That’s what’s gone wrong in my view: monetary and fiscal policies that have expanded the money supply chasing the same amount of assets by and large together with too few policies to enable broader ownership of assets. Let’s remember the Modern Monetary Theory (MMT) folks who said the government balance sheet can expand and not cause inflation because the government will tax back the spending. The flaw in this theory is the behavior of politicians is never to tax it back and if they do, they wouldn’t “burn” the money out of there but rather spend it. Remember, money is created in two ways: private credit and government “printing”. Money is destroyed when loans are repaid or the government takes in money and doesn’t spent it. Unless the government were to tax wealth and not spend the tax proceeds, asset prices would remain high because the same amount of money would be in the system. That’s the flawed thinking. I actually don’t think a society can tax its way to a reset. Some combination of debt jubilees and managed monetary tightening to damper asset prices may be the only solution. In a credit oriented economy, deflation can quickly turn to a depression. Also, most people’s pensions (and state pension obligations) are tied to stock market valuations. So deflating the bubble must be managed. We didn’t get into the current predicament overnight and it’s not going to be solved overnight. My working theory is that dampening credit creation by tightening bank capital requirements along with quantitative tightening and ceasing the payment of interest on bank reserves is the path to restoring balance between income and wealth. To counteract this, it is probably necessary to keep interest rates low. Much of our problems were created by monetary policy and only monetary policy is politically isolated to potentially force the medicine necessary to restore some balance.

Adam Smith describes the ideal nature of the income tax: “The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities.” By “respective abilities,” Smith means “in proportion to the revenue which they respectively enjoy under the protection of the state.” But Smith argued that such a tax would be impracticable, largely because the state lacked the technology to observe it directly in an acceptable fashion. He was also concerned about privacy. The level of inquiry needed for such a tax he deemed would require an unacceptable invasion of privacy. That’s no longer true in 2025… we have the ability to meet Adam Smith’s ideal tax on revenue without the inefficiencies and invasiveness of the modern income tax if we were to tax the movement of digital money itself. A tax on monetary velocity, which is the receipt of money (revenue) is possible, simple, and perhaps the most ideal tax as it represents use of the fiat instrument the state provides.

“Absurd to leave driving untaxed” 👀 The British obsession with taxing everything has become culturally endemic!

The UK tax debate feels trapped in incrementalism. If the state must extract ~35% of GDP, the question isn’t which rates, it’s which architecture. Do any of these proposals genuinely enhance growth? Unlikely. Yet this is the frontier of our “tax reform” thinking. What’s needed is first-principles design. How to get the revenue needed in the simplest way? Here’s an idea: a 0.5% receipts tax on all GBP movement. It would raise the full revenue requirement while eliminating distortionary taxes on income, profit, and capital. Imagine a UK with no corporate or personal income tax, only a frictionless, automatic levy on monetary flow. The growth potential would be extraordinary. This isn’t a call for a smaller state. It’s a call for a smarter state and one that extracts revenue efficiently while maximising innovation and enterprise. Anyone care to debate? @CPSThinkTank @CenTaxUK @ASI @IPPR @NEF @jrf_uk @WeAreBrightBlue @LabourTogether @DanNeidle @ExpatriationLaw

What’s tragic about this central bank Euro is that it could be a really useful advancement but the critics who worry about government control will be right. A central bank digital currency could easily be made perfect: with perfect privacy, no ability for government denial of transactions, and with an embedded tax layer (as a transaction fee) that would free the need to have auditable records for tax compliance. It’s all possible if only governments and people would be willing to rethink. First, we need to start with the notion that the freedom to transact is a basic human right. Transactions are part and parcel to private property. Private property is fundamental to modern western civilisation. Once society recognises a freedom to transact, then it’s apparent the system must ensure that no person can deny a transaction. However much governments might want to deny transactions, the balancing act of ensuring the fundamental right to transact instructs that the digital currency must be architected without such possibility. It’s technically possible. Second, there should be broad consensus that a permanent record of all transactions is a bad idea. Transparency of all transactions is not required to solve the double spend problem thanks to zero knowledge proofs. Governments would need to sacrifice some ability to monitor transactions. A system could be designed that certain large transactions must require an identity disclosure and again this is technologically possible. I recognise that transaction monitoring has become a tool in money laundering and criminal investigations. Third, without solving the tax issue, governments won’t be able to allow a free and private digital currency. Physical cash has allowed tax evasion since its inception. But if the nature of tax were changed to a gross transaction fee (or money receipts tax) then tax could automatically be collected on the transfer (example, 0.5% of the transfer) in full satisfaction of any other tax. Structured in this way, the digital currency code could automatically collect the tax on every transaction and eliminate the need for the government to monitor the transaction flows for tax compliance. Intermediating banks and payment processors with a central bank currency could be a really great idea . But critics are right to anticipate the system won’t be designed to ensure the freedom to transact, to prevent government AI monitoring, and to avoid the system from being a behavior control mechanism. These are social not technical issues. What we really need in the US and Europe are foundational changes to the Constitution, ECHR, and other laws enshrining the freedom to transact privately and fundamental reform of taxation.

How do you reconcile the many years of Conservatives in power?

It’s too bad a G20 country doesn’t try this approach advocated by Art Laffer of lowering taxes to a bare minimum and broadening the base. I prefer an automatic receipts tax to eliminate the need to determine residency and file tax returns, but a 13% gross personal income tax and a 13% VAT would be ok, too. The UK SHOULD do something radical and try this, but they won’t. The key to this tax reform is to keep it revenue remains neutral to avoid debates on government spending. The benefit is gaining enormous efficiently from taxation and spurring growth.

Starting now

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