I was just answering the question. [:p]
End taxes, repudiate debt.
Cut taxes, let the state collapse on its own weight. Never do anything but cut taxes.
Lets say the option was that, or full fledged deficit spending and there were no other options. Why would you cut taxes and prefer deficit spending?
In my mind I see taxes as an overt obstruction, which can be immediately calculated for. On the other hand business cycles and inflation are a covert tax, something which cannot immediately be taken account for, and because of that errors are caused due to a false idea of what the economic environment presently holds.
Another thing. People have become complacent with deficits. At best they are neutral about inflation, worst they may even think it’s a positive(keynesianism).
If we preferred direct taxation then, I think, people would be more likely to fight them, as they are obvious and out in the open. Deficit spending on the other hand can go for years, without a care in the world. In fact some people may even cheer deficit spending, specifically during a bubble.
To be honest I am kind of confused why so many people are so quick to dissmiss taxation to deficit spending. An extremely large chunk of Austrian literature is devoted to inflation and business cycles. Even the idiot laymen knows that taxation hurts his purchasing power.
The reason why we don’t need to waste our time writing about taxation as it is an obvious attack on our purchasing power. Deficit spending on the other hand is not and as such goes un-noticed by the laymen or even the erudite.
Perhaps I misunderstood, as I thought it meant all sources of financing. I’d basically prefer the state imploded, and yes direct taxation is more overt and likely to cause civil disobedience than inflation which whilst destructive can be extended through time and be hidden for a long period until it does eventually bring about a meltdown.
I go with Rothbard. In a deficit situation, I would freeze all tax cuts and reform, and I’d lower expenditure (defaulting on debt would help much). When in a surplus, having defaulted on debt, I’d cut both taxes and expenditures, and as the ultimate fiscal impact of either cannot be calculated, it would depend on the case at hand whether I’d end up with a surplus or deficit. So, always lower which among taxes and expenditures is higher.
Variations on the theme exist. Setting up Special Economic Zones in inhabited territory, in which, say, only arbitration decisions are enforceable, there are no laws or decrees and only a low (say 7 % VAT) tax applies, would increase intake without making anyone worse of. Renting sovereignty of a piece of land to some private developer for a fee would also help. On the other hand, getting rid of social programs, and their deficits, could be very, very difficult, as you cannot cut pensions for those who ‘have already paid their taxes’. You’d have to cut all social security taxes while still paying benefits. That monstrous deficit would take much, much thinking to cover.
I would argue that it would be far more convincing to eliminate these problems were there no deficit spending at all, and that the costs of these programs were in printed in b lack and white ink in the amount that taxes are withdrawn from people’s wages.
At any rate I took the question as meaning you had two options, Deficit spending or taxing, and there was no other options available other then those two. I know thats not realistic but thats what the question seemed to me.