A World without Income Taxes | Richard W. Rahn | Cato Institute: Commentary

A World without Income Taxes | Richard W. Rahn | Cato Institute: Commentary: "Why should the federal government bother to impose taxes when it can use the Federal Reserve to "print" all the money it needs to pay its bills? Last year, the Fed bought 77 percent of all of the government's new debt, which is the equivalent of printing money. The government borrowed almost 40 cents for each dollar it spent, with the Fed printing 30 cents of each dollar spent through its bond purchases (creating new money)"

"if the Fed increased the money supply by roughly 3.5 percent per year, the economy could have close to perpetual price stability, with the productivity gains being used to fund government spending.

Currently, the federal government is spending about 23 percent of GDP, and so you are probably thinking it is impossible to have a world where the federal government only spends 3.5 percent of GDP. However, up until World War I (before the income tax), the federal government only spent about 2.5 percent of GDP. In the 1920s, it was spending less than 4.5 percent of GDP."