Taxes pay for nothing.
The idea of paying "your fair share" is a lie, and the sooner we stop telling ourselves it, the faster we can actually get to a tax policy that makes sense for everyone.
Today, millions of Americans are wiring their hard-earned cash to the IRS, imagining it being divvied up to pay for roads, schools, aircraft carriers, and maybe even some bloated government waste they despise. Maybe you think you’re funding something important. Maybe you think you’re getting fleeced.
But here’s what happens when you pay your taxes:
Your money is destroyed.
Gone. Wiped from existence. I’m not talking figuratively. I’m talking literally. It doesn’t get earmarked for Social Security. It doesn’t get diverted into a Pentagon or CIA slush fund. It doesn’t get stored in a vault under the Treasury. The U.S. government doesn’t use your tax dollars to fund anything.
Taxes pay for nothing.
When the money is debited from your bank account, that money is eliminated from the economy. It doesn’t go into a bank account for the US government. There isn’t a bank account for the government at the Fed or the Treasury that the money goes into (that’s not how government procurement works.)
The U.S. government could buy everything it wants—without collecting a single cent from you or borrowing a single dime. There are consequences to this, which we’ll get into, but make no mistake: the government does not need your money to “pay for stuff.”
This whole idea that people need to “pay their fair share”? It’s a myth. That’s just not what taxes do.
Once you understand that, the entire conversation about taxes, spending, and “who pays what” turns upside down. Because if taxes don’t fund government programs, then what are they actually for?
That’s what I want to talk about today.
Taxes are about control.
Control over who gets to have wealth and who doesn’t. Who gets to buy goods and services, and who doesn’t. Who will have access to government services and infrastructure, and who will not. Who will have access to capital, and who will not.
That is what taxes do in an economy like ours.
It’s a jarring notion, I realize. But once you see it, you can’t unsee it. Every time a politician tells you we “can’t afford” something or that someone else “deserves” tax breaks, they’re not talking about money.
They’re talking about power.
And they’re hoping you never figure that out.
How the U.S. Government Buys Stuff (And Why It’s Not Like You Think)
Most people assume the government works like a giant version of their own bank account. You earn money (taxes), you budget it carefully (appropriations), and you spend only what you can afford. If you need something big—like a house or a car—you might take out a loan (government bonds).
Sounds logical, right?
Except that’s not how it works.
Let’s say the U.S. government wants to buy 100 new fighter jets. These things aren’t cheap—let’s say they cost $100 million apiece. So the total price tag? $10 billion.
Now, if the government worked the way most people think it does, this would be the process:
Congress would check how much tax revenue they’ve collected so far.
If there’s $10 billion available, great—they cut the check.
If not, they’d raise taxes or borrow the difference by issuing bonds.
The money would then be pooled together and sent to Lockheed Martin or Boeing.
That’s what most people imagine is happening at some abstract level, anyway.
But that’s not what happens. Not in the slightest.
Step One: Congress Appropriates (President signs the bill into law)
The process begins when Congress decides the government will buy those jets. They passed a spending bill that says, “The Department of Defense is now allowed to spend $10 billion on fighter jets.” The President signs that bill, and then it becomes a law. The instructions in that bill go to the OMB (the Office of Management and Budget), the Treasury, and the Department of Defense “Comptroller” (a fancy word for the guy who accounts for all the money at the DoD.)
At this moment, there is no money sitting around. Congress isn’t “moving” tax revenue into an account. They aren’t “allocating” existing funds. They’re just permitting the spending to happen.
Step Two: The Treasury Directs the Federal Reserve
Now that the spending is authorized, it’s time to make the payment.
But here’s where things get weird.
The Treasury doesn’t look for $10 billion in a vault somewhere. For one thing, there isn’t a vault. At the Treasury, there isn’t some big “Scrooge McDuck” vault filled with coins and gold (US gold reserves are kept at the NY Fed and at Ft. Knox if you’re curious). It doesn’t “collect” the money from taxpayers first. Uncle Sam isn’t walking around with a tin cup going “Any Bonds! To-day? Bond’s of Freedom, is what I’m selling!”
Instead, the Treasury sends a simple instruction to the Federal Reserve:
"Authorize the Department of Defense to pay Lockheed Martin $10 billion."
This is called a “federal spending warrant,” if you’re curious. Every government procurement is tied to a warrant. All of those warrants are tied to an appropriations bill. The entire purpose of OMB, the comptrollers at the agencies and departments, and the GAO (Government Accounting Office) is to account for all the appropriated money properly. (Although the GAO looks at how appropriations bills will impact the budget before they’re enacted, not after they go into effect.)
Step Three: The Fed Creates the Money
At this point, some guy at the Federal Reserve types $10 billion into a computer—and just like that, Lockheed Martin’s bank account balance goes up by $10 billion with a payment from the Department of Defense against the contract they made.
When the bill passed, and OMB, DoD, and Treasury got a copy, that was the “appropriation” bill. When the Treasury tells the Fed to issue the warrant, that’s the “authorization” to spend the money “for real.”
No gold is moved. No taxpayer dollars are transferred. No loans are taken out.
The money didn’t exist before that moment. Now it does.
That money is as real as real gets. Cold, hard cash, baby. Ka-ching! Booyah! Powerball winner! Champagne for everyone!
And Lockheed Martin takes that money, pays its workers, buys materials, and gets to work building the jets.
That’s it.
Wait… Did the Government Create $10 Billion Out of Thin Air?
Yes. And it does this every single day.
Now, you might be thinking: Wait a minute—if the government can just create money, why do they tax us at all? Why do they borrow money? Why do we even talk about deficits?
Great questions.
This is where history—and a lot of outdated economic thinking—gets in the way.
Why People Still Think the Government Needs Taxes to Spend
For most of modern history, governments have had to worry about how much money they have. And in some ways, we still do (but not in the ways you think.)
Before 1971, the U.S. dollar was tied to gold. The government had to have gold reserves for every dollar printed to back it up. That meant there was a real constraint—the government couldn’t create unlimited dollars because every dollar was supposed to represent a fixed amount of gold. This created an artificial level of scarcity that limited the growth of the money supply, thereby keeping inflation (the rate of growth of the money supply) artificially in check.
If the government wanted to spend more money than it had in tax revenue, it had to borrow. It couldn’t create new money without depleting its gold reserves. And since nearly every country in the world was engaged in a similar scheme of backing their currency with gold, nearly the entire world economy was checked against artificially inflating their currency or economy. Thus, artificially, the entire world economy kinda “did” act like your bank account. They didn’t create wealth because national governments were artificially constrained; you can’t create wealth because you are legally constrained (you can’t issue your own form of currency.)
This is why people—even today—still think of government spending as a household budget. It’s because, for a long time, that was “kinda” true, but it was an artificial reality.
Then, in 1971, Nixon removed the U.S. from the gold standard. From that point on, the dollar became a fiat currency, meaning its value was no longer tied to a physical resource like gold but instead backed only by the trust and stability of the U.S. government.
And that changed everything.
The Real Constraint: Trust, Not Taxes
Since 1971, the U.S. government no longer needs to collect money before it spends (it didn’t need to before, but now it really doesn’t need to.) It can create as much money as it needs, whenever it needs, simply by issuing it into existence—the same way it does when it buys fighter jets.
So why doesn’t the government spend unlimited amounts of money?
Because while the government can create money, it doesn’t control what that money is worth.
The value of the U.S. dollar is based on something exceptionally fragile: trust.
Trust in the stability of the U.S. economy.
Trust in the political system.
Trust that the government won’t collapse into chaos.
That’s why reckless trade wars, political instability, a lunatic billionaire screwing around with the US government’s payment systems, and government dysfunction spiraling out of control, directly threaten the dollar's value and the wealth of every American. If people—both in the U.S. and worldwide—stop believing that the U.S. government is stable, the dollar loses value. Inflation rises. Everything spirals.
The real risk is not the deficit or spending but whether people still believe in the system.
The other thing that constrains how much money the government can spend is how monetary level impacts prices. In other words, how increasing the amount of money in the economy impacts inflation.
Inflation and Monetary Policy
At this point, you might be thinking:
"If the government can create money out of thin air, why doesn’t it just print unlimited dollars and give everyone free healthcare, free housing, and a six-figure salary? Wouldn’t we all have a lot more trust if that was happening?"
Good question. The answer lies in inflation—the real constraint on government spending.
What Is Inflation?
Inflation happens when the supply of money grows faster than the supply of goods and services. More dollars chasing the same amount of stuff = rising prices.
Let’s say the government gives every American a $1 million check tomorrow. Sounds great, right? But what happens next? (We should all know this because we effectively did this during COVID.)
Everyone rushes to buy houses, cars, food, and other goods.
Businesses can’t produce enough to meet this sudden demand.
Prices skyrocket because people have more money, but the economy doesn’t have more stuff to sell.
Suddenly, that $1 million check doesn’t mean much—because now a loaf of bread costs $500, and a used car is $1 million.
This happened in places like Weimar, Germany, Zimbabwe, and Venezuela—their governments printed massive amounts of money, but their economies weren’t producing enough real goods to absorb it. The result? Hyperinflation and economic collapse.
So the real question isn’t “How much money can the government print?” but “How much spending can the government engage in before it causes inflation?”
The problem is this: there is only so much “stuff” in terms of goods and services that an economy can produce in a period (a month, year, ten years, etc.) That “stuff” has “a real” value, regardless of how you want to account for it, dollars, bottle caps, magic beans, etc. That “real value” is measured by the people's desire to buy those things in the economy.
The government and “the people” compete to buy all the “stuff” in the economy. The people can’t create their own money. The government can. The currency the government and the people use must be accepted for the transaction (take a look at your money; it says that the dollar is acceptable for all debts, public and private.) As a consequence, if the Government and “the people” are both spending, and the government is making up money out of nowhere, but “the people” are spending money that was tied to the goods in the economy, then every dollar that the government spends is artificially inflating the economy.
Thus, the government has to tax to reduce the aggregate demand (consumption) of all the other aspects of the economy so that the government can spend without increasing the overall aggregate demand. This is why when the government collects money from you, it destroys it.1
How the Government Controls Inflation
Governments use two major tools to keep inflation in check:
Monetary Policy (controlled by the Federal Reserve)
Fiscal Policy (controlled by Congress and the Treasury)
These two forces work together to expand or contract the amount of money circulating in the economy.
1. Monetary Policy: Controlling Interest Rates
The Federal Reserve (the central bank of the U.S.) doesn’t control how much money the government spends, but it does control how easy or hard it is for the private sector to borrow and spend.
It does this by raising or lowering interest rates.
If inflation is getting too high, the Fed raises interest rates → borrowing money becomes expensive → people and businesses spend less → the economy slows down → inflation cools off.
If the economy is in a recession, the Fed lowers interest rates → borrowing money becomes cheaper → businesses invest more → people buy more → the economy speeds up.
The Fed also uses quantitative easing and open market operations to control the money supply in other ways, but for most people, interest rates are the main lever they feel in daily life.
2. Fiscal Policy: Government Spending and Taxation
Congress and the Treasury control fiscal policy, which is the direct spending and taxing decisions of the government.
If inflation is too high, the government can raise taxes to remove money from the economy and slow things down.
If the economy is sluggish, the government can cut taxes or spend more to inject money into the system and boost demand.
This is where taxes come into play—not to “fund” government programs but as a tool to regulate inflation and economic activity.
How do you feel about “paying your fair share” now?
The whole point of taxes is to make space for the government to spend to provide public benefits. That’s it.
Why Taxes Matter in a Fiat System
Now that we understand inflation, we can finally answer the big question:
If the government doesn’t need taxes to fund spending, why does it still tax people?
To Prevent Inflation – Taxes remove excess money from the economy to keep demand in check.
To Maintain Demand for the U.S. Dollar – Since you must pay taxes in dollars, taxes ensure people continue using them.
To Reduce Wealth Concentration – Taxing the ultra-wealthy prevents them from hoarding so much money that it distorts the economy.
To Shape Economic Behavior – Tax breaks and incentives encourage certain activities (investment, homeownership) while discouraging others (smoking, carbon emissions).
However, the key takeaway is that taxes are NOT about “paying for” government programs. They are a tool for managing the economy and managing who wins and who loses.
To demonstrate this, let’s talk about something that was a hot button issue last year - student loan forgiveness.
On its face, seems like nothing to do with taxes right? I mean these students made contracts, incurred debts, and screw those kids! They should pay right! Biden and Harris, they wanted to give out a freebie! Screw them! Screw the left! Nobody should get a free lunch, right?
Oh, how wrong you are about all of that. It’s really all just about taxes. You’ve been duped once again gentle reader.
A Case Study in Taxes: Understanding the Student Loan Debate
Student loan forgiveness isn’t a financial issue. It’s a political one. Every time the subject comes up, the same tired arguments get trotted out: “It’s unfair,” “Taxpayers shouldn’t have to foot the bill,” “We can’t afford it.” Every single one of these arguments is based on a false premise—the idea that the government needs tax dollars to pay for things.
That’s not how federal spending works. Student loan payments are effectively a tax, a tax (and a disproportionate one), on students that holds back trillions in consumption that could be better spent elsewhere in the U.S. economy.
The Government Created the Loans—It Can Cancel Them
When the government issued student loans, it didn’t take money from a taxpayer-funded pool or borrow from a foreign country. It simply created the money. Congress authorized the Department of Education to guarantee student loans, and loan servicers issued them. The money appeared in university bank accounts, not because it was taken from somewhere else, but because the government decided it should exist.
If the government can create money to issue loans, it can also erase them. Canceling student debt isn’t about “paying for” anything—it’s about whether the government chooses to continue collecting money from borrowers. If Congress passed a law saying student loan balances were erased, nothing would need to be “funded.” The Department of Education would simply delete the balances from its books, and borrowers would stop making payments.
That’s it. No taxpayer money involved. No program to “fund.” Just an accounting decision.
The Real Reason Student Loan Forgiveness Is Controversial
If canceling student loans is so simple, why is it so controversial? Because while forgiveness wouldn’t cost taxpayers anything, it would cost someone money—the companies and states profiting from the debt.
The federal government doesn’t handle student loans directly. Instead, it outsources loan servicing to private companies, many of which make billions by managing repayment. These companies are paid to collect monthly payments, process paperwork, and administer forgiveness programs that are deliberately complex and difficult to navigate. If student loans were canceled, these companies would lose a massive revenue stream. That’s what this debate is really about. It’s about money, not fairness, not principles, and certainly not about education.
The bigger story here is the role of state governments—particularly in “red states.” Many states have set up loan servicing agencies, acting as middlemen between borrowers and the federal government. These agencies profit off every loan they manage. If student debt disappears, so does their income. That’s why red states are leading the legal challenges against loan forgiveness—not because of some deep commitment to fiscal responsibility but because they have billions on the line. They’re loan sharks, plain and simple. “Blue states” also have these types of programs, but they have, by and large, decided to forgo the lost revenues; they have calculated that the offset in consumption taxes and additional economic activity, in the long run, is preferable to short-term loan servicing revenues. Again, “red states” are just acting as loan sharks.
MOHELA: A Case Study in How Red States Profit from Student Debt
If student loan forgiveness were just an ideological debate about “fairness” and “personal responsibility,” you’d expect opposition from a broad mix of political actors. But that’s not what’s happening. The loudest, most aggressive opposition comes from Republican-led states. Why? Because they make money off the debt.
Take MOHELA (Missouri Higher Education Loan Authority)—one of the largest student loan servicers in the country and one of the key players behind the lawsuits that blocked Biden’s loan forgiveness plan.
MOHELA isn’t just any loan servicer. It’s a state-run entity—which means the state of Missouri profits every time a borrower makes a payment. Unlike private loan servicers like Navient or Nelnet, which answer to shareholders, MOHELA funnels its profits directly back to the state government to fund Missouri’s public programs.
This is a direct financial conflict of interest. Missouri isn’t blocking student loan forgiveness out of some deep commitment to fiscal discipline. It’s protecting its own revenue stream.
And it’s not just Missouri. Several other red states have state-affiliated loan servicers that generate money for the state. These states are not fighting student loan forgiveness to protect taxpayers—they’re fighting it to protect their bottom line.
If student loans were forgiven, MOHELA and other state-affiliated servicers would lose billions—not because taxpayers are on the hook, but because the states that profited from decades of student debt wouldn’t get their cut anymore.
That’s why Missouri led the charge to block Biden’s plan. It wasn’t about protecting working-class Americans. It was about protecting Missouri’s student debt cash cow. If Congress could come to some sort of agreement as to how these states would “get paid,” then I sincerely doubt there would be any standing for these states to sue the federal government (at the minimum, their parens patriae standing would go away.)
The “Moral Hazard” Argument Is Nonsense
Another common argument against student loan forgiveness is that it would create a moral hazard. If we cancel loans now, will future students expect the same treatment? Will people borrow recklessly, assuming their debt will eventually be erased?
This argument immediately falls apart when considering how debt works for corporations and the wealthy. The U.S. government cancels debt all the time—for the right people.
Billionaires walk away from bad investments. Corporations file for bankruptcy and start fresh. Banks get bailed out when they make reckless decisions. But when middle-class borrowers ask for the same flexibility? Suddenly, “we can’t afford it.”
The moral hazard argument also ignores the real problem: why college tuition has exploded in the first place. Student loans didn’t become a crisis because borrowers were irresponsible—they became a crisis because the government stopped funding higher education at the levels it used to, shifted the burden onto students, and then used predatory lending to fill the gap. If we cared about stopping this from happening again, we wouldn’t discuss “teaching students a lesson.” We’d be talking about making education affordable in the first place.
Canceling student debt would have immediate and far-reaching effects on the U.S. economy, both in terms of individual financial relief and broader economic stimulus. Right now, student loan payments function like a regressive tax—one that disproportionately burdens younger generations, the middle class, and lower-income borrowers.
How Student Loan Payments Act Like a Tax
In a fiat system where the government doesn’t need tax revenue to fund spending, taxes exist primarily to regulate economic activity, manage inflation, and shape wealth distribution. Student loan payments serve a similar function—they pull money out of the economy and constrain spending.
They remove spending power from the economy – The $1.7 trillion in student debt isn’t just a number—it represents money that could be spent on homes, cars, businesses, or basic consumer goods but is instead being funneled toward debt repayment.
They disproportionately burden working people – Unlike income taxes, which are at least somewhat progressive, student loan payments hit lower- and middle-income earners hardest. Borrowers must make the same monthly payment regardless of their financial situation.
They aren’t offset by economic benefits – Unlike, say, corporate taxes that fund infrastructure or public investments, student loan payments serve no productive economic function—they just extract wealth from individuals and redistribute it to financial institutions and loan servicers.
In effect, student loan payments function as a private tax imposed on those who sought higher education. And like any tax, removing it would have a ripple effect across the economy.
What Happens If We Cancel Student Debt?
1. Increased Consumer Spending → Economic Growth
If borrowers suddenly no longer had to make student loan payments, that money wouldn’t just vanish—it would be redirected into the economy.
Monthly student loan payments average between $200 and $400 per borrower. That’s a significant chunk of disposable income that could instead be spent on housing, food, healthcare, travel, and local businesses.
This increased consumer spending stimulates demand, leading to more business activity, higher wages, and job creation.
Studies have shown that canceling student debt could result in an immediate boost in GDP because millions of borrowers would suddenly have more disposable income. It’s essentially a targeted stimulus plan—one that doesn’t require printing new money, just stopping unnecessary wealth extraction from everyday people.
2. Increased Homeownership and Small Business Formation
One of the biggest drags on the economy is that student debt prevents young people from buying homes and starting businesses—two of the key drivers of economic mobility and generational wealth.
Currently, homeownership rates among Millennials and Gen Z are significantly lower than previous generations. Student loan debt is a major reason why, as borrowers struggle to qualify for mortgages.
Canceling student debt would immediately improve creditworthiness, allowing more people to enter the housing market.
A surge in home buying wouldn’t just benefit individuals—it would drive economic activity in the construction, real estate, and home improvement industries.
Similarly, many would-be entrepreneurs are currently held back by student debt, unable to take risks because of the financial burden. Removing this debt would unlock a new wave of small business creation, fueling local economies.
3. Increased Racial and Economic Equity
Student debt disproportionately impacts Black and Latino borrowers, who are more likely to take on loans and struggle with repayment due to generational wealth disparities.
Canceling student debt would immediately reduce racial wealth gaps, giving historically marginalized communities more financial stability and economic opportunity.
More disposable income in these communities means more spending in local businesses, education, and housing—creating a cycle of economic improvement.
4. Inflation? Not Likely
One argument against student loan forgiveness is that it would be inflationary—that suddenly giving borrowers more money to spend would drive up prices. This argument doesn’t hold up for a few reasons:
Canceling debt doesn’t inject new money into the economy – Unlike stimulus checks or tax cuts, which add new spending power, canceling student loans simply removes an existing drain. It’s not new money—it’s just stopping unnecessary money extraction.
It’s a phased-in effect – Borrowers wouldn’t suddenly go on spending sprees overnight. Their budgets would shift over time, allowing the economy to absorb the increased demand.
Any inflationary pressure is offset by productivity gains – More home buying, business creation, and workforce participation expand the supply of goods and services, balancing out demand.
If anything, the net effect would be anti-recessionary, counteracting the economic slowdown caused by rising interest rates and stagnant wages.
Why don’t we do it then? Politics. In large measure because “billionaires” and “red states” don’t want to lose the power and the money they have, and the amount of political influence they can exert, combined with the influence of the financial lobby in Congress and the litigation exerted in the judicial system, has kept the entire issue from being resolved. Add to this the conflation of “morality” and a fundamental misunderstanding of how taxes work (and where the money came from). We wind up with a Puritan belief that somehow students would be “ripping off a system,” when, in fact, subsidizing their education would make the entire economy (even for those who didn’t go to college) considerably better.
Ultimately, student loans are just a tax, and canceling them is just a tax cut. We have no problem discussing this when it involves billionaires and corporations. Still, we have a mental breakdown when we consider giving a couple struggling to make ends meet an extra $ $500 a month in additional cash flow. That’s what this debate means in real terms.
Another Example: Universal Healthcare & The "How Will We Pay for It?" Lie
Every time universal healthcare is brought up in the U.S., the same tired arguments get thrown around:
“It would bankrupt the country.”
“We can’t afford it.”
“Taxes would have to skyrocket.”
It’s the same playbook used to argue against student loan forgiveness. Frame it as a financial impossibility, convince people that their tax burden will increase, and make them believe there’s simply no money for it.
But just like student loan forgiveness, this is a complete lie.
We Already Pay for Universal Healthcare—We Just Get Nothing for It
I have a confession to make. Because of the incredible amount of chaos going on in the United States, I’ve been exploring living elsewhere and becoming a “sovereign citizen.” My other substack, Borderless Living, is exploring that journey. As a consequence of looking to live elsewhere, one of the things you have to consider is health care. I mean, you’re not just on vacation, you’re going to be permanently living somewhere else. You have to consider where you’re going to go to the dentist, the doctor, get prescriptions filled, etc.
So as a part of this process, I’ve had to do head-to-head comparisons between what I pay in the United States for healthcare premiums, out-of-pocket expenses, and the like, and then compare what my tax burden would be in other countries under their systems (and I’m m making the assumption in those cases I’m living in those countries as a national since I’m looking at citizenship, not as some kind of ex-pat or resident alien, which creates other types of issues; this allows, if you will, an “apples to apples,” comparison.)
What I found was this simple fact: the U.S. already spends more per capita on healthcare than any other country in the world—and yet, we don’t have universal coverage.
The U.S. spends $4.5 trillion annually on healthcare—far more than countries with universal systems like Canada, the UK, and Germany.
Yet, we have worse outcomes—lower life expectancy, higher infant mortality, and massive medical debt.
Americans pay more in private healthcare costs than citizens in other countries pay in taxes for their public systems.
In other words: We already pay for universal healthcare—we just don’t get it. Instead, the money goes to insurance companies, private hospital networks, and pharmaceutical corporations, all of whom exist to extract profit rather than provide care.
How Private Healthcare Costs Function Like a Tax
One of the biggest lies in American politics is that a publicly funded healthcare system would “raise your taxes.” The reality is that you are already being taxed for healthcare—you don’t call it a tax. (But you sure figure that fact out in a hurry when you have to compare it apples to apples if you move to a place like Italy, Spain, Portugal, or Ireland, and you want to compare those expenses.)
Insurance premiums – Money taken directly out of your paycheck every month.
Deductibles and copays – Out-of-pocket spending as a direct cost to access care.
Surprise medical bills – Unexpected fees, denied coverage, and hidden costs that act as financial penalties for getting sick.
Employer contributions – Money that could be going into your wages, but instead goes to private insurers.
Add it all up, and most Americans are paying far more for healthcare than they would under a universal system—but instead of paying the government, they’re paying private corporations. When I looked at this, in most cases, my healthcare costs will go DOWN if I move out of the U.S. and to a European Union country. I’m not kidding about that. Although all of those countries have higher marginal tax rates, when you consider federal, state, and local taxation, and then you consider insurance premiums, in nearly every country, I slightly came out ahead (granted I am a high income earner and I live in a “high tax” state.) I found that fact to be shocking. Instead of paying Blue Cross Blue Shield, Delta Dental, etc., I’d just have money taxed from my income and get better access to care, with virtually no deductibles, living in a place like Ireland or Spain, for about 80% of what I’m paying now, for the “Cadillac plan” of healthcare I have and the massive tax rate that I pay. I really couldn’t believe it, but that math checks out every time I run it with every EU country I’ve checked thus far.
The Real Reason We Don’t Have Universal Healthcare
If the U.S. government can create money at will if we already outspend every other country, and if healthcare costs are already a hidden tax, why don’t we have universal healthcare?
Simple: Because the people who profit off the current system don’t want it to change.
Insurance companies would lose billions if people weren’t forced to buy their plans.
Hospitals couldn’t charge obscene, unregulated prices for basic procedures.
Pharmaceutical companies couldn’t gouge Americans while selling the same drugs for cheaper overseas.
And just like student loan servicers and red-state governments fought debt cancellation, the healthcare industry spends billions lobbying to keep you trapped in a system that extracts money from you while delivering the worst outcomes in the developed world.
How Other Countries Pull It Off
A common counterargument is: “But other countries use taxes to fund healthcare. Doesn't that prove that we would need to raise taxes dramatically?”
Not really.
Other developed countries do use taxes to fund their healthcare systems, but the key difference is that they are replacing a cost, not adding a new one.
Take Ireland as an example (where I’ve studied the most.) When you compare what people pay in the U.S. for health insurance, deductibles, and out-of-pocket costs to what Irish taxpayers pay for their public healthcare system, it’s essentially a wash—or, in many cases, a net gain for the taxpayer (as it was for me.)
Yes, Irish tax rates are higher, particularly for higher earners (close to 50%, few deductions, people in this country would literally pop a bolt reading the Irish tax code, I know I did when I did my first pass-through—it does get better as you look through it.)
But the total cost of living is lower because essential services—healthcare, education, transportation—are funded through taxes rather than extracted through private payments. (This is where when you consider things like property taxes, user fees, licenses, etc., you find out you are paying LESS in overall taxes; it’s just considerably more transparent, and it comes out of one pot, namely, income taxes.)
That means no monthly insurance premiums, no massive deductibles, no surprise medical bills, and no bankruptcies over medical debt.
The same holds in Canada, Germany, the UK, and most of Europe. People pay into the system through taxes, but they eliminate an entire category of private financial burdens in exchange.
Now, compare that to the U.S.:
You’re already paying thousands per year in premiums, deductibles, and out-of-pocket expenses.
That money doesn’t go toward better healthcare—it goes to administrative bloat, executive bonuses, and insurance companies deciding whether you deserve treatment.
If we replaced this system with a publicly funded model, your “taxes” might go up slightly, but your total healthcare spending would drop dramatically—meaning you’d come out ahead.
How the U.S. Could Implement Universal Healthcare Without Causing Inflation or Doctor Shortages
Opponents of universal healthcare claim that if the government provided healthcare, it would lead to doctor shortages, long wait times, and a collapse in medical innovation.
This is completely false.
Universal healthcare does not mean eliminating the private healthcare market—it simply changes who pays the bill.
Doctors and nurses would still be paid competitively. The government would pay hospitals and providers directly instead of forcing them to chase payments from insurance companies and patients. We already have a structure to do this with Medicaire and Medicaid (although that structure would need to be reformed and revisited to handle a national healthcare system.)
Private hospitals and research institutions would still exist. The system would still allow for private-sector innovation, new drug development, and elective procedures. Although drug companies like to talk as if innovation is privately funded, that’s a myth. The vast majority of drug research begins (and ends) with government funding through the NIH (in other words “Da Gubermint”.)
The supply of doctors and nurses would increase, not decrease. Right now, many medical professionals leave the field due to administrative burdens, malpractice insurance costs, and burnout from insurance-mandated restrictions. Removing private insurance bureaucracy would free up doctors to actually practice medicine instead of fighting insurers for payment.
The U.S. already has a single-payer system for veterans (VA healthcare) and the elderly (Medicare). Expanding this model gradually to the general population wouldn’t create a sudden inflationary shock—it would redirect money that’s already being spent on private insurance toward a more efficient system.
If the government fully funded healthcare, it would do two things:
Taxation would remove some excess demand from the private sector, ensuring that the increased government spending doesn’t overheat the economy.
Public funding would eliminate price-gouging, administrative waste, and artificial scarcity, making healthcare more efficient, not less.
The Bottom Line: Healthcare Costs Are A Tax
The next time someone tells you that universal healthcare would “raise your taxes,” ask them:
Why are we already spending more than any other country and getting worse results?
Why do we let private companies extract more money from people than any public system would ever require?
If we can always afford tax cuts for billionaires, why can’t we afford basic healthcare for everyone?
Because the answer is always the same: We can afford it. The only reason we don’t have it is because the people in charge want to keep it that way.
So, the next time someone says “we can’t afford” student loan forgiveness, ask them this: Can we afford another billionaire tax break? Can we afford to let Wall Street walk away from bad bets? Can we afford corporate subsidies? Because if we can afford all of that, then we can afford to cancel a tax that never needed to exist in the first place.
Taxes are about control. Who gets what, why, when, how. Who gets access to capital? Who gets to have access to services?
While taxes started off as a mechanism to allow the government to spend without creating inflation, the reality is that role has expanded to the point that now the primary role of tax policy is political and social control. We have created channels of wealth creation with tax policy. Those channels create political power, which reinforces wealth creation, which reinforces political power.
It is a vicious cycle. We can afford to change it. It’s just money. It’s just taxes. In the end, as I keep saying, it pays for nothing. It’s all made up and in our heads. The scarcity of time, life, and natural resources are real; the scarcity of money is a myth.
Conclusion: The Illusion of Scarcity and the Reality of Control
At the heart of this entire debate—whether it’s taxes, government spending, student loan forgiveness, or billionaire tax breaks—is a carefully maintained illusion: the illusion of scarcity.
You’ve been told that government spending is like a household budget. That if the government wants to spend money on healthcare, education, or infrastructure, it has to “find the money” somewhere—by taxing you, by borrowing from China, or by cutting other programs.
But that was never true.
The U.S. government creates money when it spends. It doesn’t need tax revenue to fund anything. Taxes exist to regulate inflation, manage economic demand, and—most importantly—control who gets to have wealth and who doesn’t.
And once you understand that, you realize that every debate about “who deserves help” and “who should pay their fair share” isn’t actually about money.
It’s about power.
It’s about whether working people should get the same financial breaks that corporations and billionaires get every day. It’s about whether student borrowers should be allowed to escape a lifetime of debt servitude while banks and hedge funds walk away from their bad bets with government bailouts. It’s about whether public resources should be used to benefit everyone, or whether they should be hoarded by the people who already have the most.
The next time someone tells you “we can’t afford” student loan forgiveness, universal healthcare, or any other public investment, ask them why we can always afford tax cuts for billionaires, subsidies for corporations, and blank checks for the defense industry.
Because the truth is, we were never supposed to figure this out. We were never supposed to realize that taxes don’t ‘pay’ for anything, that scarcity is a lie, and that the only thing standing between us and a better system is a handful of people hoarding wealth and power.
But now that you see it, what are you going to do about it?
Happy tax day.
If you remember anything from your Macroeconomics classes, you know the national income equation:
where:
C = Consumption (aggregate consumer demand)
I = Investment (aggregate business activity)
G = Government expenditures
Nx = Net exports (exports minus imports)
A second key equation is the quantity theory of money:
where:
M = Money supply
V = Velocity of money (how quickly it circulates)
P = Price level
Q = Quantity of goods and services (also known as GDP)
Now, even if you aren’t a math wiz (I get it—I wasn’t, but I had to become one), you can see a relationship between these two equations. Let me spell it out:
Inflation happens when the amount of money in the economy (M) grows faster than GDP (Q). Why? Because if we assume V (velocity) stays relatively stable in the short term, then the equation simplifies to:
or, even more simply, P ≈ Q/M. That means the price level (inflation) rises when the money supply increases faster than GDP.
So what happens when the government (G) is spending like crazy, but M (money supply) is constant? The price level has to rise—inflation shoots up.
That’s precisely what happened in 2021 after COVID-19. Governments worldwide pumped money into their economies—into our pockets and corporate subsidies. But for months, people couldn’t spend it effectively. Then, as restrictions lifted, demand surged while supply chains were still a mess. Too much money chasing too few goods led to skyrocketing prices. On top of that, government spending remained high, fueling even more inflation.
This is why governments tax when they spend—taxation reduces the amount of money circulating in the economy, helping control inflation. Government borrowing has a similar effect: when the government borrows, it removes money from circulation in exchange for a promise to pay it back later (with interest). This keeps inflation in check in the short term and creates long-term risks.
That’s where the real debt problem comes in. Today, the national debt might not seem like an issue, but the bill comes due at some point. When it does, it could hit the economy like a brick.
I've decided to block the illiterates.
Bottom line is this... what I've written is grounded in two theories of economics, one is called MMT - Modern Monetary Theory, the other is called HPM, High-powered Money theory.
The peculiar nature of how the government pays for things is complicated. Admittedly, I've simplified the hell out of it so that it's digestable.
But the basic premise about control, inflation, demand for currency, and the ability of the US government to issue currency, is how this works.
If you needed demonstration that ultimately it's about "trust," Trump tanking the economy last week and the US bond market going into the dumper should have been a lesson.
When it comes time for us to issue more debt, it's going to be considerably harder. The ability of the Republicans to push a tax cut now without it being inflationary is zero. The tariffs, the tax cut, and the lack of confidence in the U.S. economy, are all going to drive inflation through the roof.
That said, I assure you, the government will not run out of money... even with the fact that apparently tax compliance this year is expected to drop to an all time low.
I suppose that happens when you fire half the IRS, explicitly the tax compliance divisions. LOL!
So much is in this one post! It would be worth splitting out the healthcare section into a separate post. Would you consider doing that? It debunks and demystifies so many false narratives about healthcare that are out there. Many that I believed, and as you clearly explain, are not valid. You do good work.