Tax purpose in taxation

Answer 1

The purpose of taxation in Fiat monetary system has nothing to do with funding. This is a common misconception. Any funds that are required, can be simply printed. Unlike a monetary system that is based on intrinsically valued money, fiat system never has any shortage of money, by definition.

I know, that in millions upon millions of articles, and "pedias", funding is always given as a main reason.

The true reason for taxation in fiat monetary system, is to force everyone to use the fiat money. This is why one can not pay his taxes in gold or silver, even though gold is hoarded by central banks around the world. Taxes are only accepted in the fiat of the issuance of the taxing authority. By doing so, the tax payer has no choice but to acquire required amount of fiat money, thus creating a demand for that particular kind of fiat.

If there was no taxation, nobody would use fiat money. And on the other hand, if tax was accepted only in worn underwear (for instance), then that worn underwear would become the money in circulation.

Without heavy taxation, the people would use something that has an intrinsic value as money, and not fiat. This is because by using fiat, one constantly loses his purchasing power, as compared to using say, gold as money.

To underscore, the real purpose of taxation in fiat monetary system is to force the people to use the kind of money that is less suitable to be used as money, namely fiat paper notes of central bank. Everything else is simply a misdirection.