Healthy Money Healthy Planet - library.uniteddiversity.coop

24
Tax Issues
One of the most commonly expressed reservations about the growth of parallel
currencies such as trade dollars is that income tax will be avoided and hence
government revenue will decline. It seems that whenever reform occurs and one
problem is solved, another will arise, but this is no argument against
implementing the reform. For example, although the passing of the Paid Parental
Leave Act in 2002 exposed the fact that non­working parents do not receive any
government money for parenthood, the legislation was nonetheless a significant
advance on the previous situation. There is no doubt in my mind that the rise of
complementary currencies will quickly expose a faulty tax system, but this is no
excuse for failing to introduce these currencies in the first place. In fact, we should
regard it as fortunate that the introduction of healthy money will expose the
inherent weakness.
Most people assume that the bulk of government revenue has always come
from income tax and will continue to do so. But income tax is a relatively new
imposition. It was first introduced in 1844 in the UK, when the private banks were
demanding some sort of security for their loans to government. The US didn’t
introduce income tax until 1914, the year that the newly formed Federal Reserve
Bank had been given the sole right to issue and control the country’s money
supply. In effect, income tax is therefore a form of collateral for banks. Plenty of
other taxation systems have been used in the past, and in Chapter 16 I discuss