In today’s post, I want to discuss about CBDCs (Central Bank Digital Currencies) and one aspect of it that really isn’t getting enough attention.
One aspect or massive disadvantage of the CBDC that I personally believe is that they are being used to collect more tax revenue. When most people when they think of the disadvantages of CBDCs they immediately think of control (Read about CBDC Privacy issues here). The fact that the government could monitor all your transactions and penalize certain behaviors. We see this already with things like cigarettes having higher taxes than say alcohol. And while I definitely think the control aspect is scary and needs to be exposed as much as possible, I believe this push to implement CBDCs is also about milking the consumer dry, or more taxes.
Why CBDCs will be used To Raise Taxes?
I believe the fact of the matter is that with the national debt growing so much, politicians need a way to increase revenue, or tax income. Remember that every year the country has basically has an income. It’s mainly tax revenue and a few other sources. When spending is higher than tax revenue, the government has to make up the difference by issuing T-bills. Of course, this leads to deficits (How we could cut deficits) that tack on more to the national debt every year. So, the federal government really has two options: cut spending or increase tax revenue. We know that it’s almost certainly going to be the latter.
So, coming back to the CBDC angle, the government needs more money, and they recognize that taxing all these smaller “off the book” transactions could help with revenue. Many people are adamantly against a CBDC in the United States. It’s possible if we move to a cashless society, it’s not unthinkable for an underground economy to pop up. Say for example, if you mow your neighbor’s grass for $40 bucks, neither side of the transaction wants the government coming in and taking 10 percent or whatever number they decide.
Donald Trump said that he would never allow a CBDC. Other politicians like Ron DeSantis and Vivek Ramaswamy have made similar statements, but it seems most of this is coming from the right only. This really should be one issue that both sides should support.
Many people right now who hear about CBDCs might not be against them because their mentality is that they pay for everything with their phone or credit card. But the fact of the matter is that there is simply no good reason to have a CBDC. They say security and financial fraud, but the private banks haven’t been able to stop this yet so why do we think a large government bureaucracy can?
At the end of the day, even with many politicians against it, many countries are exploring CBDCs and its more likely than not they are coming. Eventually, I believe when they come in the United States, they will give free money to everyone who signs up and also the FedNow program will be pushed to many of the large companies. It’s not unreasonable to think that people who use it will pay less taxes or get some sort of a tax credit.
In the end, there might not be much one can do if a large number of companies, including utility companies, require payments in digital currency.
