Let's Replaces Federal Taxes with a Single Virtual Tax
By Tom Kagy | 11 Mar, 2026

Allowing Congress to set the amount of money the government can print each year would eliminate the high cost of filing tax forms and collecting taxes while avoiding the annual budget approval melodrama.

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Hello, this is Tom Kagy with Unconventional Wisdom.

Now here's an idea that I had written in an essay that was published in Trans-Pacific Magazine a few decades ago. If you are one of those people who enjoys filling out 1040s every year, if you really get off on the bookkeeping aspect of that, or if you're a small business owner that loves doing your ⁓ taxes, your bookkeeping every year,

Or maybe if you're a bookkeeper or an accountant who profits mostly off of tax season, you'll probably hate this and you probably don't want to listen any further. But if you're like me and you hate doing 1040s, you hate dealing with the entire tax system, then you might like the idea of a virtual tax.

Now, what is a virtual tax? Rather than having the government collect a certain percentage of everybody's money, a virtual tax would be where the government simply prints the money that it needs. Of course, the more astute among you may be screaming, well, that's going to cause crazy inflation. Well, we already have crazy inflation all over the world. And it's not getting any better. Our budget deficits keep getting bigger. Nothing is being done to correct it.

One way we can correct it is by taking into account the fact that the government is necessary and that it has to spend a certain amount of money to perform its necessary functions. Once you accept that, then you accept that there will be a certain amount of inflation because the government is adding to the burden, adding to the cost of everything. It's just a necessary surcharge to the cost of existing in a safe, controlled society. It's the cost of having roads, airports, police officers. So how would a virtual tax work? Well, right now, the federal government prints money. It prints essentially whatever it needs.

Now when the government needs something and it doesn't have the cash, it gets the Federal Reserve to create it. Okay, this is process that they call, quote, monetizing the debt, where you essentially are quietly transferring purchasing power from every person in our society who holds any dollars to the government, which does the printing.

Naturally, this causes some inflation and obviously having virtual taxes will not change that.

So what are the advantages of having a virtual tax system? Well, first of all, you save probably somewhere in the order of $100 billion, maybe $150 billion a year in administering the tax system, all the different taxes that are collected by the government, income taxes, corporate taxes, inheritance taxes, tariffs.

That costs a lot of money and that effort can totally be done away with under a virtual tax system. And then of course there's an additional probably two or three hundred more billion dollars wasted in the form of bookkeepers, accountants, individuals wasting their productive time filling out tax forms, lawyers arguing about taxes.

So essentially right now we're spending, I would say somewhere around minimum of $600 billion a year just because we have a non-virtual paper tax system. Now that is what, 2 % of our GDP essentially. So we're basically just wasting 2% of our GDP on just the process of having non-virtual taxes. And of course, then there's the other, I would imagine probably 15 to 17 percent that is going toward various government expenditures. Okay, so and this is all currently covered partly by the paper tax collection system and partly by the government simply printing the additional money that it doesn't have.

Now imagine if we did away with all of that and we simply settled on a figure that our Congress, people elected to decide our necessary federal expenditures, would settle on one number.  And once that's done, there would be no argument about it. There wouldn't be the melodrama we have every year trying to get annual budgets approved, which in itself is very wasteful.

And it actually interferes with economic activity because a lot of people don't know what they should be doing when the government is closed or they don't know when the government reopened. They can't do any planning. We kind of have a little bit of that going on right now.  Our airports are backlogged at the security checks because TSA is not funded anymore.  So a lot of these TSA agents are being asked to work for free because we simply haven't finished out the budget approval process.

And of course, a lot of them aren't going to show up. They'd rather stay home or go work on their side gigs. So we have these three hour, three and a half hour airport lines. That's just a tiny symptom of insisting on having a paper tax system in an age when we have the capability easily to have a virtual tax system. OK, now.

The annual budget drama being dispensed with is only one advantage. The other advantages are that there will be absolutely total control over inflation. Right now, we don't have total control because it's not possible to control the total amount of money that ultimately ends up getting printed to make sure our government continues functioning.

But under a virtual system we can print a certain amount of money if we end up needing more than the amount that was approved to print. We have to take that into account in the next year and deduct that amount from the total amount of money that Congress feels should be printed the next year. The bottom line is we have a system that is frictionless. It doesn't cause disruptions.

Everybody knows, everybody understands, that society is paying for it in the form of inflation. What's also great is it's not regressive, like some aspects of our current tax system. In other words, if you're a rich guy or rich girl who is making millions every year, well, you're going to be paying a much higher price because all your dollars are going to be taxed more simply because the inflation will proportionately take a bigger bite out of what you've earned. If you're a poor person who has no money, takes nothing from you. In fact, if anything, this system would probably require there to be some sort of government transfer to low-income households to help them enjoy a certain amount of economic security, which is what we have now anyways, although it's very, very inefficient.  As even Donald Trump pointed out, it's open to some abuses.  

So anyways, that's my idea for the day. It's unconventional, but I think it's a great idea. I'm baffled that Congress didn't jump all over it when I first wrote the essay back in, I think, 1991. So you can help the United States of America become a rational modern society by writing a little note, go to your congressperson's page and write a little note saying, we've got to go to a virtual system so you morons don't keep screwing over society every year with your stupid budget battles.

Thank you very much. Until next time, this is Tom Kagy for unconventional wisdom on Goldsea podcasts.