Actually, they could. Printing say 1 note for every 9 notes in existence would lead to an inflation of around 11% and is equivalent to a uniform property tax of 10%.
The reasons we don't do things that way I can think of are:
- it would make inflation huge (government spending typically is over 30% of GDP; that would give over 50% inflation)
- it was not possible under the gold standard.
- people would feel it as unjust that one's cash and bank accounts are 'taxed', but e.g. houses one owns are not.
- because of the former, it would tax the poor way more than the rich.
It would be a really good way to stimulate consumer spending, though.
Also, people would eventually stop using the government's currency, the bank notes it printed would then be worthless, and the government would have to start explicitly taxing again. Only now it would have an economy denominated in a foreign currency.
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They cannot just print infinite number of notes
Actually, they could. Printing say 1 note for every 9 notes in existence would lead to an inflation of around 11% and is equivalent to a uniform property tax of 10%.
The reasons we don't do things that way I can think of are:
- it would make inflation huge (government spending typically is over 30% of GDP; that would give over 50% inflation)
- it was not possible under the gold standard.
- people would feel it as unjust that one's cash and bank accounts are 'taxed', but e.g. houses one owns are not.
- because of the former, it would tax the poor way more than the rich.
It would be a really good way to stimulate consumer spending, though.
Also, people would eventually stop using the government's currency, the bank notes it printed would then be worthless, and the government would have to start explicitly taxing again. Only now it would have an economy denominated in a foreign currency.
In short, They cannot just print infinite number of notes