The Necessity of Collecting State and Local Taxes

Executive Summary

• States and local entities only need to collect taxes if they do not have the money creation power of the government.

Introduction

Only the federal government should have the power to issue money. The US colonies ran into problems, with each colony issuing its own money. For example, competing currencies would not be allowed (that is, Ohio issuing a different currency than Virginia’s). However, that power can be in part delegated to the states a well.

How About State and Local Taxes?

Neither state nor local taxes are necessary if the government were to control the power to issue money from the Federal Reserve and private banks. The purpose of taxes is to reduce spending power, not fund governments. However, even without the benefit of money creation, the Bank of North Dakota has proven the benefits of having a state bank — even if it uses debt-based currency (as it does). The Bank of North Dakota would be even better off if it could use debt-free US government-issued money.