My name is Economart (for purposes here anyway) and I have been working for nearly 15 years on a fascinating subject little investigated in Public Finance: a Cost and Benefit Analysis of Taxation. The conclusion is quite startling, and I have yet to find a refutation.

The core argument contains what I consider a near mathematical proof for the abolition of Taxation. I know it sounds absurd, but upon investigation it becomes less so.

For that elusive refutation, I shall pay the successful challenger or charity of his choice CDN$10,000 of my personal funds.

Many years ago a very poor assumption established itself in economics and, specifically, public finance. It was accepted without proper investigation that Taxation is the best means of raising capital for public expenditures. I argue that it is not and never has been.

Though some may know vaguely the financial costs of Taxation, very few people are aware of the financial benefits of Taxation, which is very strange considering its broad usage and excessive burden.

All my work forms its foundation in one self-evident truth, that government does not fund itself. It does not fund public expenditures. It does not settle its debts. It never has and it never will. That task has always fallen to the Taxpayer. In order to fully and properly understand how Public Finance works, one must apply this little appreciated fact. Given that the community of Taxpayers funds government, it is to their finances on must look and examine in order to answer rudimentary questions in this area of study. If this insight should not be correct, then all I argue for is worthless. If correct, then all that follows must be so.

The terse 15 sentence proof supplied below explains in summary the financial benefits to a jurisdiction, any jurisdiction, using Taxation to raise funds for public expenditures. The method used is a very simple one. Add up the financial benefits of Taxation and see if they surpass all costs.

I have discovered that it does not matter whether a community, not the government, but a community, funds its public expenditures by Taxation or Borrowing. However, Taxation bears immense costs in deterrence and in government squander that Borrowing does not. So why would a community tax when it can borrow and shed these inherent and exorbitant costs?

I am not arguing for the abolition of government, only the present and primary means of how funds are raised for public expenditures. All I am concerned about is a government revenue question, how the government fills up its money bag, not how it empties it.

If the idea and proof be correct, its implementation shall generate immense wealth within nations and throughout the world — a blessing for us all.

The idea explained with such brevity below has never generated much interest in the economics’ community, and none among the few learned economics thinkers and practitioners with whom I have been in contact in the past has ever supplied a refutation. Recently, I have made this same generous financial offer directly to the Business and Economics professors and certain of the students at many universities throughout Canada and several abroad. Perhaps the learned men and women visiting this site can do better in discovering the flaw.

And if unable to discover the elusive flaw, perhaps the idea will be of some service in rendering the stagnant field of economics once again more fertile, siring lucrative returns for all.


The costs of borrowing for a community or nation to fund public expenditures, if it borrows solely from its resident citizens and in the nation’s currency, is nil.

Why? Because if, in adding a financial debt to a community, one adds an equivalent financial asset, the aggregate finances of the community will not in any way be altered. This is simple reasoning confirmed by simple arithmetic.

The community is the source of the government’s funds. The government taxes or borrows from the community to pay for public services provided by the government on behalf of the community.

Cost of public services is $10 million.

Scenario 1: The government taxes $10 million.

Community finances: minus $10 million from community bank accounts for government expenditures.

No community government debt, and no community government IOU.

Scenario 2: The government borrows $10 million solely from community lenders at a certain interest rate.

Community finances: minus $10 million from community bank accounts for government expenditures.

Community government debt: $10 million;
Community government bonds held by lenders: $10 million.

At x years in the future: the asset held by the community (lenders) will be $10 million + y interest. The deferred liability claimed against the community (taxpayers) will be $10 million + y interest. The value of all community government debts when combined with all community government IOUs or bonds is zero for the community.

Theoretically, at some point in the future, the community via its government could collect taxes in the amount of all debts and interest from the community, i.e. the taxpayers, and simply hand the collected funds right back to the community, i.e. its lenders, erasing the acquired community government debts and assets.

It is the same $0 combined worth whether the community pays its taxes immediately or never pays them at all.

If a community borrows from its own citizens to fund worthy public expenditures rather than taxes those citizens, it will not alter the aggregate finances of the community or the wealth of the community. Adding a financial debt and an equivalent financial asset to a community will cause the elimination of both when summed.

Whatever financial benefit Taxation possesses is nullified by the fact that borrowing instead of Taxation places no greater financial burden on the community.

However, the costs of Taxation are immense. By ridding the nation of Taxation and instituting borrowing to fund public expenditures, the nation will shed all those costs of Taxation for the negligible fee of borrowing in the financial markets and the administration of public debt.

Find the Flaw and Collect the Prize