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Can anyone provide evidence to support this statement? If the US Treasury does not use taxes collected to pay any of the expenses of the US Federal Government, that means that they destroy that money when it comes into their control, in whatever form it comes in (paper, checks, electronic transfer, etc). I'm willing to beieve a statement like this, but I really want to see the evidence behind it because I don't believe it is true.

The Treasury does not collect enough taxes to pay the expenses of the Federal Government. That's why we have deficits. But the money that the Treasury does collect is transferred to accounts that are then directed by Congress based on legislation that is passed and by the Executive branch to pay the expenses of government. We can agree or disagree with what is being paid for, but the actual mechanism of what happens to the dollars that get paid in taxes is something we really need to get a handle on so we can stop fighting about it.

So, does anyone have EVIDENCE that taxes paid into the Treasury are destroyed? I'm serious.

Sigwo 1y ago

If I understand, taxes pay the Fed back, who previously "printed" all the money for the Treasury to fund the government.

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Chad Lupkes 1y ago

Yes, that's true. But that's actually paying for the expenses of the government. When money is created, it is balanced with debt. The Treasury creates the debts in the form of Bonds, Bills and Notes. Those are bought on the open market, and well, here is what the Federal Reserve website says about it:

How does the Federal Reserve's buying and selling of securities relate to the borrowing decisions of the federal government?

All monetary policy decisions of the Federal Reserve--including buying and selling securities--are made independently of the borrowing decisions of the federal government and are intended solely to fulfill the mandate set out for the Federal Reserve by law--maximum employment, stable prices, and moderate long-term interest rates.

The Federal Reserve purchases Treasury securities held by the public through a competitive bidding process. The Federal Reserve does not purchase new Treasury securities directly from the U.S. Treasury, and Federal Reserve purchases of Treasury securities from the public are not a means of financing the federal deficit.

In financing the federal deficit, the federal government borrows from the public by issuing Treasury securities, which are sold at auction according to a schedule that is published quarterly. The Treasury determines the types and amounts of Treasury securities sold at auction with the goal of achieving the lowest financing costs for the federal government over time. The Federal Reserve does not participate in competitive bidding at Treasury auctions, and the Treasury's debt management decisions are not influenced by the Federal Reserve's purchases of Treasury securities in secondary markets.

https://www.federalreserve.gov/faqs/how-does-the-federal-reserve-buying-and-selling-of-securities-relate-to-the-borrowing-decisions-of-the-federal-government.htm

Chad Lupkes 1y ago

So, what I see here is a simple case of plausible deniability. But it still doesn't change the fact that taxes coming into the Treasury do go to pay down the debt held by the Federal Government, which while sold to the public through open auction, are bought by the Federal Reserve and then cashed in to the Treasury in exchange for the tax revenue that the Treasury receives.

Chad Lupkes 1y ago

According to the Treasury, the tax money the Federal Government collects is placed into the General Fund of the Treasury to pay for essential government services.

https://home.treasury.gov/subfooter/faqs/accounting-budget-faqs