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RE: Three Extremely Important Taboo Questions (And The Answers)
Thank you for your answer. Do you have any idea where the tax dollars end up, if they aren't in the government bank accounts? That's the bit I couldn't quite comprehend.
They get destroyed.
Think of how it looks on a balance sheet when money is created - the central bank creates the money as a liability to itself and an asset to whomever is receiving the money.
When the money comes back in taxes, the asset is given back to the central bank and it then cancels the liability on its balance sheet.
The Australian Tax Office doesn't accept notes for the payment of taxes. However, if someone in the US pays dollar bills to the IRS, those notes are thrown into a shredder. You can buy the shredded dollars, if you want.
Okay thank you. You did explain that in the post, but I guess it didn't fully sink in. Not having any accounting training it probably went past me. But I think I get what you mean. So is this 'double-entry accounting?'
Yes, double entry bookkeeping. Basically, every entry is a + to one person and a - to another person. When you add the +’s and -‘s together, you should always get 0.