Can Cryptocurrency Prevent Pre-Spending of Tax Revenue?

 

This article is provided for information and education purposes only and is not intended as investment advice. Readers are encouraged to do their own research and consult a professional before making any investment decisions.

 

 

 

 

 

Pre-spending of tax revenue is a problem that plagues taxpayers around the world and could easily be solved by wider adoption of legitimate cryptocurrency. Spending of this phantom tax revenue reduces accountability for monetary authorities and places undue strain on a tax base. Phantom tax is presumed future tax revenue which is spent prior to any tax payment being received. Experts commonly refer to pre-spending of phantom tax as deficit spending.

When tax money is spent prior to revenue collection, it places a strain on future generations of workers - not only by increasing debt levels, but also by prematurely devaluing an individual’s net worth relative to the total sum of wealth in the country's economy. Those on a fixed income often have a hard time keeping up with these inflationary periods if they’re not accompanied by corresponding increases in their payments. They can find themselves having to make extreme lifestyle sacrifices, even if it means sacrificing their health just to make ends meet financially.

Placing the onus of a huge financial debt burden on tomorrow's workers automatically puts that nation’s people at a huge financial disadvantage relative to their international peers. If cryptocurrency can gradually be phased in to mainstream society, it might just help change this trend by restricting the ability to print money out of thin air and nullifying centralized authorities’ opportunity to spend taxpayer money that they haven't even contributed yet. 

With fiat money there is almost zero public accountability and transparency in the process of generating new units of currency, and parties are entirely capable of colluding in a self-serving manner that works to the detriment of society at large. This is all possible due to insufficient public oversight regarding how tax money is spent and managed by our respective governments. 

In cryptocurrency's case, the generation of new units of currency is algorithmically dictated, and the public can freely participate in this process. Each cryptocurrency's blockchain provides a record of every transaction that takes place on the network, which the public can easily browse by using a block explorer.

Transparent cryptocurrency allows taxpayers to track their contribution via a block explorer, so long as their government is willing to operate above board. This would allow anyone in the general public to audit government programs which are funded by cryptocurrency - and have a cryptocurrency-based spending budget. 

To reiterate, this opportunity to utilize the harder currency standard offered by cryptocurrencies can prevent spending of phantom tax, since you can't spend cryptocurrency that is not in your possession. The level of transparency and accountability that cryptocurrency can offer upon mass adoption is unrivalled by any fiat currency. Barring a third-party-conducted and publicly accessible audit of all central bank ledgers going back to their founding, fiat can never reign supreme in this regard.

Author: Brandon Cheliak

Education Director for DNotes and co-founder of DNotesEDU

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