Although I don't live in the US, I can imagine what would happen if the federal and state governments unilaterally stopped collecting income tax all at once... Instant financial chaos and severe social and economic dislocation for a prolonged period of time. Decades, perhaps? Without the means to pay the interest or capital on trillions of dollars of debt acquired by the governments, chiefly through the sale of bonds to US citizens and foreign investors, all government debt would instantly become worthless. Since a substantial amount of this debt is held outside the country, defaulting on it would produce rapid economic retaliation. US currency would collapse and become worthless to anyone holding it. All foreign trade would come to a standstill, because no one would sell to those holding US currency and the US would be unable to pay for any imports. The economies of other nations would begin to destabilize: debt holders, trading partners, and those who are neither; all victims of a global economic disruption. The effects would cascade rapidly through every segment of US society touched by the federal and state governments. I could go on, but all direct and indirect government subsidies to the telecommunications industry have stopped. You have just received a notice of a sharp increase in your communications charges that you cannot afford to pay with the devalued US dollar. You won't be able to read the reast of the posting, becau.......... phszzt.......... light up the candles, dear. ________________________________________ Re: "scores of us would migrate to Canada" Trade with the US dominates the Canadian economy to an extent far beyond that of any other western nation. The Canadian economy is far too dependent on the health of the US economy. Some 80% of Canadian exports go to the US and some 70% of imports come from the US. Canada is the largest trading partner of the US - 20% of US trade is with Canada. Most of this trade is intra-corporate transfers of products and materials. The automotive industry, for example, is tightly interconnected through the 1965 Canada-US Auto Pact. If the US economy collapsed, millions of Canadians would be out of work the next day.

It is about a balance between what the government spends and what they get in from taxes. When the government spends more than the tax it gets in, this is a deficit and the US has to borrow that money from other governments or the World bank. Specifically, income tax accounts for only around 30% of total government revenue, the rest coming from all the other taxes we have to pay. In the short term therefore, not much of a difference, although the 30% of lost revenue would have to be found from somewhere, be it from increasing the other taxes, cutting government spending on things like welfare, or borrowing more from other countries, Long term however, it could not go on indefinitely, as governments that raise taxes or lower government spending tend not to stay in government for very long, and the more debt a country is in, the less the their currency is worth, affecting the value of it's exports and making it's imports more expensive. The knock on effect of abolishing income tax could be disastrous to the US economy, but i'm sure the government would find some other way to get the revenue it requires, by taxing us on something else, or we could plunder the middle east of it's natural resources!

But... If I had a safe full of Gold, I could continue to purchase anything I wanted to until my gold ran out, if ever. Economically, things would become more expensive, but my gold would not lose its value. The U.S Government's gold would be just the same. They would have to begin collecting gold in place of income tax. Millions of Americans would suffer with insomnia as the U.S. Government would eventually change the meaning of, Tooth Fairy.