Taxes

I was just thinking today about the taxes gathered from the circulation of a single one dollar bill. Here's what I mean.

You earn one dollar on Saturday. You pay about twenty-four cents from that dollar into income tax. Then you spend your dollar at the store. When you spend it, seven cents go to sales tax. Then the store owner claims that dollar as income, and spends sixteen cents on income tax. He then pays the cashier with that dollar, and the cashier gives twenty-four cents of that dollar as income tax. (So, from your hands to the hands of the cashier who you gave the dollar to, the dollar has raised seventy-one cents in taxes. That happens in one day.)

Let's pretend that dollar is spent every day. (I think it would be a fair under-estimate to claim that on average, Americans spend a dollar a day.) If the average dollar bill remains in circulation for three years, (that's 1,095 days) and earns seventy-one cents in taxes every day) by the time that dollar is retired, it has generated $771.45 in taxes for the American government.

Now, don't quote any of these numbers. I just thought it was an interesting thought experiment. Maybe that's why the government doesn't like it when we color on money.