It means that if they take 90% of your money and just sit on it (it is never spent in any fashion whatsoever), than it ceases to exist qua money. The goods it represents don’t go out of existence, so the remaining 10% of the money will still be representing the total amount of goods in circulation . . . the net result being that your 10% will be worth as much as the 100% you had before. It basically relies on the fact that we use a fiat or representational currency instead of a hard currency: it’s tantamount to your credit card company saying that you have a “theoretical” $100,000 limit, but you you have to stay $90,000 under the limit as a “safety gap”. Practical result: you have a $10,000 limit.
If, however, the government were to take 90% of the goods or hard currency, there would be a problem, because it would be destroying productive capacity instead of paper that doesn’t mean anything.
As for the question of where I would start if I were to reduce taxes, I’d probably hit “specialty” taxes like capital gains or vice taxes and “invisible” taxes like payroll taxes. Part of this program would be eliminating stupid laws like vehicle registration, and hyper-expensive programs like social security. The reason I’d start with these is that they are most indicative of the country’s overall philosophical approach to the question of taxation. If you can get taxes that don’t, apparently, affect most people repealed, you know it’s time to move on the whole deal.
Then you start instituting measures like a flat income tax that decreases the burden on the sectors of society that invest most in future growth. This would theoretically ramp up the economy, making it easier to eliminate taxes altogether at a later stage. At the same time, you begin a takeover program of gradually introducing charges or a government lotto or whatever your final government-financing scheme will be. You also cut every last vestige of improper government spending and begin sending people larger and larger refunds.
In the final stage, there shouldn’t be anything left but a flat income tax and a flat sales tax. It’s a tossup which of these to eliminate first. A sales tax is semi-voluntary, since people have to actually go out and buy things in order to encounter it, but it may also cause people to limit their transactions in order to remain tax-free. If you actually manage to get to this stage and you have your voluntary-financing apparatus in place, why not just dump both of them at the same time? Sounds good to me.
It’s not impossible or even really difficult to develop a practical plan, in fact, it’s vital to have a practical plan when you start pitching your philosophical ideals. If you were a venture capitalist, would you rather invest with someone that says “the theory is this so we’re going to enter into this area and start making some sort of product” or someone that actually came to you with numbers describing the market gap, why they think there’s a demand, what specific product they’re making to fill that demand, how they plan to merchandise it, advertise it, potential customers they’ve already approached, etc.? Seems like a no-brainer to me.
