Tuesday, April 5, 2016

Jon Schwarz — Here’s the Price Countries Pay for Tax Evasion Exposed in Panama Papers

How much tax revenue do the world’s governments lose thanks to this kind of financial engineering?
According to The Hidden Wealth of Nations, a recent book by University of California, Berkeley economist Gabriel Zucman, the answer is that tax evasion costs governments approximately $200 billion per year.
Zucman also estimates that tax avoidance by U.S. corporations — which, unlike tax evasion, is generally carried out in the open and is technically legal — costs governments an additional $130 billion per year. (European and Asian corporations have the same incentives to avoid taxes, but there is not enough data to estimate its scale.)...
The Intercept
Here’s the Price Countries Pay for Tax Evasion Exposed in Panama Papers
Jon Schwarz

26 comments:

Matt Franko said...

Right because as everybody knows govts get their money from the taxes otherwise they would be broke...

Tom Hickey said...

The problem is that 1) government and the people at large believe this and it is not going to change in the foreseeable future, and 2) even in paradigm, government expenditure is funded by taxes or deficits and deficits increase government liabilities. Increasing government liabilities is a good thing from the perspective of increasing $NFA (non-government financial wealth) but it also potentially results in inflation at full employment. So funning a full employment budget and also funding socially desirable goals is still going to require draw down of previously created $NFA.

Allowing the wealthy to hoard is at least potentially a problem financially and economically and vast inequality in the distribution of real wealth means allocating real resources very disproportionately, which eventually as social and political consequences, and the Trump and Sanders candidacies are showing.

There's also a perception problem. Havens are designed to keep the public from knowing the extent of inequality and the actual distribution of financial wealth. The same is true of real wealth although it is harder to cover up now with Google Earth. Even so, few people know the extent of the real holdings of the superrich. BTW, the superrich began acquiring the choicest property on the planet back in the 19th century. This has been going on for awhile.

But still one cannot get in and look at the premises. I recall what a todo there was over the discovery of Imelda Marcos's collection of designer shoes. This is the insinuation of the wealth of Putin and XI's family and friends, even though not in their names.

lastgreek said...

Basically, Tom, tax evasion has the same effects on the economy as counterfeit currency. Wonder if they carry the same penalty ;)

MRW said...

Matt,

Right because as everybody knows govts get their money from the taxes otherwise they would be broke...

Exactly

So funning [funding?] a full employment budget and also funding socially desirable goals is still going to require draw down of previously created $NFA.

How so? Didn’t happen in WWII or 1945-1965. Where does this this idea come from, and I’m asking this question sincerely. It doesn’t make any sense to me; I need to be enlightened. How do Net financial Assets pay for a full employment budget and socially desirable programs, if that’s what you’re saying? Or, are you talking about treasury securities sopping up more money swilling in society to stem the immediate use of those dollars in the real economy?

The perception problem is real and largely, perception porn. Even at 1,000 pairs of shoes and considering the cost of designer shoes today--male and female--at the high end of $2,000/pair, big whoop. But I suppose it matters to the little guy. Still, making a mountain out of this molehill does no one any good.

MRW said...

lastgeek,

Basically, Tom, tax evasion has the same effects on the economy as counterfeit currency.

????

Tom Hickey said...

MRW, it's the accounting. Revenue and borrowing are sources of funds for both the issuer and users.

The difference is that government as issuer funds itself whereas users don't. Users have to get funds from those with the power to generate them, either from government or from banks as government agents in money creation. Only the issuer can increase and decrease $NFA (spending and taxation).

Even though the issuer creates its own funding by crediting accounts and issuing securities, it still "gets funds" as far as the accounting goes. The issuer gets funds it has already supplied and has an unlimited supply of. However, to maintain price stability the user cannot create unlimited funding for itself. At some point, creating new funds for moving resources to public use will be inflationary if funds that have been created are not withdrawn (taxed).

Taxes also drive state money. Therefore the state has to maintain control over money creation and withdrawal to maintain its monopoly. A government that can't control counterfeiting or collect taxes loses its sovereignty over the currency.

Tom Hickey said...



Yes and no. Counterfeiting and tax evasion both contribute to undermining currency sovereignty. But counterfeiting also undermines the government's currency monopoly directly.

Furthermore, tax evasion often amounts to sterilization of the amount of taxes evaded since it is not used for consumption. However, it may be used for purchasing real assets, especially RE, so it does have an effect on asset appreciation.

But counterfeit money is usually spent immediately and that is potentially inflationary at full employment. Of course, if the government's fiscal stance is too tight for economic conditions, the spending increase could also be a blessing in disguise.

MRW said...

Thanks, Tom. That was clear and it was my understanding, so sorry for the confusion.

In the interim, I read Romanchuk’s “What is Monetary Policy?” and Lonergan’s "The distinction between monetary and fiscal policy,” which contained this footnote:

[2]Scott Fullwiler provides a clear distinction between fiscal and monetary policy, in this excellent article. But as is often the case with MMT, the definition is idiosyncratic: “fiscal policy is about managing the net financial assets of the non-government sector relative to the state of the economy, and monetary policy is about managing interest rates (and through it, to the best of its abilities, bank lending and deposit creation) relative to the state of the economy.”

So I was off to read Scott article. something I remember glancing at last June before leaving for a trip, not something I really sat down and read. I find Fullwiler clear-headed about subjects as complex as Fed operations--he goes out of his way to talk English--but I have to concentrate and follow his roadmap into the material. Then I’m fine stumbling in the dark because I make my way out of it.

Tom Hickey said...

Right. The MMT position that fiscal is about operations that change the amount of $NFA and monetary is about operations that only affect the composition and not the amount.

The great thing about MMT is that the definitions are operational rather than merely stipulated. Stipulated definitions in models usually carry some ideological bias.

Brian Ulrich said...
This comment has been removed by the author.
Brian Ulrich said...

Hey Tom, and others, apologies for reviving this old thread... but I've been doing some work on the monetary nature tax evasion and counterfeiting, and haven't found much mention of it in official MMT literature or forums... except here.

I'll start off by agreeing with everything Tom said. But wanted to point out that the claim that tax evasion and counterfeiting are different is based on general assumptions about how the illicit funds are spent/invested/saved. As is correctly pointed out, when all the variables are considered, funds from that activity are more likely to be "spent" vs illicit funds from tax evasion. That's fair enough. Our world works the way it works. But that probability isn't something universal. It varies among sovereign nations based on, among other variables, the capabilities and willingness of each to detect and prosecute these attempts to "undermine currency sovereignty".

However, it is possible for us to be aware of this real-world probability but also acknowledge that it doesn't have anything to do with the underlying accounting identities represented by the two actions of counterfeiting and federal tax evasion. It's possible to strip away the probabilities present in our current society and evaluate the accounting/monetary realities of these two actions for their realities in any sovereign nation that issues it's own currency and collects tax.

As long as the amount of the infractions are identical and the illicit funds "gained" by each are known to be spent/saved/invested in the same exact manner, counterfeiting and federal tax evasion are indeed identical in their effect, including all accounting entries, on all parties involved in the transaction, and all parties not involved in the transaction. At least I'm not aware of anything to the contrary.

Tom Hickey said...

I would say functionally the same in so far as both add spending power that would have been available if the law had been followed, but different in that in the case of tax avoidance, there are entries on the government's books whereas that is not the case with counterfeiting. So it is potentially possible to account for tax avoidance while counterfeiting is just out there floating around until discovered.

Brian Ulrich said...

Tom... maybe we should start out by making sure we are discussing the same thing. Your most recent post uses the term tax avoidance, while all the previous posts in the thread including mine and yours use tax evasion. Hopefully the switch in language was an inadvertent mixup that doesn't distract from the heart of the discussion and we can continue to discuss tax evasion as it relates to counterfeiting.

Tom Hickey said...

Sorry for the mixup, Brian. Tax avoidance is legal, while tax evasion and counterfeiting are not. Tax avoidance is not comparable to counterfeiting, while tax evasion is in that what appears to be money is in the M1 money supply when it should not be there. Tax evasion leaves tax credits on the books that should have been withdrawn, and counterfeiting puts money tokens in the system that resemble tax credits but are not since they are not on the books as such.

The difference among them is that counterfeiting involves bogus tokens created illegally, whereas both tax evasion and tax avoidance involve actual tax credits on the books in the government's unit of account.

When counterfeit money is discovered, it confiscated and destroyed. Cash in circulation doesn't change. Cash in circulation is part of M1, so the money supply doesn't change.

If someone is convicted of tax evasion, not only are the taxes due collected but also a penalty imposed. When these are paid, those tax credits are withdrawn from nongovernment accounts and money is withdrawn from nongovernment, that is, M1 decreases in that amount).

Tax avoidance doesn’t change the amount of tax credits in nongovernment accounts unless the government contests the rationale and wins the case, which sometimes happens. Then taxes are due along with penalties, and when paid, M1 decreases and money is withdrawn from nongovernment. But generally tax avoidance leaves M1 as it is.

Tax avoidance is regarded as moral question rather than a legal one when the law is followed.

Brian Ulrich said...

Tom... thanks for clearing that up. I am in agreement with all of that differentiation between tax avoidance and evasion. Where we disagree, I think, is about entries being on the books of the government. I don't think it reflects the reality or even realistic possibilities of government accounting concerning tax evasion.

You point out that counterfeiting is just "floating around until discovered". That is correct and is why it makes sense that the government would NOT have an accounting entry for that action. But the same is true for tax evasion, which is simply misrepresenting the value of something that the government taxes. Both of these actions undermine government sovereignty and both involve monetary transactions of which the government is unaware. That's a key point, because the fact is the government can't have an accounting entry for something it doesn't know about!

To be sure, the IRS has information on file for each taxpayer. Per taxpayer ID, employers report wages paid, banks report interest paid, mortgage companies report interest received, brokerage houses report on capital gains, etc. If those were the only things the government taxed it would be very difficult to evade taxes, because that is all known information to the IRS. But if tax liability was calculated only based only on info known by the IRS, then it could send each taxpayer a tax bill instead of requiring a tax return to be filed.

Until the return is filed government does not know if you earned cash income, incurred capital gains from the sale of real estate, installed energy-saving appliances that qualify for a tax credit, obtained a new dependent(via birth, adoption) that results in an additional exemption, the breakdown of your business vs personal expenses which affect "net" income and therefore tax liability, whether a business wants to accelerate depreciation on an asset, etc. Hell, they don't even know whether individual filers will itemize or not, much less what the final itemized deduction would be. All of those things, unknown until tax filing, are self-reported. It seems obvious that whatever accounting entries are on the government books to represent tax liability MUST reflect what is known.
Besides the situation of approved tax returns where the tax liabilities for the tax year are offset by the correct combination of payments/refunds, the only time the government would make a tax-related entry on its books is when it became aware of a discrepancy via tax audit or similar investigation or when an amended tax return is filed. For the student focused on operational reality, as opposed to theory, the fact that the government allows amended returns(with no more accompanying documentation than the original) to be filed should provide all the proof necessary. Because whether the amended return results in additional payment or refund for the taxpayer, the government is forced to make an adjustment to their books to reflect that transaction when it approves the amended return. So we must either believe that until it accepted the amended return the government had an accounting entry that indicated the TRUE tax liability of that taxpayer despite the fact that it didn't match his original return, the government chose to ignore it until the amended return was processed, and then made the appropriate CORRECTION to the books when it issued the refund (or accepted payment). Or instead we may believe that the government just makes the appropriate accounting entries based on the information provided in the tax returns as it processes them, and makes additional entries (or completely rejects a return) if information on a return doesn't mesh with the KNOWN information it has on file. In short, the entries on government books reflect reported tax liability, not actual tax liability, which is why tax evasion does not influence government books any differently than counterfeiting.

Tom Hickey said...

That's a key point, because the fact is the government can't have an accounting entry for something it doesn't know about!

Of course, you can have accounting entries that is not reported correctly or not reported at all. Those accounting entries that tax evaders don't report correctly or at all, but are required to keep and report to tax authorities, are spendable money that is part of M1. There is a money trail.

Some of that is cash or laundered into cash, which is difficult to trace once cash is withdrawn and in circulation. But there is a record of cash passed through tellers' windows. Cash in circulation is part of M1 money supply and it is accounted for when withdrawn or deposited. How much cash there is in circulation is a known amount.

Everyone is required to keep accounts and report periodically to the IRS in the US. Failure to record all transactions accurately, including cash transactions, and to report them as a component of earnings constitutes tax evasion. While the government doesn't know necessarily have the accounting record in advance, that is what tax audits are for. Authorities also monitor transactions and movements of $ that appear to be suspicious. Tax evaders do get discovered through making large purchases with cash. In the US the IRS is on the lookout for this, as well as money laundering.

BTW, I have friends who have received a letter from IRS stating that their tax report doesn't reflect information that the IRS has about them. The person is informed that they have have been assessed an additional amount of tax, prompt payment of which will terminate the matter. The letter warns that if the payment is not received in the specified time, then an audit will ensue to determine the matter.

None of this is the case with counterfeiting. And for those unlucky enough to accept counterfeit money and be the one discovered to be holding the bill forfeit the amount when the bill is confiscated. No accounting involved.



Brian Ulrich said...


Tom, thanks. I really do appreciate your willingness to discuss this.

That's a key point, because the fact is the government can't have an accounting entry for something it doesn't know about!


Of course, you can have accounting entries that is not reported correctly or not reported at all. Those accounting entries that tax evaders don't report correctly or at all, but are required to keep and report to tax authorities, are spendable money that is part of M1. There is a money trail.


This could be misinterpretation on my part, but your answer here seems to involve “accounting entries” on private books as opposed to “accounting entries on the government books”, which is what you claimed to be the difference between tax evasion and counterfeiting. Surely, we can agree that any entries on private books are irrelevant to the matter. Those are certainly easier to forge than counterfeit bills. Obviously, a business owner who accepts $10,000 in cash payments that he plans to NOT report as income is not likely to record those transactions on his books, despite the fact that he is required to keep them for tax authorities.

While entities that accept a lot of unreported cash or deal in illegal trade altogether will have two sets of books. So, yes, on private books there may all sorts of accounting entries. Some legitimate, some knowingly falsified, some duplicate, some for their eyes only. But the only entries “on the government books” will represent what is known by the government, which is basically what is filed in the tax return (or other quarterly reporting required by law). It’s what is on the government books that determines the tax liability of each taxpayer, which is the same as saying it’s what the government knows about.

Brian Ulrich said...

While the government doesn't know necessarily have the accounting record in advance, that is what tax audits are for. Authorities also monitor transactions and movements of $ that appear to be suspicious. Tax evaders do get discovered through making large purchases with cash. In the US the IRS is on the lookout for this, as well as money laundering.

We are in agreement on this point about how audits and other government monitoring serve to detect tax evasion. And I think your first sentence here acknowledges that government does indeed adjust its accounting entries to reflect the result of any audit or investigation. Pass the audit and nothing changes. Don’t have the paperwork to back up your $500 energy efficient tax credit and you lose it, along with any penalty imposed. It’s not until that moment of final judgement by the auditor that the government books get adjusted to reflect both the tax liability and the penalty. But nothing here illustrates how tax evasion differs from counterfeiting, in terms of monetary operations.

I think it’s helpful (imperative) to separately analyze the crime and the punishment; the monetary “action” of the individual/company and the reaction of the government. Once they are analyzed separately, the results can be combined. In fact, I should reiterate here that my claim of identical operation and effect are only concerning the “actions” of counterfeiting vs federal tax evasion, not necessarily the government “reaction”. But the government does have full authority over its reaction and as long as it’s reaction to each is identical, then even the combination of the crime and punishment for each offense are identical. The same can be said for nearly any white-collar crime and its blue-collar equivalent. If you wear a suit and skim money from savings accounts your punishment, even considering monetary retribution only, may differ from someone who swipes money from cash registers.

So, are federal evasion and counterfeiting different if the crimes are perpetrated, but not discovered?

What if they are discovered but not prosecuted? (by a corrupt government, for example)

Tom Hickey said...

I think of of a currency system as a network of accounting records in a hierarchy with the government at the apex, the banks that member of the central bank's system at the second tier, non-bank financial institutions at the third level, and firms and households at the fourth level. These are the counterparties to transactions in the unit of account and so all books overlap over the network based on the flow of the unit of account as recored in the accounting records. The whole thing could be put on a giant spreadsheet and the push now is to do just that. But even without it, it is possible to trace money flows across and through the entire system with only a few "holes" that make tax evasion possible to cover up through money laundering and use of cash. Money laundering usually involves international transactions that are difficult for a government to trace without cooperation of other countries, and cash transactions are inherently opaque.

While most many think of their records as theirs and as individual, that is not how government agencies or lawmakers think. they understand that they are dealing with a system that is constituted of a network of subsystems and nodes linked by accounting records recorded in the government's unit of account.

As entries in the government's unit of account, all records involving the government's unit of account are "on the government's books," albeit in an extended sense, in that legal jurisdiction, e.g, in the US, under federal law. This is the basis of chartalism, in which taxes are required to create a demand for the money the government issues. All accounting records overlap because of double entry bookkeeping in counterparties' accounts. So it is possible to trace all transactions across the accounting records in a unit of account. The exception is cash, which potentially is not recorded. But that is a legal violation and is evidence of tax evasion. Of course, tax authorities are primarily concerned with large transactions, and much of this takes place using large denomination bills. To the degree there is no control or loose control, tax power declines. To the degree control is lost, demand for the unit of account loses its basis and confidence in government declines, and more people are incentivized to take advantage of the system.

The IRS and FBI spend a lot of their funding keeping track of this. Large cash transactions are flags. Money laundering is also under scrutiny internationally, especially in the big money centers alike London, NY, and HK.

The chief objective in a raid is to seize all records intact and if not intact, recoverable, as well as to locate cash hoards. Agents are trained to be expert at doing this. Government all employ a bevy of lawyers and accountants to deal with the data discovered in order to prepare a case. It becomes very obvious at that point who really owns those accounting records.

Banks' books are open to the government on demand for regulation and oversight. There are regulators on duty daily at the large banks. Financial institutions' books are open to the government although the government may have to go through a legal process to have access to them. All firms and households accounts are available to the government at any time the tax authority calls for an audit. Some audits are for cause and others randomly selected to sample how the system is functioning.

continued

Tom Hickey said...

continuation

It has to be that that way for taxes to create demand for the currency. The government has to have access to all accounts in order to enforce tax liabilities and that is tantamount to the entire accounting system of the users of the government's unit of account being included in the the government's books in an extended sense. This is an implication of a government being the monopoly issuer of its currency. The monopoly power is legally instituted, in the US in the US Constitution, and that includes the powers of issuance and taxation. Court precedent establishes that all accounts in the unit of account in the government's jurisdiction are available to the government as tax authority.

The government also has to have access to the financial system to ensure good order and no cheating, and that risk is contained.

BTW, this also includes barter transactions for tax purposes, as some of my friends that are into barter have found out when called upon by IRS. They ended up paying back taxes with penalties. Barter transactions also have to be accounted for by law in computing taxable income.

This is also a reason that Bitcoin is very popular and a further reason that governments will eventually require Bitcoin transactions to be transparent to government or they will be declared illegal.

The entire accounting system as whole in the unit of account is open to the government by law and regulation in the currency zone, and it is enforced.

The exception to this is use of the unit of account outside the currency zone. For the USD, these units are called Eurodollars although they are now international. International tax evasion is generally carried out through money laundering and large denomination US bills, as well as large denomination euro bills. The push is on to close that down by digitizing money and making blockchain transparent to government.

Tom Hickey said...

Counterfeiting is entirely outside the system like embezzlement in which units of account entered are fictitious. Both are bogus, but counterfeiting has no counterpart on anyone's books. It is outside the system entirely from the point of view of accounting.

Tax evasion is a suppression of reality. Embezzlement is an illusion created by accounting. Both tax evasion and embezzlement are discovered through accounting. That's not true of counterfeiting, which is only a matter of a bogus physical token.

Counterfeiting is a physical illusion until it is discovered. Investigators do use accounting to determine when, where and how counterfeit bills entered the system in order to find the source.

Tom Hickey said...

"Counterfeiting is entirely outside the system like embezzlement in which units of account entered are fictitious," should be "unlike embezzlement."

Counterfeiting is physical fraud, while embezzlement is accounting fraud. When discovered, both are deleted. Counterfeit bills are removed from circulation and destroyed after being used as evidence, while corrections to accounting records are made in the case of embezzlement.

Brian Ulrich said...

That’s a great overview and I agree with 99% of it 

So it is possible to trace all transactions across the accounting records in a unit of account. The exception is cash, which potentially is not recorded. But that is a legal violation and is evidence of tax evasion.


I suppose it’s also possible to track, for a day, the exact nature and amount of the labor performed by everyone in the country. Just have everyone create a personal time sheet then combine into one spreadsheet. Would that tell you what everyone did that day? No. It would reveal what everyone said they did that day. Accounting records of taxpayers and companies in US jurisdiction are no sacred documents. They aren’t guaranteed to reflect “reality” any more than a time sheet submitted by a wage earner to his employer. Sure, the employer has the authority to oversee and scrutinize both the real and recorded activity of the employee. But at the end of the day, due to the practical constraints of constant monitoring, employers pay based on what is on the time sheet. If any auditing or investigating by the company turns up fraud in the reporting, then adjustments are made accordingly.

Your rebuttals continue to focus on the “unreported cash” income method of evading taxes and more specifically on the methods that government uses to detect that method of that tax evasion. Tax evasion and counterfeiting are different crimes, so it is understood that different methods may be used to detect and investigate them. But that isn’t answering the question of whether the two actions are monetarily equivalent. In fact, I think it is distracting from it. I provided a long list of common tax evasion methods (misreporting capital gains from RE sale, business vs personal expenses, etc) that don’t require the perpetrator to hide cash or cash transactions. Those methods of tax evasion are just as real and have the same effect as other methods of tax evasion. If we can agree that those two methods of tax evasion are monetarily equivalent, perhaps it would help to use them as examples.

I’ll also go ahead and ask this again: Do you consider federal tax evasion and counterfeiting to be monetarily equivalent actions even in a scenario where it can be known/assumed that the crime will not be detected/prosecuted in any way?

Tom Hickey said...

Do you consider federal tax evasion and counterfeiting to be monetarily equivalent actions even in a scenario where it can be known/assumed that the crime will not be detected/prosecuted in any way?

Short answer. No.

Tax evasion involves actual money as a tax credit in the unit of account, while counterfeiting doesn't. Counterfeit bills are not tax credit in the unit of account, but only appear to be such. Counterfeit "money" does not constitute actual money in this legal sense.

There is an overlap however. There is a monetary circuit involved in counterfeit money that begins with the counterfeiter and ends with the authorities confiscating the bills. That circuit could have a fairly long chain of transactions.

Counterfeit bills do enter the system and get accounted for as it they were actually money. Counterfeit bills may be involved in many transactions prior to be being discovered. Those appear in accounting records and they are considered as such for tax purposes.

One probably is not going to win a case against the IRS by arguing that there is no tax liability from a gain since actual money was not involved owing to counterfeit bill being used, when this was not known at the time and the bills were passed on inadvertently due to ignorance. I am pretty sure that taxpayers would still be liable for gains that accrue.

Conversely if counterfeit bills one is holding are confiscated, it is taken as a loss on the books, similar to stolen goods.

Brian Ulrich said...

Tom… Good work! That’s enough for one week. It’s Friday afternoon, please take the weekend off  Thanks again for the dialog. I’ve enjoyed it. I’ll leave these responses for now.

Counterfeit bills are not tax credit in the unit of account, but only appear to be such.


Counterfeit bills AND illicit funds from tax evasion ARE both valid tax credits in the unit of account until the moment they are detected and confiscated. It’s conceivable, even likely, that in earlier times with less sophisticated technology, the government routinely unknowingly accepted counterfeit money to permanently extinguish a tax liability. If this is even recognized as a possibility, then it serves to prove that monetary difference in the two actions is not inherent, but determined by the capability of the government to detect the action!


Counterfeit "money" does not constitute actual money in this legal sense.


Illicit funds from tax evasion are just as illegal as counterfeit funds.


There is a monetary circuit involved in counterfeit money that begins with the counterfeiter and ends with the authorities confiscating the bills. That circuit could have a fairly long chain of transactions.


There is a monetary circuit involved in tax evasion that begins with the evasion and ends with the authorities confiscating the tax liability.


Counterfeit bills do enter the system and get accounted for as it they were actually money. Counterfeit bills may be involved in many transactions prior to be being discovered. Those appear in accounting records and they are considered as such for tax purposes.


Illicit funds from tax evasion do remain in the system and get accounted for as if they were actually money. Tax evasion funds may be involved in many transactions prior to being discovered. Those appear in accounting records and they are considered as such for tax purposes.

Tom Hickey said...

One final thought.

A government could declare as a matter of law that an entire transaction path that it identified as illegal was subject to confiscation as the passing of counterfeit money.

This would make the passing of large bills difficult, and as a matter of fact it is already difficult in many places owing to counterfeiting and the possibility that the bill will not be identified as counterfeit until it reaches the bank, in which case the firm's account is debited. I have seen signs saying that nothing above a twenty will be accepted at the registers.