The "ability to choose when to work and on what terms" is nothing but the ability to purchase goods.

And the ability to be able to enjoy more of that wonderful tax-free benefit: leisure. A person living a life of leisure off the proceeds of their lottery win benefits more from society than a person who works 4000 hours a year to fund exactly the same consumption habits. That advantage accrues to the lottery winner from the day they receive the income.

The issue is not allocation of green pieces of paper at all. Moving numbers around in computers somewhere at the Fed or BankAm's data center doesn't affect the world at all.

On the contrary, numbers moving around in computers makes a huge difference. I don't think we disagree with the basic intuition that taxing the supply of cash going into Fred's fund will reduce the real resources allocated by his fund. But the dynamics of the economy overall are a little more complicated, especially when instead of the investor actively allocating to new ventures a la Fred Wilson, investments are fed into the world of finance where the inherited real resources of Schlage Lock Company have the same purchasing power as newly-created credit to most market participants.

As several of the comments in your linked article pointed out, it's not a true representation of reality to suggest that taking $84 million out of the bank will result in the cancellation of $84 million in business loans, unless the US were to switch to a 100% reserve system. Instead, banks have a large degree of choice in the quantity of money they loan out, which is ultimately based on whether they anticipate earning enough real interest to repay the loans: they've already allocated a multiple of Mr Kendrick's money to real resources and if the government wants to start consuming it that's fine and dandy until the reserves look a little low. If the recent upswing in the bling market is looking sustainable, and the demand for yachts remains resilient they may even decide to extend more credit than they were previously so more people can get to work creating resources.

Sure, the government isn't omnipotent and clumsy fiscal stimuli might boost little more than inflation and do more damage to the economy than good. But moving numbers around and multiplying them does a lot more for the economy, especially when it's not doing too well. And Mr Kendrick would doubtless greatly appreciate being taxed less even if his bank manager notices the difference less than him.

-

Most of the profit in selling Chinese-made goods is made by US companies (or multinationals employing sizeable US workforces). Selling and distributing foreign-made goods to US consumers is always going to generate incomes in the US, even if its creatively destroying domestic manufacturing industries at the same time. On the other hand, US investors can invest the untaxed portion of their income anywhere in the world with a few strokes of a keyboard. In the event of the US government offering the investment stimulus of income tax cuts but balancing them with domestic-demand-depressing consumption taxes, it's a fair bet a sizeable portion of that investment stimulus might find its way to London, Frankfurt or Tokyo.