Cash Crusader Economist Takes on Tax

While there have been many developments in ways to pay over the past few decades, there is a stalwart of the payments landscape it would be risky to forget: cash. Economist Professor Jay L. Zagorsky recently explored whether he could use cash to settle one of the most fundamental debts—taxes—and why everyone should value their banknotes and coins.

Zagorsky describes himself as ‘a business school professor who teaches thousands of students how to run businesses and make money in a capitalist economy’. He is also a staunch proponent of cash, which he points out is ‘crucial to the world’s continued economic prosperity, resilience and safety’. He is not asking anyone to abandon digital payment methods, but rather urging them to keep using cash.

Writing for Fortune.com, Zagorsky describes a recent adventure he embarked upon to settle his taxes with the Internal Revenue Service using cash. His motivation was both to practice what he preaches—the benefits and importance of physical money—and to find out how easy it was for someone lacking a bank account to pay IRS dues.

His conclusion: ‘paying the IRS with cash is possible, but it turned out to be onerous and time-consuming’. He was repeatedly pressed to use cashless methods, but points out that he would have been charged an additional 2.5% to use a credit or debit card. He was turned away from the first face-to-face appointment he arranged and had to come back a week later to coincide with another person wanting to pay cash.

While he was ultimately able to pay, he questioned why, if the government is keen for everyone to pay tax, they don’t make it equally easy to use different options. He adds that, for individuals without bank accounts, paying taxes should not require paying fees to third party companies, especially when they’re often among the lowest-earning tax payers. It is also noteworthy that cash is defined in law as ‘legal tender for all debts, public charges, taxes and dues’, making it particularly unreasonable for the IRS to put obstacles in the way of using it to settle taxes.

Zagorsky makes compelling arguments for using cash, from preserving personal privacy (even if just when making certain purchases) to the resilience of economies against natural disasters and cyberattacks that can render cashless options unusable for days or even weeks at a time. Two arguments in particular resonate with his IRS experience: firstly, ‘going cashless excludes people’, and secondly that ‘using cash reduces prices’, with merchants typically passing on the fees they are charged by card companies to customers.

Whether paying for everyday goods and services, or settling a tax bill, the right to pay cash matters on an individual basis, and supports a healthy economy nationwide.