(2) Tax Revenue Comes from Funds Spent by Government — Issue Resolved

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Continued from here.

It seems to me that the comment below has resolved the issue. Taxes can only be settled by using money created by government via the central bank: bank reserves.

Lector: This may be the problem. You or I can pay taxes with bank money, by writing a check on our bank account. As far as you or I see, there is no difference between bank money and government money here. (Say that this tax check exhausts, closes our bank account, for simplicity) But that is not the end of the matter, which I think may be your assumption. After the federal government has accepted our tax check, the bank now owes the government. 

It is as if the government now has our account at the bank. The government wants to be paid now, wants to close this account. The only thing it will accept from the bank as payment when it closes this account is federal money, reserves that it has earlier issued. If the bank does not have the reserves to pay up immediately, it will be in debt to the government, and the discount rate – determined by the government – is the rate that the bank will be paying the federal government on its “account”. If the bank can never pay this debt, it is eventually declared insolvent by the government 

Always, the government want’s its own money back. Rendered unto Caesar, as an ancient economist said.

The source.