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●Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening <the gap between rich and poor.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●Everything in economics devolves to motive, and the motive is the gap.
Fact 1: Federal taxes do not support federal spending. If all federal taxes fell to $0 or rose to $999 trillion, neither event would affect the federal government’s ability to pay its bills, not even by a penny.
Fact 2: Federal taxes remove dollars from the economy, thereby depressing the economy.
So why do we say, “Really, really increase taxes on the rich”
And what do we mean by “really, really”?
And who are the rich?
In May of this year, we published TROPHIC CASCADE: How Yellowstone National Park opened my mind, which drew a parallel between the top predators in Yellowstone Park and the U.S. government, the “top predator” in U.S. economics.
You should read the article to see the reasoning.
One of the four recommendations made in this article was:
Progressively higher federal income taxes on high incomes, while eliminating federal taxes on lower incomes.
Step 7, in the “Nine Steps to Prosperity” reads, “Increase the standard income tax deduction annually.
Additionally, the progressive income tax top rate should rise again. We might consider something along the lines of 1964 tax rates, where the highest income bracket was about $3 million and taxed at 77%.
Further, all income – salaries, capital gains, gifts, inheritances, etc., should be taxed at the same rate.
Ultimately, those earning up to $500K annually would pay no federal taxes, and those above that level would pay 60%+, adjusted for inflation.
Which brings us to this article in the Huff Post:
Economists Say We Should Tax The Rich At 90 Percent
Benjamin Walsh; Posted: 10/22/2014
All Americans would be better off if top tax rates went back to Eisenhower-era levels when the top federal income tax rate was 91 percent, according to a new working paper by Fabian Kindermann from the University of Bonn and Dirk Krueger from the University of Pennsylvania.
Here is the conclusion from the report, charted:
Kindermann and Krueger say that a top marginal tax rate in the range of 90 percent would decrease both income and wealth inequality, bring in more money for the government and increase everyone’s well-being.
While “bringing in more money for the government” is bad economics (a Monetarily Sovereign government doesn’t need or use tax dollars), “decreasing income and wealth inequality” is great economics for many reasons, both moral and fiscal.
It is rational to accept high income tax rates on top earners and low rates for the rest as a form of insurance.
This insurance takes the form of low-income people paying dramatically less in taxes. “Everyone who is below four times median income” — that’s about $210,000 for households — “pays less,” Kruger said.
Again, the economics is a bit squirrely, because raising or lowering top rates has nothing to do with bottom rates. Apparently the authors falsely believe the federal government needs tax dollars.
However, their conclusion is sound. The top rates should be raised significantly and the bottom rates lowered to zero.
In the Ten Steps to Prosperity, Step 7. says, “Increase the standard income tax deduction annually,” and Step 8. says, “Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income.”
The paper assumes that tax rates won’t stop a future Bill Gates from wanting to start Microsoft.
Agreed. Few of us begin a business with the plan to become one of the wealthiest people on earth.
Instead we hope to create a successful company and make a great living, and if we are very, very lucky, circumstance then takes over, and our successful company becomes wildly successful.
A marginal tax rate of 95% on the top .1% earners, would discourage precisely zero people from working.
Sadly, since the very rich have increased their control over Congress, the President and even the Supreme Court, the likelihood of this ever happening is quite low.
Yet, if presented to voters as a package — lower rates for the lower 99%; higher rates for the upper 1% — it probably would pass.
Rodger Malcolm Mitchell
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.
THE RECESSION CLOCK
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.