Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
Those, who understand even the basics of Monetary Sovereignty, know a Monetarily Sovereign government does not need an outside source of the sovereign currency it has the unlimited power to produce. By way of example, I have awarded dunce capsto certain economics experts, who do not understand the basis for all economics, Monetary Sovereignty.
I am “sovereign” in these dunce caps. I do not need to borrow any. I do not need to collect dunce caps as a tax on recipients. I can create all I wish, any time I wish. I create them by the very act of awarding them.
Identically, the U.S. federal government is sovereign in U.S. dollars. It does not need to borrow any. It does not need to levy taxes to obtain dollars. Uniquely, the federal government creates all the dollars it wishes, any time it wishes. It creates them by the very act of awarding them, i.e. spending them.
Although, federal taxes may have some value in directing certain aspects of the economy, they are unnecessary as a source of federal spending funds. If we eliminated all federal taxing (and borrowing) tomorrow, this would not affect by even one penny, the federal government’s ability to spend. Federal taxes simply remove dollars from the economy and destroy them.
(No, they are not recycled by the government. They are not used or saved by the government. They are destroyed — lost forever.)
And, there is yet another problem with federal taxes, specifically income taxes. They waste one of the most precious commodities the citizens of a nation own: Time.
Forbes, Janet Novack, Forbes Staff, 1/05/2011
Tax Waste: 6.1 Billion Hours Spent Complying With Federal Tax Code
National Taxpayer Advocate Nina E. Olson multiplied the IRS’ own estimates of how much time taxpayers spend collecting data for and filling out each individual tax form by the number of forms filed to estimate that Americans (both individuals and businesses) spend 6.1 billion hours a year complying with the code. That’s the equivalent of more than 3 million workers toiling away full time, all year. By way of comparison, the Federal government employs the equivalent of 2.1 million full-time civilian workers and Wal-Mart, the nation’s largest private employer, has 1.4 million workers in the U.S., although not all are full time.
That’s 6.1 billion unpaid hours. Not only are millions of Americans unemployed, so earning no money, but the federal government requires Americans to do 6.1 billion hours of unpaid work.
About 60% of individual taxpayers now pay CPAs, enrolled agents, H&R Block or other services to prepare their returns while another 29% use software, such as Intuit’s TurboTax. According to a recent IRS study, the median individual taxpayer (as measured by income) spent $258 in 2007 for tax prep, up from $220 in 2000, in constant, inflation-adjusted dollars.
In summary, the federal income tax is worse than unnecessary. It is costly in terms of both time and money — a useless, harmful exercise.
So what is Ms. Olson’s suggested solution?
Olson called for Congress to fashion reform by beginning with a clean slate—eliminating all $1.1 trillion in annual tax deductions, credits and other tax expenditures, and then adding back only those where “a compelling business case can be made that the benefits of providing the tax incentive through the tax code outweigh the tax-complexity challenges that special rules create.”
In contrast to the deficit panel chairmen, who proposed eliminating tax breaks to both dramatically lower rates and raise an extra $80 billion a year, Olson urged Congress to enact a revenue neutral tax reform for its own sake to produce a system that is “simpler, more transparent, and easier and cheaper for taxpayers to navigate.”
Yikes. First she wants to cost the economy $1.1 trillion. Then she wants Congress to replace some of the lost deductions with new deductions. This is a solution?
In essence she is saying, “We have a purposeless, anti-stimulus process that removes more than $2 trillion from the economy every year. Further, it is a massive time waster. So my suggestion is to continue stealing $2+ trillion from the economy every year, but ask Congress to make the process simpler.”
How about this: Let’s begin to eliminate taxes, and stop taking trillions out of the economy. My suggestion is to increase the standard deduction by $10,000 every year. This gradually would simplify the process by each year making more people eligible for “post-card” returns.
Remember, politicians do politics. So, don’t expect the politicians known as “Congress” to simplify a 100% politically-created monster known as the tax code. It’s like expecting termites to stop building mounds.
Rodger Malcolm Mitchell
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. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports