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●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, which ultimately leads to civil disorder.
●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.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive, and the motive is the gap.
Readers of this blog know that federal taxes do not fund federal spending.
Although state and local taxes do support the spending of the monetarily non-sovereign state and local governments, federal taxes have no effect on the spending ability of our Monetarily Sovereign federal government.
If federal taxes fell to $0 or rose to $999 trillion, neither event would affect the federal government’s ability to spend. But because the populace has been brainwashed into believing federal finance is the same as state and local government and personal finance, we are treated to such lies as:
“Washington has to live within its means . . . Both parties agree that we need to reduce the deficit by the same amount — by $4 trillion. Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both.” Barach Obama
“Let’s be honest. We’re broke.” John Boehner
Honest?? The belief that federal taxes are necessary to support government spending (aka the Big Lie), now is being expressed regarding that “unpatriotic” tax move known as “inversion.”
Inversion means changing the address of a corporation’s headquarters to a lower-tax location, so as to reduce taxes.
It doesn’t require changing the physical location (though it could), doesn’t require firing American employees, doesn’t really require much except perhaps changing some of the company’s letterheads.
But this simple tax-saving procedure, not much different from the steps every taxpayer takes every tax season, has resulted in the most ridiculous commentary seen since Sarah Palin.
“My sense is this is Burger King trying to dodge paying its taxes,” Frank Clemente, executive director of the nonprofit Americans for Tax Fairness, told The Huffington Post. “I can’t say what’s on the company’s mind here, whether they’re trying to beat the clock on this and do something before Congress passes legislation or do something before Obama signs an executive order.”
One company, the drugstore giant Walgreen, considered and then abandoned a planned inversion earlier this month, after it faced significant public backlash. The Walgreen inversion could have allowed the company to slash its tax rate by as much as 15 percent, equating to savings of billions of dollars.
Oh, no! Allowing an American corporation to pay billions of dollars less in wholly unnecessary taxes? Unthinkable! And what would that company do with all those billions? Hire more people? Invest in infrastructure? Buy more goods and services, thereby increasing Gross Domestic Product, and enriching us all?
And then, here come the politicians:
Sen. Dick Durbin has a new target as he tries to halt American firms from moving corporate headquarters overseas to cut their tax bills: Hospira, a Lake Forest-based company that makes injectable drugs and infusion products.
The Democrat from Illinois on Thursday wrote a letter to the CEO of Hospira urging him not to take the firm’s tax dollars overseas.
“I strongly urge you and the Board of Directors not to duck your corporate responsibility by moving overseas to dodge paying U.S. taxes,” he wrote in the letter to F. Michael Ball. The deal, reportedly valued at about $5 billion, would allow Hospira to move its corporate tax base to France, which has a lower tax rate than the United States.
Durbin also noted that Hospira’s products are bought by the taxpayer-supported Veterans Health Administration and Medicare. Further, he said, Hospira relies on the Food and Drug Administration to “ensure its products are safe for consumers.”
The Durbin article tells every lie about inversion:
Hospira is not planning to “flee” the U.S. It merely is changing the mailing address of its headquarters. No one will move. Nothing will change — except the company will pay less taxes.
The Board of Directors would “duck its corporate responsibility” if it paid more taxes than necessary.
The VHA, Medicare and FDA are not “taxpayer supported.” Federal taxes don’t support anything.
Then, I received this petition:
Burger King benefits enormously from being an American company and should pay its fair share of taxes here in America. Don’t even attempt this whopper tax dodge or we will boycott Burger King.
There are currently 80,836 signatures.
How very clever: “Whopper” tax dodge. Sadly, more than 80 thousand people have no clue about federal financing. They actually believe they will benefit if companies pay more taxes. Ask them how they will benefit, and they will look at you like addled, drooling cows.
And finally, there is Gregory (famous economist) Mankiw’s article, which includes these lies:
“Tax inversions mean less money for the United States Treasury.”
“If tax inversions are a problem, as arguably they are . . . “
Wrong and wrong. The United States Treasury has the infinite ability to create money, and tax inversions most assuredly are not a problem. If anything, they are a solution to the corporate tax problem.
Then, when you think that maybe Mankiw is beginning to see the light:
” . . . corporations are more like tax collectors than taxpayers. The burden of the corporate tax is ultimately borne by people . . .”
“Let’s repeal the corporate income tax entirely, and scale back the personal income tax as well.”
Absolutely correct. I think he’s got it. I think he’s got it. The corporate tax, by removing dollars from the U.S. economy, impoverishes us all, especially the middle and lower classes.
But no. He doesn’t have it:
“We can replace (corporate and personal income taxes) with a broad-based tax on consumption.
“Some may worry that a flat consumption tax is too easy on the rich or too hard on the poor. But, one possibility is to maintain a personal income tax for those with especially high incomes. Another is to use some revenue from the consumption tax to fund universal fixed rebates — sometimes called demogrants.”
Sorry Greg, but federal taxes do not fund federal spending. So yes, a flat tax would be a big problem, because by impacting the poor more than the rich, it widens the Gap between the rich and the rest.
Bottom line, inversions are a partial solution (not a problem) to the real problem: Corporate taxes. They are paid by corporate employees and customers, not by the corporations themselves, though these taxes do make our corporations less competitive, internationally.
Why do the politicians hate inversions? Because massive inversions would demonstrate that the federal government doesn’t need taxes, and once the public understands that, all the excuses for federal austerity disappear.
(This was demonstrated before, when FICA was reduced, and SS payments were continued out of the government’s general fund. But Obama raised FICA soon enough that the public didn’t catch on. It also was demonstrated when the federal government, in an effort to stimulate the economy, sent checks to taxpayers — checks that were not backed by FICA or any other tax. But again the public didn’t get it.)
The rich political contributors love austerity. Austerity is what pushes the poor down and the rich up.
And the sound of 80,000+ mooing people demanding poverty, is heard in our land.
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)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
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.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports
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.