–The FICA disgrace

Mitchell’s laws:
●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 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.
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Fifteen years ago, FREE MONEY suggested the elimination of FICA. Three years ago I posted (with input from Warren Mosler and Randall Wray) “Ten Reasons to Eliminate FICA.”

FICA is the most damaging tax in American history. It punishes the middle and lower income classes (the “99%”), while leaving upper income classes (the “1%”) virtually untouched. It punishes salaried people while leaving all other types of income unscathed.

For many in the middle and lower income classes, FICA is the largest tax they pay – larger even than those income taxes that are much in discussion today. No tax does more than FICA to widen the gap between the richest and the rest.

So it should come no surprise that the Democrats and the Republicans seem to favor increasing FICA, since both parties receive so much funding from the upper 1%.

Here are a few excerpts from an article in the HuffPost:

Obama Administration Not Sticking Up For Payroll Tax Cut
Posted: 11/26/2012

WASHINGTON — For the past two years, U.S. workers have enjoyed a 2 percentage-point increase in take-home pay thanks to a payroll tax reduction trumpeted by lawmakers as an effective lift for a sagging economy. Come Dec. 31, that cut will expire — and policymakers don’t seem too upset about it.

The White House has gone almost completely quiet on one of its favorite stimulus policies. In a report released Monday morning, the administration warned that middle-class families will pay thousands more in taxes next year unless Republicans relented on income tax breaks for the rich. But the report didn’t mention the soon-to-expire payroll tax cut.

Translation: “The marginal tax rate, on those rich people who pay very little of the marginal rate anyway, cannot be allowed to rise. But, taxing the 99% is O.K. Those people are not big contributors to our campaigns.”

At the daily briefing later on Monday, Alan Krueger, chairman of President Barack Obama’s Council of Economic Advisers (CEA), said that the payroll tax cut clearly gave a boost to middle-class families and to the economy in general over the past year. But he stopped notably short of supporting its extension.

Translation: Cutting FICA helps the economy, so let’s increase FICA.

“There are many tax provisions that are expiring at the end of the year and the president has said that the payroll tax cut, among others, should be on the table,” Krueger said.

Translation: President Obama, the self-proclaimed protector of the 99%, does not mind increasing taxes on the “little” people who voted for him.

Congressional leaders are similarly difficult to read, though many signs hint at the demise of the payroll tax cut. House Minority Leader Nancy Pelosi (D-Calif.) said in September the tax cut should be allowed to expire.

Translation: Thank you to all you middle and lower income people who voted Democratic. Gotcha!

Many lawmakers and outside stakeholders have expressed concern that diverting tax money from Social Security — which the payroll tax helps fund — would weaken the program, which provides an average monthly benefit of $1,237 to some 40 million seniors. The Social Security Administration’s actuaries say the trust fund will run out of money in 2033, at which point incoming tax revenue could support just 75 percent of benefits.

Translation: We successfully have brainwashed you people into believing FICA pays for your Social Security. That is one of the great successes of the *BIG LIE.

AARP, the lobby group for senior citizens, said in a statement Monday that it is glad the White House left the cut out of its tax report. The organization has previously said the payroll tax should return to normal.

“We’re pleased the White House doesn’t mention the payroll tax holiday since extending it would undermine Social Security’s separate dedicated funding source,” AARP executive Joyce Rogers said in an email. “We also remain committed to keeping Social Security and Medicare benefit cuts out of any ‘fiscal cliff’ negotiations.”

Translation: You thought AARP was on the side of the retired and elderly. No, AARP is an insurance agency masquerading as your benefactor. AARP always has promulgated the *BIG LIE that FICA pays for Social Security and Medicare.

Sen. Bernie Sanders (I-Vt.), a self-described socialist who has been a vocal advocate of social insurance programs, said Monday that he is “strongly opposed” to keeping the tax holiday, since doing so could damage Social Security’s solvency.

“The middle class deserves tax relief, but not at the expense of Social Security,” Sanders said. “The president and members of his administration have been very clear that the payroll tax reduction was temporary and would not be extended. I expect them to keep that commitment.”

Translation: And, of course, we in Congress like FICA because our rich contributors like FICA. What’s good for the rich is good for the country – oh, except maybe for those middle and lower income groups. But you can’t help everyone.

Bottom line: FICA is 100% bad for the economy. Before the U.S. became Monetarily Sovereign in 1971, FICA did fund Social Security. Today, FICA no longer pays for Social Security. FICA does not pay for Medicare. FICA does not pay for anything. You might as well shove your money into a garbage bag and burn it.

All FICA does is take money from the pockets of middle and lower income class consumers and from businesses (which take it from employees). More than a trillion dollars was paid for FICA this year. That’s a trillion dollars removed from the economy, lost forever. Think of what this economy could do with an extra $1 trillion.

If FICA were $0, that would not reduce by even one cent, the federal government’s ability to pay all Social Security benefits and to provide free Medicare to every man, woman and child in America. The collection of FICA is the 2nd biggest tax disgrace in America.

The biggest? Obama and the Democrats – the great supporters of the 99% – justify FICA by telling you the *BIG LIE.

[*The BIG LIE is a statement that U.S. federal taxes pay for U.S. spending. In a Monetarily Sovereign government, taxes pay for nothing.]

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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 Imports

#MONETARY SOVEREIGNTY