●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.
●Cutting the deficit is the government’s method for taking dollars from the middle class and giving them to the rich.
●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.
Vanguard, which provides investment funds with reasonably low management fees, sent me (I am invested in their funds) an Email, describing the effects of the “fiscal cliff” legislation.
For your interest, here is what Vanguard says:
The legislation includes the following provisions:
*For most taxpayers, income tax rates would remain unchanged at the 2001/2003 levels.
*Individuals earning more than $400,000 and couples earning more than $450,000 would be subject to a higher 39.6% top marginal rate.
*These same upper-income earners would face an increase in capital gains and dividend tax rates from 15% to 20%.
*Individuals earning more than $250,000 and couples earning more than $300,000 would see the return of a phase-out on personal exemptions and itemized deductions.
*The tax rate on large inheritances (estates valued at $5 million for individuals and $10 million for couples, indexed for inflation) would rise from 35% to 40%, the estate and gift tax regimes would remain unified, and spouses would continue to have access to unused estate tax exemption amounts.
*The alternative minimum tax (AMT) would be permanently adjusted for inflation, preventing more families from being subject to the AMT.
*401(k) and other defined contribution retirement plans could provide plan participants with a newly expanded opportunity to convert their pre-tax savings in plans into Roth savings.
*The IRA charitable rollover provision would be extended for 2012 and 2013 (with special ability to make use of the provision for 2012 distributions).
*Unemployment benefits would be extended for one year.
See anything missing?
The Vanguard guys, being wealthy managers, directed virtually all their attention to the piddly, little rich-guy tax increases (most of which the wealthy are too clever to pay anyway), and forgot all about the biggest, worst, most damaging tax increase of all: the FICA increase.
I saw an estimate that the FICA tax increase will rip $150 billion from the pockets of salaried people, dramatically increasing the gap between the rich and the rest. Whether or not the number is correct, the real number is sure to be large.
On an individual level, that extra 2% will take $1,000 away from a salaried person earning $50,000 per year. I guess that problem isn’t worth the attention of Vanguard’s wealthy managers.
Incidentally, I’ve seen several comments claiming the 2% FICA increase, wasn’t really an increase, because the previous level was meant to be a temporary decrease. That inane argument will be of great comfort to working people, who now will have additional dollars taken out of their paychecks.
(I suppose if all the income taxes had been raised to pre-Bush levels, they too would not be considered increases.)
Anyway, I hope you find this interesting, both from its content and its non-content.
Rodger Malcolm Mitchell
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
5 thoughts on “–Et tu, Vanguard??”
MAY I ADD: https://rodgermmitchell.wordpress.com/2012/11/27/the-fica-disgrace/
Repeat my comments:
November 27, 2012 at 4:32 pm
Well said, well stated.
Perhaps you could also mention, after due examination and you find it to be correct: Elimination of FICA would increase jobs, increase production, increase wages (income), increase profits with price stabilization and no inflation threat.
The worker receives a larger paycheck which creates greater demand which
creates a need for a greater supply while production cost is lower; therefore profit is higher since there is no added tax burden on the supplier while all of this occurs without a price increase thereby non inflationary.
What would you, Wray, Mosler say would be the result if as Obama said,
” We must raise taxes somewhere else in order to lower income taxes.”
IF we did just that. “Reduce Federal Income Taxes To Zero”
by the simple solution of raising revenue “somewhere else”.
Maybe,perhaps, “We the people collecting interest on own money, instead of “private for profit banks”
Surely, even though the “people” believe the “Big Lies”
maybe,perhaps there can be hope that there may be a way to make the lie -true.
Rodger Malcolm Mitchell says:
November 27, 2012 at 4:43 pm
A Monetarily Sovereign government neither needs nor uses revenue, to pay its bills. It pays all bills by creating dollars ad hoc, through the simple expedient of increasing the numbers in creditors’ checking account.
A Monetarily Sovereign government’s finances are unlike personal finances, state finances, business finances or euro nation finances. The U.S. government has the unlimited power to increase the numbers in checking accounts.
That is what “Monetarily Sovereign” means — it is sovereign over its money. It does not need to ask anyone for its sovereign currency — not you, not me, not China.
November 27, 2012 at 6:33 pm
YES,YES, absolutely correct. How many ways can I say, or agree with those words, yet trying to understand what is “The Role Of Money” now in the USA
and how do we correct the legislation that will eventually lead us to either servitude or revolution.
When we voted (self imposed) the rights for a “private for profit banks” to not only issue, leverage, and use our currency but also allowed those “private for profit banks” to tax us on that issuance, for surely paying them interest is taxation.
This makes me question, Is the US Dollar a Monetary Sovereignty’s currency that has allowed itself to be compromised.
Perhaps to such a flaw that it can no longer protect itself from hyperinflation and or moral hazard.
As long as the “private for profit banks “(financial institutions) have the power to issue, and the guarantee that their issuance is sovereign currency, we are only a rate and period of time away from monetary suicide.
But, still what you state is correct for now.
It is my sincere hope that someone will prove me wrong.
Keynes, Minsky,DeSoto, Soddy, many others; all of whom have stated that “private for profit banks” should be separated from government.
Rodger Malcolm Mitchell says:
November 28, 2012 at 8:08 am
No banks should be privately owned. As I’ve written before: All banks should be federally owned.
Justaluckyfool asks just a simple question:
What if , as proven by QE 3 ,the Feds were to purchase assets that produce revenue (actually just like a taxation) in amounts greater than that which is received by “federal income taxes and FICA”, would it not be prudent to do such a thing ?
It is a simple change in direction of a benefit already given by the governing. We simply change making these profits for the private banks and give those exact same profits to the US Treas. to be allowed as appropriations for Congress.
another great video from the TYT network–detailing the doublespeak in the media the past few days regarding the new tax cuts. around the 10-minute mark they show excerpts of an interview with Grover Nordquist:
Unfortunately, he thinks — in his own words — “tax cuts don’t work.”
Sad, because often he does know what he’s talking about. This time, not.
right. and he also advocates for a “balanced budget.”
so, as your friend, warren mosler, would say, he’s hopelessly “out-of-paradigm.”
but, who on TV gets it? or at least says it openly? when you look at all the economic discourse on TV, they’re all saying either “balanced budget” or “surplus.” that seems to be the prerequisite for getting on TV in the first place…
Saw from a couple of sources that the hit from the FICA tax fiasco is that GDP will be 1.5% less than if it was left in place (imagine the economic effect of eliminating this pernicious tax). To borrow from conventional economics a loss of 1.5% in GDP translates into a .75% increase in unemployment (Okun’s law). Yes, we are on the road to Greece, but for a different reason than the corporate media is brainwashing the electorate – needless austerity.