Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
●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.
We’ve discussed in the past, how semantics has ruled the erroneous beliefs about our economy and led to recessions.
For instance, using pejoratives like “federal deficit” to replace “economic surplus” and “federal debt” instead of “deposits” (in the Federal Reserve Bank), fools the public. Nearly everyone viscerally wants “debts” and “deficits” reduced, despite the fact that economically, these are positives.
For quite some time now, one of my favorite misinformation sources, The Committee For a Responsible Federal Budget (CRFB), which is associated with Pete Peterson’s foundation, has been using another, rather subtle, misnomer:
Beyond Tax Expenditures
By Marc Goldwein, Jessica Stone, and Adam Rosenberg
The recent announcement by Senate Finance Committee Chair Max Baucus, D-Mont., and ranking minority member Orrin G. Hatch, R-Utah, to begin tax reform with a ‘‘blank slate’’ has helped breathe new life into the tax reform discussion and placed a renewed focus on tax expenditures.
Under their approach, all tax preferences would first be eliminated and could only be added back at the cost of higher tax rates or other sources of revenue.
Beginning with the last paragraph, the CRFB makes it clear they believe your taxes are too low, and any changes in tax law should raise your taxes. Nice?
But let’s get to semantics. Most people think of “reform” as being what one does to cure a bad situation. But CRFB latches on to the word tax “reform” and makes it their euphemism for tax “increases.”
No one likes tax increases, but who could argue against reform. In the CRFB world, if you agree on the need for tax reform, you actually are asking for your taxes to be increased. Subtle and clever, huh?
But here’s an even better one: “Tax expenditures.”
In the normal world, when you make an “expenditure,” you spend your money. But a tax “expenditure” saves you money. It’s actually a tax saving, reduction or deduction.
But (here’s the clever part), by calling it a tax “expenditure” the inference is that all your money really belongs to the federal government, so when you don’t pay taxes, the government actually seems to be spending its own money.
The fact is that in a Monetarily Sovereign government, there is no relationship between taxes and federal spending. Even were federal taxes $0, the government could continue spending forever. (Compare this to the situation with states and cities, which are monetarily non-sovereign, so do spend tax money.) Unlike the states, the federal government never spends tax money.
The really clever part is that the so-called tax expenditure has the same overall effect as federal spending — they both add net dollars to the economy, so both are economically beneficial.
But while a tax saving, tax deduction or tax reduction clearly benefit the public, “tax expenditure” conveys negative, extravagant and profligate implications. The public admires savers as being prudent, while spenders are seen as less fiscally responsible.
The tax-loving CRFB also opposes “non-tax expenditure base provisions (NTEBPs).
NTEBPs, as we define them, are provisions in the tax code that narrow the tax base and allow for a reduced tax burden but are not classified as tax expenditures.
If there is one thing the rich hate, it’s to “narrow the tax base,” which is another way of saying, tax the poor less and the rich more. No way would a Pete Peterson-related organization want that!
The theoretically broadest tax base would be to tax each poor person exactly amount as each rich person — the homeless guy pays as much tax as Warren Buffet.
So you can see why the rich would object to a narrow tax base.
But tax-lovers like CRFB never want to say, “tax the poor more and tax the rich less.” That would be too honest. So they discuss “narrowing” or “broadening” the tax base — more semantic misdirection.
Exclusions, credits, and other tax preferences are expensive, regressive, and distortionary. Collectively, they will cost the federal government approximately $1.3 trillion in forgone revenue in 2013.
Translation: Tax preferences add $1.3 trillion to the economy, helping to grow the economy. We prefer to pull $1.3 from the pockets of taxpayers.
The article lists the following seven personal NTEBPs that should be eliminated:
a. Moving expense deduction
b. Employee expense deductions
c. Gambling loss deduction (from winnings)
d. Business use of home
e. Deferral of capital gains income (vs. pay as you go)
f. Standard deduction
g. Personal and dependent exemptions (based on family size)
Of these, only two affect the super rich: c. (marginally) and e. The rest would have a dramatic and negative effect on the middle- and lower-income groups — i.e. they would “broaden” the base.
In this article, the authors identify “non-tax expenditure base provisions” (NTEBPs) as an understudied source of potential revenue which can be generated by broadening the existing income tax base.
Translation: The authors propose widening the gap between the rich and the rest, by sucking dollars out of the middle- and lower-income groups.
Finally, this organization has the gall to ask for donations, the recommended size of which ranges from $50 to $10,000. (“Amounts smaller or larger than those indicated above are welcome but cannot be processed through our Web site.”)
Hey, if I were rich and wanted to screw the middle- and lower-income groups and didn’t care about what happened to the United States of America, I might be temped to support this organization.
But why would anyone else?
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. Click here
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%
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