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●Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●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.
1. The U.S. federal government (unlike state and local governments) is Monetarily Sovereign. This means has the unlimited ability to create its sovereign currency, the U.S. dollar.
It never can run short of dollars, and never needs to ask anyone for dollars — not you, not me, not China. Even if all federal taxes fell to $0, the federal government could continue paying its bills, forever.
2. Every dollar in federal taxes collected comes out of the private sector, thereby impoverishing the private sector. When millions of American individuals and companies pay taxes, there is less money available for growing the economy. When you pay federal taxes, you have less money left to buy goods and services. It’s that simple.
Keep those two points in mind as you read these excepts from an article that appeared in the September 23, 2014 Chicago Tribune:
Six of Illinois’ biggest companies hold a combined $100 billion in profits overseas, a strategy that keeps those earnings from being subject to U.S. corporate income taxes.
The tax-trimming move by those and 44 other U.S. companies with global operations was put in the spotlight Friday when U.S. Sen. Dick Durbin proposed a bill that would penalize companies that moved their headquarters overseas.
U.S. corporations face income taxes as high as 35 percent on income earned both domestically and abroad. However, there is one important caveat: Companies aren’t required to pay the U.S. taxes on foreign profits that they say are “indefinitely” reinvested overseas and not brought back, or repatriated, to the U.S.
Translation: The U.S. government, not needing tax dollars, unnecessarily taxes companies as much as “35 percent on income earned both domestically and abroad.” There is no reason whatsoever for this tax.
The amount of such earnings for corporations in the Russell 1,000 has grown by 93 percent to $2.12 trillion, said the Sutton, Mass.-based researcher of public companies.
In addition, the number of firms reporting indefinitely reinvested earnings has risen by 12 percent from 2008 to 2013, to 547 companies, Audit Analytics said.
On Friday, (Sen. Dick) Durbin, an Illinois Democrat, and Sen. Sherrod Brown, D-Ohio, announced legislation that would require U.S. corporations that relocate to a foreign country to pay taxes on any overseas profit they were holding before their move took effect.
Translation: Rather than reduce or eliminate a wholly unnecessary tax — a tax that comes out of the private sector’s pockets, a tax that makes U.S. corporations less competitive with foreign corporations, thereby cutting U.S. employment and economic growth — Durbin and Brown wish to increase it.
In their announcement, they listed 50 U.S. companies that were, as of 2013, “indefinitely” reinvesting billions of dollars in earnings in their overseas operations. Few of the companies, however, have announced plans to move their headquarters overseas.
Translation: This all began with Durbin’s “shock” that Walgreen considered moving its headquarters address out of the U.S., an event that would have had zero effect on the U.S. or Illinois’ economy.
Durbin warns of customer boycott if Walgreen moves HQ to Europe
Crain’s Chicago Business
The U.S. Senate’s No. 2 Democrat today ramped up his opposition to tax-driven corporate headquarters relocations another notch, suggesting that customers of Walgreen Co. may defect if the drugstore chain proceeds with a rumored HQ move to Europe.
Mr. Durbin conceded that Walgreen could “dodge” an estimated $4 billion in U.S. taxes over the next five years by moving its headquarters to Switzerland. “I recognize that potential windfall is an attractive option for shareholders,” he wrote.
However, he continued, “customers have many choices about where to shop and where to have their prescriptions filled. I believe you will find that your customers are deeply patriotic and will not support Walgreen’s decision to turn its back on the U.S.”
Translation: A corporation providing more money to shareholders, while building its business and employing more people, is “unpatriotic” and a “dodge.” It would be far better for that corporation to send more dollars to the federal government (which neither needs nor uses tax dollars), while cutting business growth and employing fewer people.
Similarly, if you the reader, wish to be a patriot, you should pay more taxes. Never mind your family’s needs. Never mind food, clothing, housing, health and education. Divert all those dollars to the federal government, which has no need for them.
Mr. Durbin is a candidate for re-election. His GOP opponent, Jim Oberweis, responded, “There is nothing ‘patriotic’ about a career politician bullying a job-creating Illinois company for legally using the tax code he helped create. Instead of haranguing companies that employ thousands of Illinoisans, Dick Durbin ought to do his job and reform our tax code, which includes the highest corporate tax rate in the world.“
Durbin is counting on the public’s ignorance of basic economics. Paying federal taxes helps no one. The federal government (unlike state and local governments) has no use for tax dollars. It creates dollars, ad hoc, when it pays bills. It never can run short of dollars. Federal taxes are a net loss for the economy and everyone in it.
And Durbin knows it.
Durbin merely needed an nice, safe issue to demagogue, in advance of the election. With this phony issue, he can portray himself as a great patriot and protector of America.
He is neither.
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)
The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
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.