Here are some excerpts from an interesting article in Bloomberg:
Could India Be the First to Get Rid of Cash?
JULY 20, 2016 By Mihir Sharma
“Black money” — the colloquial name for a vast network of off-the-book cash transactions and unbanked savings — is one of India’s biggest scourges.
Amounting to as much as $460 billion a year, bigger than the GDP of Argentina, all that money lies beyond the reach of the tax authorities, creditors, and anti-corruption investigators.
Half the country’s output comes from the small, informal sector, where cash transactions are the norm.
Meanwhile, taxes are cumbersome to pay and easy to avoid.
To collect revenue, India’s government has to rely on indirect levies such as sales and excise taxes, which are distortionary and regressive, rather than on income tax.
Direct taxes contribute only 35 percent of the take in India.
Tax evasion has been a hot-button political issue in India for at least a decade. The anti-corruption crusader Arvind Kejriwal — now chief minister of the Indian capital Delhi — made headlines when he accused top politicians and businessmen of having illegal offshore accounts.
Belgium, for example, which has the highest proportion of cashless transactions in the world — 93 percent, according to MasterCard — has banned cash payments of over 3,000 euros.
India’s many poor people and migrants still struggle to access its chronically inefficient banking system, despite the government’s efforts at reform.
If presented with an easy and frictionless way of transferring cash, there’s no reason to think consumers wouldn’t embrace it quickly.
As cash gets used for fewer and fewer transactions, it will become easier for authorities to crack down on tax evasion.
The “cashless society” is proposed as an innocent, money-saving convenience, especially for poor people, and as a way to reduce corrupt tax avoidance. Thus, the “cashless society” is described as a morally and economically good program.
But its real purpose, its insidious purpose, is control.
Consider that India is Monetarily Sovereign. Its currency is the rupee (worth about $.15).
Being Monetarily Sovereign, India has the unlimited ability to pay any bill denominated in rupees.
Even if India stopped taxing altogether, it could continue spending forever. It never would run short of rupees.
Monetarily Sovereign entities do not need income so long as their currency is widely accepted for payment and/or exchange. The rupee is such a currency.
The article gave the example of Belgium, as a nation where few bills are paid with cash. But because Belgium uses the euro, it monetarily non-sovereign. It does not have its own sovereign currency, so it does not have the unlimited ability to pay its bills. It needs income.
Similarly, our states, counties and cities are monetarily non-sovereign. They too, need taxes to fund spending.
By contrast, India (like the U.S., Canada, Australia, China, Japan, and other Monetarily Sovereign nations) does not need to collect taxes for bill payment.
Yet all these nations collect taxes, not because they need the currency (They don’t), but for economic control.
Tax collection, together with harsh laws about tax evasion, provide a means by which a government can track and control the finances of every citizen. Tracking and controlling finances allows governments to track and control the lives of their citizens.
When you use credit cards or checks to pay your bills, you create a “paper” trail, easily followed by the government. Similarly, if you are a business that accepts credit cards or checks in payment, your finances can be tracked.
More importantly, if you fall into either of the above categories, your finances not only can be tracked, but controlled.
Having the power to levy taxes on various forms of income or purchase, allows the government to control much of your life. For instance, a simple gasoline tax can affect such decisions as: Will you drive to work, take a train, or decide to work nearby? Where will you vacation? Where will you live? What kind of vehicle will you own? Import taxes affect what you buy. Luxury taxes affect what you own. Inheritance taxes affect what you leave behind.
The arbitrary tax rates on various forms of income dramatically affect your investing and your saving. Taxes affect your charity giving and your healthcare.
The requirements to declare your income and much of your spending allow the government to trace what you do and where you go.
The operations of any business are controlled in part, by what forms of income are taxed and what expenses are tax-deductible.
Today, computerized “big data” collection, gives the government a permanent record of your life and the lives of every business. Tax laws run the world.
The tracking and control afforded by tax collections is why the federal government does not want you to understand Monetary Sovereignty.
It is why the government wants you to believe the “Big Lie” (i.e. “Federal taxes fund federal spending”). It is why you repeatedly have been told wrongly that federal obligations are taxpayer obligations, and that when the government spends, its spends “taxpayer dollars” — all part of The Big Lie.
In summary, the real effect of the “cashless society” is to ease tax collection. The real purpose of federal tax collection is to track and to control your life.
Rodger Malcolm Mitchell
Ten Steps to Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich afford better health care than the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-tranferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be an good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.