Hey, whoever wrote “Trump’s” tax “plan” may be on to something.

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
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O.K., so it actually isn’t a “plan.” It’s a simplistic, one page, double-spaced, little note that purports to guide a replacement for our gigantic tax code. It is a little paper that essentially says “we should cut taxes, increase spending, and cut the debt, but you figure out how.”

It reminds one of the double-spaced, “print-in-large-letters” response that we pre-computer high schoolers created, when our teacher gave us the assignment to write about some subject, and we tried to stretch our ignorance over the greatest number of pages.

But at least, we wrote several pages; Trump delivered only one page. And it isn’t actually Trump’s; he had people to write it for him.

But what else could we expect from the best-selling author of “The Art of the Deal,” who never wrote a word of it?

That said, the people who wrote “Trump’s” teeny, weeny non-plan may actually be on to something.

Here is what my favorite voice of the rich had to say:

CRFB President: Trump’s Tax Plan Will Add $5.5 Trillion to the Debt
Maya MacGuineas, Apr 27, 2017

President Trump is on the right track by turning focus toward fixing our nation’s broken tax code.

See how low the bar has become, that when Trump says our tax code is bad, it’s as though he has become a brilliant observer of something no one knew.

Tax rate cuts are important and a driver of growth, but do not be hoodwinked: no way will they pay for themselves.

Actual tax collection cuts (not just tax rate cuts) drive growth in one key way: They add dollars to the private sector.  

Adding dollars to the private sector takes place when the federal government runs domestic deficits. It is the domestic deficit spending that drives economic growth. This is the absolute economic fact that MacGuineas and her CRFB always pretend not to understand.

Growth is sluggish; our 35% corporate tax rate is the highest in the developed world; our strategy for international taxation is a mess; and the income tax seems to get more complicated and opaque every year.

Her comment about the 35% shows why it is not tax rate cuts, but rather, actual tax collection cuts, that are important. Very few corporations pay that 35% rate.

But these problems cannot be solved by simply lowering all business taxes to 15% while cutting taxes for individuals. In fact, the President’s current proposal is likely to worsen our country’s growth prospects by ballooning our record high national debt.

The President’s plan could add over $5 trillion to the national debt over the next decade.

And this is why we say, the people who wrote “Trump’s” non-plan may actually be on to something.  Anything that stresses MacGuineas about future deficits is good news for America.

Under current law, the primary way to “add over $5 trillion to the national debt” is for the federal government to run multi-billion dollar deficits.

No deficits, no economic growth. (See here [Point 3.])

As a result, debt would rise to a higher share of the economy than any time in history.

If her $5 trillion dollar figure is correct, the federal “debt” will not rise enough.

Last year the debt increase was $875 Billion.   It got us where we are today. But the deficit growth has been declining.

A mere $5 Trillion increase in federal debt, over the next decade, actually implies a decrease in federal debt growth — the debt growth that cured the Great Recession.

And history shows that when debt growth declines, we have recessions.

Continuing with MacGuineas’s comments:

When it comes to tax cuts, there is always the free lunch crowd claiming if we cut taxes, they will pay for themselves through growth. Here in the real world, smart, pro-growth tax cuts can at best cover a fraction of their costs.

“Pay for themselves” means that tax rate cuts supposedly will result in more tax collections. Thankfully, this never has happened.

In fact, large tax cuts can actually harm economic growth by creating a massive debt load.

Federal debt is nothing more than the total to deposits in T-security accounts at the Federal Reserve Bank.

My local bank advertises and gives rewards — even pays interest — to obtain deposits.  So why deposits should be a burden on the world’s safest, most powerful bank, is anyone’s guess. But it is a common whine among debt worriers.

MacGuineas then offered up her 4-step plan. Steps #1 and #2 are the usual right-wing juggling act that involves taking a lot from lower and middle-class individuals and giving some to rich people and some to rich corporations, and the rest to the government (the latter having no use for tax money)  — resulting in a net loss for the private sector, aka “the economy.”.

But Step #3 is the real goal of the very rich: Cut benefits to the middle classes and the poor:

Step three is to reform our entitlement programs.

Social Security, health, and interest spending are responsible for 82 percent of projected spending growth over the next decade; and both Social Security and Medicare are headed toward insolvency.

The usual “Big Lie.” The federal government, being Monetarily Sovereign, cannot become insolvent, even if federal taxes were $0. For that reason, no federal agency can become insolvent unless Congress wishes it.

Thoughtful reforms can improve health outcomes, encourage work, strengthen retirement security, and reduce the long-term debt all while protecting the most vulnerable.

And so, that is MacGuineas’s wonderful solution: “Thoughtful reforms” (aka “Cut benefits” for the people). Ah, those thoughtful reforms.

And so we trudge to MacGuineas’s final step:

The final step is to do everything else we can to encourage economic growth.

Faster economic growth needs to be broadly shared so it lifts all incomes, improves everyone’s wealth, and helps our fiscal situation.

Policymakers need to fire on all cylinders — pursuing reforms to taxes and entitlements but also regulations, immigration, federal investment, trade, and energy.

A critical component of the growth agenda is to get our debt under control.

Yep, to encourage economic growth we must “fire on all cylinders” and encourage economic growth.  Wow! Why didn’t anyone think of that?

Most importantly, we must give to the rich, while taking from the middle and the poor. That is the real message.

As for Trump’s one-page, double-spaced, magnum opus, it’s both too much and too little. It’s too much for the debt harpies, who would delight in sending America into a depression, as federal surpluses always do.

And it’s too little if the goal is to grow the economy.

The progressives (are there any?) will hate his one-page paper because it widens the Gap between the rich and the rest. The conservatives will hate it because it doesn’t widen the Gap enough (Is there ever enough?)

The middle will hate it because it doesn’t allow deductions for state and local taxes, and doesn’t make the corporations “pay their fair share,” whatever that may be. And Trump will hate everyone who criticizes

And Trump will hate everyone who criticizes it, because he loathes any sort of criticism.

But the .01%, the truly rich, will love it. Trump’s businesses will love it. Ivanka, the walking, talking conflict of interest will love it. And Jared, the inexperienced, all-purpose expert about everything,  will love it.  

So yes, the people who wrote Trump’s one-page tax “plan” for him are on to something.

And it’s something bad for you and me.

Rodger Malcolm Mitchell
Monetary Sovereignty

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

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 can afford better health care than can 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 A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) 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 EVERYONE Five 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 benefitting 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 FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce 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 business taxes would be a 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.

MONETARY SOVEREIGNTY