The U.S. federal government is Monetarily Sovereign (See: Monetary Sovereignty.) It created the first U.S. dollars from thin air, and it retains the unlimited ability to create more U.S. dollars. The government never unintentionally can run short of U.S. dollars. Even if all federal tax collections ended, the federal government could continue spending forever.
State and local governments are monetarily non-sovereign. They can and often do run short of dollars.
Because the U.S. government cannot run short of dollars, it has no need for tax dollars. In fact, it destroys all tax dollars upon receipt at the Treasury. (See: “Does the Federal Government Really Destroy Your Tax Dollars?“) Taxes are paid with dollars from the M2 money supply, and when they reach the Treasury, they cease to exist in any money supply measure. Thus, the federal government does not spend taxpayers’ dollars.
By contrast, state/local governments do need and spend taxpayers’ dollars.
Contrary to popular wisdom, federal spending does not cause inflation. Inflation always is caused by shortages of critical goods and services, usually oil, food, and labor. (See: “Cause of Inflation.”) Inflations can be cured by additional government spending to cure shortages.
Keep those facts in mind as you read excerpts from the following article:
The Commonwealth Fund Health Care Affordability Survey, fielded for the first time in 2023, asked U.S. adults with health insurance, and those without, about their ability to afford their health care — whether costs prevented them from getting care, whether provider bills left them with medical debt, and how these problems affected their lives.
Many Americans have inadequate coverage that’s led to delayed or forgone care, significant medical debt, and worsening health problems.
While having health insurance is always better than not having it, the survey findings challenge the implicit assumption that health insurance in the United States buys affordable access to care.
Difficulties affording care are experienced by people in employer, marketplace, and individual market plans, as well as people enrolled in Medicaid and Medicare.
Private insurance is burdened by the profit motive, which restricts the number and amount of benefits offered. However the federal government has no profit motive and has the unlimited ability to create dollars. So why is Medicare inadequate?
For the survey, our analysis focuses on 6,121 working-age respondents, those 19 to 64.
Survey Highlights
Large shares of insured working-age adults surveyed said it was very or somewhat difficult to afford their health care: 43 percent of those with employer coverage, 57 percent with marketplace or individual-market plans, 45 percent with Medicaid, and 51 percent with Medicare.
Many insured adults said they or a family member had delayed or skipped needed health care or prescription drugs because they couldn’t afford it in the past 12 months: 29 percent of those with employer coverage, 37 percent covered by marketplace or individual-market plans, 39 percent enrolled in Medicaid, and 42 percent with Medicare.
Cost-driven delays in getting care or missed care made people sicker. Fifty-four percent of people with employer coverage who reported delaying or forgoing care because of costs said a health problem of theirs or a family member got worse because of it, as did 61 percent in marketplace or individual-market plans, 60 percent with Medicaid, and 63 percent with Medicare.
Insurance coverage didn’t prevent people from incurring medical debt.Thirty percent of adults with employer coverage were paying off debt from medical or dental care, as were 33 percent of those in marketplace or individual-market plans, 21 percent with Medicaid, and 33 percent with Medicare.
Medical debt leads many people to delay or avoid getting care or filling prescriptions: more than one-third (34%) of people with medical debt are in employer plans, 39 percent in the marketplace or individual-market plans, 31 percent in Medicaid, and 32 percent in Medicare.
Healthcare insurance, whether private or government-funded, is inadequate. Given the fact that the federal government has infinite dollars, why are so many Americans suffering with too-costly-but-inadequate insurance?
Medicare, for instance, is far less than comprehensive. Why does Medicare have Part A, Part B, Part C, and Part D, each with different options and costs? Why not simply a Medicare that covers everything for everyone at no cost?
Why, if the federal government has infinite money, are these expenses not covered, and why are there deductibles and added costs to complete coverages?
You have been told, falsely, that the federal government is like state/local governments, business, you and me, in being monetarily non-sovereign. You have been told falsely, that the federal government spends taxpayers’ dollars and can run short of dollars.
You have been told, falsely, that to provide benefits, the federal government must levy taxes and spend taxpayers’ money.
It’s all a lie.
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”
Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Ben Bernanke: “It’s not tax money… We simply use the computer to mark up the size of the account. The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”
The U.S. government is not the only Monetarily Sovereign entity. For example:
Press Conference: Mario Draghi, President of the ECB, 9 January 2014
Question: I am wondering: can the ECB ever run out of money?
Mario Draghi: Technically, no. We cannot run out of money.
Given its infinite money supply, why does the federal government not provide free, comprehensive, no-deductible insurance to every man, woman, and child in America? Why must you, as an American, risk bankruptcy, sickness, and death because your insurance is inadequate?
What is the Big Lie? The Big Lie is the claim that federal taxes fund federal spending.To pay its bills, the federal government creates new dollars ad hoc by tapping computer keys. Whenever you read an article claiming the federal government is “spending taxpayers’ dollars; it is a lie.
State and local governments spend taxpayers’ dollars; the federal government does not.
Why are you being lied to, and where are the lies coming from?
The lies are coming from the healthcare insurance industry, the media, the economists, and the politicians.
It’s easy to understand why the insurance industry lies about the federal government’s not funding healthcare insurance: The profit motive. The insurance industry does not want to lose the huge profits in selling healthcare coverage.
But why do the media, economists, and politicians lie?
Because they are bribed.
The media are bribed by advertising dollars and by ownership. The economists are bribed by university contributions and by promises of lucrative jobs in “think tanks.” The politicians are bribed by campaign contributions and by promises of lucrative jobswith industry.
Who is doing the bribing? The very rich?
Why are the rich bribing? Gap psychology says people grow richer and more powerful by widening the Gap between them and those below them in any income/wealth/power measure. That is the primary way the rich make themselves more affluent.
How do the rich widen the Gap below them? They get more for themselves, but importantly, they make sure those below them get less. They use their influence to reduce the federal benefits paid to those less wealthy.
The rich disseminate the lie that Medicare and Social Security are running short of dollars, so benefits must be reduced, and taxes must be increased (See: “Starve the Poor.”)
What should be done?
First, the useless, harmful FICA tax should be eliminated. Like all federal taxes, it funds nothing. Worse, it punishes the low-income worker and widens the Gap between the rich and the rest.
Second, the federal government should pay for free, comprehensive Medicare for All, with no limits and no deductions. One free plan for everyone; no Part A, B, C, D. No Medicaid. No “Donut holes.” No Medicare Advantage plans.
The public must learn that federal spending is beneficial, and it costs nothing.The more the federal government spends on healthcare, the more the overall economy will grow and prosper.
Ignorance is the weapon used by the rich to dominate the rest. That is the reason medical services are unaffordable for so many Americans.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.
Every day, U.S. dollars are createdby federal government spending and by private sector lending.
And every day, dollars are destroyed by federal taxing and by private sector loan repayment.
Because private sector loans eventually are repaid, they do not permanently add dollars to the economy. By contrast, federal spending seldom is balanced by federal taxes — the government runs deficits almost every year — and those deficit dollars not offset by taxes, are permanently added to the economy.
Thus, federal deficits are the primary way dollars are permanently added to the economy.
The trajectory of Gross Domestic Product (GDP – red) parallels the M2 money supply trajectory.
America’s population is growing, and we have inflation every year. Further, our imports generally exceed our exports, so dollars leave the economy.
Just to remain level on a real (inflation-adjusted) per capita basis, our economy requires a growing supply of dollars:
GDP = Federal Spending + Nonfederal Spending + Net Exports
Mathematically, the economy (GDP) can’t grow unless the money supply increases. Without federal deficit spending, both “Federal Spending” and “Nonfederal Spending” would decrease, and “Net Exports” already is below zero.
In summary, the federal government must grow GDP to account for:
Inflation: According to the Bureau of Labor Statistics consumer price index, the average inflation rate of the US dollar between 1970 and today was 3.98% per year. This means that today’s prices are 7.93 times as high as average prices since 1970. So far, in 2023, the inflation rate has been about 8%. The Federal Reserve aims for 2% inflation.
Population growth: According to the United Nations, the population of the United States in 1970 was 205,052,174. As of 2023, the population of the United States is estimated to be 339,996,563. Therefore, the population of the United States today is approximately 65.8% higher than in 1970. The current population of U.S. in 2023 is 339,996,563, a 0.5% increase from 2022 or about 2 million more people.
Net imports: According to the World Bank, the U.S. trade balance for 2021 was $ 861.71B, a 37.32% increase from 2020.
Economic growth. Just to achieve zero economic growth, the U.S. government must run deficits that overcome Inflation, Population growth, and Net imports of $861B. For economic growth, the federal government must run additional deficits.
Federal deficits add growth dollars to the economy. Federal taxes take growth dollars away from the economy.
There are various ways to calculate how much the federal deficit needs to be to achieve economic growth.
Here is a genuinely rough estimate, only as an example. The most recent GDP increase was $414 Billion.
That increase was achieved with a $1.7 Trillion deficit and $861 Billion Net Imports. This left about $839 Billion in the economy.
At 8% inflation, achieving the same level of GDP growth, Population Growth, and Net Imports would require a federal deficit of (108% x 1.7 Trillion) $1.8 Trillion.
Again, this is just “back of the envelope” stuff, leaving out many variables. It’s only to demonstrate one fact: Deficits are necessary for economic growth. Period.
$10 trillion in added debt shows ‘Bush and Trump tax cuts broke our modern tax structure’Jon Queally, Common Dreams, October 22, 2023, 7:05AM ET$10 trillion in added debt shows ‘Bush and Trump tax cuts broke our modern tax structure.’
The “modern tax structure” is broken, but not because of “added debt.” It’s broken because the purpose of federal taxes differs from the purpose of state/local taxes.
Federal taxes do not fund federal spending. Our Monetarily Sovereign government funds its spending by creating new dollars ad hoc.
No tax dollars are used. Taxes are paid with dollars from the M2 money supply measure. But when they reach the Treasury, they disappear from any money supply measure. The Treasury has infinite dollars; no measure exists.
Federal tax dollars effectively are destroyed upon receipt.
Today, federal taxes have two explicit purposes and one hidden purpose.
Federal taxes help the government control the economy by taxing what the government wishes to discourage and giving tax breaks to what the government wishes to reward.
Federal taxes also assure demand for the U.S. dollar by requiring dollars to be paid for all tax obligations.
The hidden purpose is to enrich the wealthy by widening the income/wealth/power Gap between the rich and the rest of us. The tax structure contains tax loopholes not available to the rest of us. These were put there via political bribes from the rich.
The U.S. Treasury Department on Friday released new figures related to the 2023 budget that showed a troubling drop in the nation’s tax revenue compared to GDP — a measure that fell to 16.5% despite a growing economy — and an annual deficit increase that essentially doubled from the previous year.
This above is an oblique reference to the meaningless Federal debt/GDP ratio. It is a ratio that compares two unrelated measures. Federal “debt” is nothing like actual debt. It is deposits into Treasury Security accounts (T-bills, T-notes, T-bonds).
These accounts are held by the government but are owned by the depositors (the buyers of those T-securities). The government never uses those dollars other than to add interest.
Upon maturity, the government merely transfers the dollars from the depositors’ T-security accounts to the depositors’ checking accounts. It is a simple asset transfer like moving dollars from your savings account to your checking account.
This so-called “debt” is not a financial burden on anyone — not on the government or on taxpayers.
The purpose of those accounts is not to provide spending money to the government. Rather, they are a safe place to store unused dollars, which stabilizes the dollar and helps provide demand for the dollar.
The other side of the Debt/GDP ratio, GDP, is total spending in America. It is not related in any way to deposits into T-security accounts.
The Debt/GDP ratio predicts nothing. It measures nothing. The ratio does not indicate the federal government’s ability to pay its bills, an infinite ability. The federal government cannot run short of dollars. Not now. Not ever.
The ratio does not indicate the economy’s health, which is characterized by such measures as inflation, employment, unemployment, GDP growth, healthcare, etc.
Look at any list comparing the ratio among the world’s various nations, and you will not be able to discern anything about those nations. For example:
Countries with the Highest Debt-to-GDP Ratios (%) Venezuela — 350% Japan — 266% Sudan — 259% Greece — 206% Lebanon — 172% Cabo Verde — 157% Italy — 156% Libya — 155% Portugal — 134% Singapore — 131% Bahrain — 128% United States — 128%
Countries with the Lowest Debt-to-GDP Ratios (%) are Brunei — 3.2%, Afghanistan — 7.8%, Kuwait — 11.5%, Congo (Dem. Rep.) — 15.2%, Eswatini — 15.5%, Burundi — 15.9% Palestine — 16.4% Russia — 17.8% Botswana — 18.2% Estonia — 18.2%
As you can see, the debt/GDP ratios tell you nothing about the economies of any country. Low ratios mean nothing. High ratios mean nothing.
Similarly, tax revenue/GDP means nothing. Yet the author, Jon Queally, finds it “troubling.”
That ratio tells you nothing about the government’s ability to pay its bills (which, again, is infinite). It tells you nothing about the current or future health of the economy.
The only thing this ratio tells you is how many dollars the government is taking from the private sector compared to spendingin the private sector. While Queally is concerned about the ratio being too low, he really should be concerned about it being too high.
Taking money from the economy is recessionary. The higher the tax revenue/GDP ratio, the fewer growth dollars remain in the economy. In finding the reduced ratio “troubling,” Queally has it all backwards, which is typical for people who do not understand Monetary Sovereignty.
It is far more troubling that economists find a meaningless ratio “troubling,”
“The deficit unexpectedly jumped this year to roughly $2 trillion.”
Bobby Kogan, senior director for federal budget policy at the Center for American Progress, has argued repeatedly that growing deficits in recent years have a clear and singular chief cause: Republican tax cuts that benefit mainly the wealthy and profitable corporations.
Federal deficits add growth dollars to the economy. The bigger the deficit, the more GDP growth.
The problem arises not because the deficits are too large but rather because they benefit the very rich by narrowing the income/wealth/power Gapbetween the rich and the rest.
The solution is not to levy more taxes on the general public or to reduce federal spending, both recessionary. The solution is to narrow the Gap by taxing the rich more and the rest of us less.
The first step should be to eliminate the FICA tax. It is America’s most regressive tax, punishing low-level salaried people the most.
Despite claims that FICA funds Medicare and Social Security, it does nothing of the sort. Medicare and Social Security benefits are funded by federal government money creation. If FICA were eliminated, this would have no effect on the government’s infinite ability to pay benefits.
Like all tax dollars, those FICA dollars are destroyed upon receipt by the U.S. Treasury.
In response to the Treasury figures released Friday, Kogan said that “roughly 75%” of the surge in the deficit and the debt ratio, the amount of federal debt relative to the overall size of the economy, was due to revenue decreases resulting from GOP-approved tax cuts over recent decades. “
Of the remaining 25%,” he said, “more than half” was higher interest payments on the debt related to Federal Reserve policy.
Federal tax cuts and federal interest payments both add growth dollars to GDP. It is hard to explain why anyone would wish to take more dollars from the private sector and give them to the Monetarily Sovereign federal government.
“We have a revenue problem due to tax cuts,” said Kogan, pointing to the major tax laws enacted under the administrations of George W. Bush and Donald Trump. “
The Bush and Trump tax cuts broke our modern tax structure. Revenue is significantly lower and no longer grows much with the economy.”
Is it possible for an economist to be too ignorant to understand that taxes take dollars outof the economy, which is recessionary?
And he offered this visualization about a growing debt ratio:
“The point I want to make again and again and again is that, relative to the last time CBO was projecting stable debt/GDP, spending is down, not up,” Kogan said in a tweet Friday night. “
It’s lower revenue that’s 100% responsible for the change in debt projections. If you take away nothing else, leave with this point.”
This truly is beyond ignorant. Kogan claims taking money from the economy is good for the economy, while adding dollars to the economy is bad for the economy.
In a detailed analysis produced in March, Kogan explained that, “If not for the Bush tax cuts and their extensions — as well as the Trump tax cuts — revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining.
It’s difficult to understand how a thinking human could claim that taking dollars from the monetarily non-sovereign private sector and giving them to the Monetarily Sovereign federal government somehow is good for America.
Shall we now apply leeches to cure anemia? Same ignorance.
Instead, these tax cuts have added $10 trillion to the debt since their enactment and are responsible for 57 percent of the increase in the debt ratio since 2001, and more than 90 percent of the increase in the debt ratio if the one-time costs of bills responding to COVID-19 and the Great Recession are excluded.
As we have shown, the debt/GDP ratio is meaningless. And as for the federal “debt,” it isn’t even debt. It is deposits into Treasury Security accounts, which more than anything, resemble safe deposit boxes.
The federal government does not spend the dollars in T-bill, T-note, and T-bond accounts. The government never touches those dollars, all of which are the property of the depositors.
Those so-called deposits are not a debt burden on the federal government. As each account reaches maturity, the dollars in the accounts are returned to their depositors.
It’s a simple asset exchange from the depositor’s T-security account to the depositor’s checking account.
Just as with deposits into safe deposit boxes, the contents of T-security accounts are not owed or owned by the federal government.
“Tax giveaways for the wealthy are continuing to starve the federal government of needed revenue: those passed by former Presidents Trump and Bush have added $10 trillion to the debt and account for 57 percent of the increase in the debt-to-GDP ratio since 2001,” read the statement.
“If not for those tax cuts, U.S. debt would be declining as a share of the economy.”
It is not possible to “starve the federal government” of dollars. It creates all the dollars it needs, at the touch of a computer key.
Kogan has no idea what Monetary Sovereignty means. He seems to think federal finances are like personal finances.
Whitehouse, who chairs the Senate Budget Committee, said the dip in federal revenue and growth in the overall deficit both have the same primary cause: GOP fealty to the wealthy individualsand powerful corporations that bankroll their campaigns.
GOP “fealty to the wealthy individuals” is well known. The only people more ignorant that those who worry about the meaningless Debt/GDP ratio are the middle- and lower-income people who vote for the party that tries to cheat them every day.
“In their blind loyalty to their mega-donors, Republicans’ fixation on giant tax cuts for billionaires has created a revenue problem that is driving up our national debt,” Whitehouse said Friday night.
“Even as federal spending fell over the last year relative to the size of the economy, the deficit increased because Republicans have rigged the tax code so that big corporations and the wealthy can avoid paying their fair share.”
The “giant tax cuts for billionaires” is not a federal debtproblem. The debt is no problem at all.
The tax cut for billionaires is a Gapproblem. The wider the Gap between the rich and the rest, the wealthier and more powerful the rich become and the poorer and more powerless the rest of us become.
Offering a solution, Whitehouse said, “Fixing our corrupted tax code and cracking down on wealthy tax cheats would help bring down the deficit.
It would also ensure teachers and firefighters don’t pay higher tax rates than billionaires, level the playing field for small businesses, and promote a stronger economy for all.”
The goal is not to “bring down the federal deficit.” The deficit enriches the economy. The goal is to narrow the Gap between the rich and the rest.
None of the latest figures — those showing that tax cuts have injured revenues and therefore spiked deficits and increased debt — should be a surprise.
Tax cuts reduce federal revenues. Federal revenues come out of the economy. Tax cuts enrich the economy. Is this so hard to understand? Growing GDP requires growing the money supply.
In 2018, shortly after the Trump tax cuts were signed into law, a Congressional Budget Office report predicted precisely this result: that revenues would plummet; annual deficits would grow; and not even the promise of economic growth made by Republicans to justify the giveaway would be enough to make up the difference in the budget.
“The CBO’s latest report exposes the scam behind the rosy rhetoric from Republicans that their tax bill would pay for itself,” Sen. Chuck Schumer (D-N.Y.), and now Senate Majority Leader, said at the time.
“Republicans racked up the national debt by giving tax breaks to their billionaire buddies, and now they want everyone else to pay for them.”
The Republicans lie; the Democrats lie. The media lie. The politicians lie. The economists lie. They all tell the Big Lie that federal spending is funded by federal taxes.
The purpose of the Big Lie is to make you believe the federal government cannot afford to give you benefits unless taxes are increased.
The plan is to make you ignorant so you will not demand increases in Medicare and Social Security benefits, poverty aids, infrastructure aids, and all the other benefits that supposedly are “unaffordable.”
For all the empty promises and howling from the GOP and their allied deficit hawks, the economic prescription they forced through Congress has resulted in an annual deficit of more than double, all while demanding the nation’s poorest and most vulnerable pay the price by demanding key social programs—including food aid, education budgets, unemployment benefits, and housing assistance — be slashed.
And being ignorant about federal finances, many of the “poor and most vulnerable” keep voting for Republicans.
Meanwhile, the GOP majority in the U.S. House — with or without a Speaker currently holding the gavel — still has plans to extend the Trump tax cuts if given half a chance.
In May, a CBO analysis of that pending legislation found that such an extension would add an additional $3.5 trillion to the national debt.
In other words, it would add 3,5 trillion growth dollars to the economy.
“Republicans racked up the national debt by giving tax breaks to their billionaire buddies, and now they want everyone else to pay for them,” Whitehouse said at the time.
“It is one of life’s great enigmas that Republicans can keep a straight face while they simultaneously cite the deficit to extort massive spending cuts to critical programs and support a bill that would blow up deficits to extend trillions in tax cuts for the people who need them the least.”
It’s one of life’s great mysteries why people who author articles about economics fail to understand that federal taxes remove growth dollars from the economy, federal deficit spending adds growth dollars to the economy, and the federal government never can run short of dollars but the economy can..
Your visceral reaction to the following article may be anger that a wealthy corporation allegedly cheated on its taxes. You may be glad they were caught and now might have to pay the government $29 billion, plus penalties.
A multiyear campaign to slash the IRS budget has left it understaffed and on the defensive. That’s been good news for tax cheats, the rich, and big corporations — but not for the poor.
What does “but not for the poor” mean? In what way are the poor harmed by Microsoft’s alleged cheating on its taxes? Let’s see if we can find the answer.
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In a long-awaited development, the largest audit in the history of the IRS has finally taken its next step. On Wednesday, Microsoft announced that the agency had notified the company that it owes $28.9 billion in back taxes, plus penalties and interest.
The case is epic not only in dollars but in scope. As ProPublica reported in an in-depth narrative in 2020, the IRS saw the case as a chance to prove the agency’s effectiveness.
Often cowed by the prospect of facing off against corporations with endless resources, the IRS set out to be bolder and more aggressive. It took the unusual step of hiring a corporate law firm to represent the agency, which incensed Microsoft. The company, along with others in its industry, responded by rallying allies in Congress to rein in the IRS.
In 2005, ProPublica wrote Microsoft “sold its most valuable possession — its intellectual property — to an 85-person factory it owned in a small Puerto Rican city.” Having struck a favorable tax deal with Puerto Rico, Microsoft then channeled its profits to the facility.
But earlier that same year, the IRS had set up a new unit to audit intra-company deals that sent U.S. profits to tax havens — deals that were especially common among tech companies like Google, Facebook, and Apple.
By the time ProPublica published its story on the audit in 2020, the two sides had sued each other, and one case had long been stuck in court. Almost three years after the last motions in the case, a ruling finally came down.
The judge sided with the IRS, writing, “The Court finds itself unable to escape the conclusion that a significant purpose, if not the sole purpose, of Microsoft’s transactions was to avoid or evade federal income tax.” He agreed with the IRS’ characterization of the deal as a tax shelter.
He wrote that the $29 billion that the IRS was seeking covered 2004 to 2013. He asserted, however, that the total, were the IRS to ultimately prevail, would be reduced by about $10 billion in taxes that Microsoft has already paid on its overseas profits.
A major feature of President Donald Trump’s 2017 tax bill was a requirement that companies repatriate those profits, though they paid a special, low tax rate when they did. Microsoft had stored up $142 billion in offshore profits by 2017.
The IRS attorneys who worked on the case believed it to be, by far, the largest U.S. audit ever, and the amount the IRS is seeking from Microsoft is several times larger than in any other publicly disclosed audit in the agency’s history.
The case, in a way, is the last, great vestige of the IRS before it was gutted by budget cutsthroughout the 2010s and corporate audits plummeted.
While the recent infusion of billions from the Inflation Reduction Act will allow the agency to rebuild itself in the coming years, the Microsoft case shows the fruit of those efforts could take a long, long time to reap.
Who are you rooting for, Microsoft or the IRS?
Consider these facts:
Congress’s “gutting” of the IRS left it struggling to prosecute big, money-rich firms for tax fraud because such effort requires huge manpower and many years of effort — neither of which has been affordable.
So, the IRS had to focus its efforts on smaller fish, like you and me, while the whales got away with paying at much lower rates.
Donald Trump, for example, paid $500 a year in taxes. Compare that with what you paid.
To be fair, much of his savings came from favorable tax laws rather than the tax cheatingMicrosoft allegedly did.
Either way, Congress has allowed the rich to pay a lower % of their income in taxes than the rest.
Federal taxes do not fund federal spending. The government pays all its bills by creating new dollars ad hoc.
Alan Greenspan:“The United States can pay any debt it has because we can always print the money to do that.”
Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
Federal taxes take dollars from the private sector, which impoverishes the economy. Federal deficits enrich the economy and facilitate economic growth.
If Microsoft pays the government the $29 billion claimed by the IRS, this will take $29 billion from the economy but do nothing to help the federal government pay its bills.
The government will not need to raise taxes to “make up” for the loss of $29 billion.
When ProPublica said that understaffing the IRS was good news for tax cheats “but not for the poor,” they could have meant two different things:
The government would be short of funds to pay benefits to the poor or
The IRS could focus on the poor, allowing the rich to skate.
The former is wrong. The federal government has infinite funds to pay for anything. The latter is correct, and the real purpose of understaffing the IRS is to make it easier for the rich to cheat on their taxes.
Why does the federal government collect taxes if it neither needs nor uses the dollars?
To control the economy by discouraging what the government doesn’t like and giving tax breaks to what the government wishes to reward.
To create demand for the U.S. dollar by requiring taxes to be paid in dollars.
To help the rich become more prosperous by widening the income/wealth/power Gap between the rich and the rest.
What should be done?
Unlike state and local governments, the federal government is Monetarily Sovereign, meaning it has the infinite ability to create its sovereign currency, the U.S. dollar. It never unintentionally can run short of dollars.
Therefore, the sole legitimate purposes of federal taxes are numbers 1. and 2 above. The general public should not be subject to payroll (FICA) taxes or income taxes, as these only take growth dollars from the economy and do not fund anything.
Contrary to popular myth, FICA does not pay for Social Security or Medicare. The federal government creates the dollars to pay for these programs, just as it does for Congress, the President, the Supreme Court, the Military, and every other federal agency.
Because no public purpose is served by extracting dollars from America’s businesses, company profits should not be taxed.
One could theorize that taxing profits encourages corporations to invest in growth, but we’ve seen scant evidence that businesses are not already motivated to grow.
It’s doubtful that taking tax dollars from a business aids business growth.
The third purpose of federal taxes should be to lift the middle- and lower-income groups by taxing the rich more to narrow the Gap between the rich and the rest.
This would require eliminating the myriad tax breaks and loopholes afforded to the rich re-defining “income” to include every kind of wealth increase while dramatically increasing the lowest amount of income that could be taxed.
The Republican Party’s primary talking point regarding guns is that although cities run by Democrats have strong gun laws, they are riven with gun violence, proving that gun laws don’t work and have negative results.
As with so many right-wing conspiracy theories readily believed by MAGAs, this one is disputed by facts:
In 2022, for example, after a shooter took the lives of 19 children and two teachers at Robb Elementary School in Uvalde, Texas, Gov. Greg Abbott (R-TX) claimed that gun violence in the cities of New York, Los Angeles, and Chicago is evidence that tougher gun laws are “not a real solution.”
Similarly, despite evidence that New York City actually has relatively low rates of gun violence when controlling for its size, in April 2023, Rep. Jim Jordan (R-OH) used his powers as the House Judiciary Committee chair to hold a field hearing on violent crime in Manhattan.
The purpose: To disrepute Manhattan District Attorney Alvin Bragg after Bragg brought charges against former President Donald Trump.
These examples demonstrate a larger coordinated effort by conservatives to make violent crime a “Democrat” issue while at the same time diverting attention from their own public safety failures to address gun violence, including neglecting to make it harder for individuals with violent intentions to obtain a gun.
Cities in blue states, based on how a state voted in the 2020 presidential election, are consistently safer from guns than cities in red states, regardless of which party is represented in city leadership.
From 2018 to 2021, red-state cities experienced larger increases in gun violence rates than blue-state cities. In 2023, blue-state cities are experiencing larger declines in gun violence rates than red-state cities.
Not only do blue-state cities on average experience lower rates of gun violence in each year of the study, but now, gun violence rates appear to be decreasing faster on average in these cities than in red-state cities.
Put simply, the data do not back up the blame-game politics of Republican lawmakers such as Texas Gov. Abbott and Rep. Jordan.
Gun violence is not a problem unique to large American cities. Rural communities, particularly in red states, are experiencing some of the highest rates of gun violence in the United States.
For example, from 2016 to 2020, 13 of the 20 U.S. counties with the most gun homicides per capita were rural.
None of the above should surprise any thinking person. The notion that giving every person permission to carry high-powered guns in public somehow is safer than restricting gun ownership is ridiculous.
By what logic does arming everyone with high-powered, semi-automatic, or automatic weapons make you safer?
A criminal is more likely to shoot you if you point a gun at him than if you don’t or if you shoot and miss.
Are you going to be able to shoot first when a “bad guy” confronts you on the street or even in your home? Will you instantly know your legal rights so you don’t go to jail for shooting first?
Yes, laws against some people carrying some types of guns won’t prevent all criminals from carrying any gun, just as laws against fraud don’t stop all fraud, and laws against assault and battery don’t stop all assault and battery.
It is people’s nature that some will break laws.
But does that mean we should eliminate all laws because some people break them?
Shall we eliminate laws against child rape because some adults rape children despite the laws? To borrow a phrase from the gun lobby, “If we outlaw speeding, only the speeders will speed.”
We have many laws. Thick books filled with laws. And many of them are broken. But shall we burn all the law books?
Shall we not outlaw speeding because some people still will break the law and speed? Shall we not criminalize fraud because someone might break the law and create a fake university that bilks students.
Shall we not have laws against tax fraud because someone will break that law by creating a fake foundation? Shall we not have laws against rape because some people will ignore the law and attack a woman?
Is the reason not to prevent some people from packing guns the fact that some people will break the law? Ah, but guns. Guns are somehow different. Guns only kill and maim. So, shall we not have laws outlawing certain guns or people carrying a gun because laws don’t work.
We outlaw drugs to prevent people from unintentionally committing suicide with drugs, yet guns constitute a significant suicide device, even more than being a murder device. But guns are “different.”
Red states have experienced higher murder rates than blue states every year from 2000 to 2020.
And the difference is not driven by gun violence happening disproportionately in large cities. Even when the largest cities in each red state are removed from the analysis, the overall murder rate is still percent higher than in blue states across that entire period.
From 2015 to 2022, cities in blues states saw an average gun homicide rate of 7.23 per 100,000 residents. In red-states cities, that rate was 11.1 per 100,000 residents—53 percent higher than the rate in blue-state cities.
Cities in states that voted for Joe Biden in the 2020 election consistently have the lowest rates of gun violence per 100,000 residents.
New York had only the 218th-highest rate of firearm-involved homicides per 100,000 residents. Similarly, Los Angeles was the 151st-ranked city, and 34 cities had higher rates of gun violence than Chicago.
While some leaders want to cherry-pick these three cities based on the media attention they garner as examples of failed policies to reduce gun violence, the reality is that seven of the top 10 cities regarding gun violence rates are in red states, not blue.
Although the gun-lovers claim the blue states have “strong” gun laws, the reality is that compared to the days before District of Columbia v. Heller, today’s laws are weak.
Heller was the case where the right-wing Supreme Court — the self-described”originalists” — decided the original 13 words of the 2nd Amendment didn’t mean what they clearly said (about a “well-regulated militia.”)
The originalist Supreme Court not only eliminated the “militia” but also eliminated the “well-regulated.” True originalists are left to wonder what those words originally meant.
So that is the question for all originalists: What exactly did the Founding Fathers mean by “well-regulated,” and what did they mean by “militia.”
Today’s laws have been watered down to near meaninglessness. Today, any nut can carry almost any gun anywhere except in court.
(Why not in court? Because guns are too dangerous in court, though not too dangerous anywhere else.)
In each year from 2016 to 2022, cities in red states had higher population-adjusted rates of accidental gun deaths than cities in blue states.
Not only are guns used for murder and suicide, they also cause accidental deaths. Having a gun in your house or carrying one in the street greatly increases the chances you will die by gunshot.
In 2022, for example, cities in red states experienced 27 percent more accidental shootings, on average, than cities in blue states. These data suggest that the difference between these cities is not just a crime problem; it’s a gun problem.
In each year from 2016 to 2022, cities in red states had higher population-adjusted rates of accidental gun deaths than cities in blue states.
Cities in states that voted for President Joe Biden in the 2020 election have consistently lower rates of accidental deaths due to firearms.
From 2019 to 2021, the United States experienced the largest two-year increase in homicides ever recorded by the Centers for Disease Control and Prevention—and it was almost entirely driven by gun homicides.
This alarming statistic forces gun violence to the center of every public safety conversation. How policymakers have responded to this hard truth is telling.
States such as Oregon, New Jersey, and 19 others—of which 15 were blue states—plus Washington D.C., passed a combined 91 gun safety bills in 2022 alone.
Notably, the Giffords Law Center to Prevent Gun Violence’s annual state scorecard rankings show states with the strongest gun laws consistently have the lowest rates of gun violence.
Despite this strong association, conservative politicians continue pushing the narrative that gun violence is worsening in cities in blue states. However, the data do not support this claim. In the 300 most populous U.S. cities, from 2018 to the peak of gun violence in 2021, red-state cities, on average, saw their rates of gun homicides increase by 27 percent more than in blue-state cities.
Among the 300 most populous U.S. cities, cities in blue states have seen a 14.9 percent decrease in year-to-date gun homicides after adjusting for population. In red-state cities, the drop is only 3.7 percent.
Blue cities are statistically different from red cities regarding commonly used socioeconomic indicators: population size, poverty rate, income inequality, and racial diversity.
This means that comparing all blue cities with all red cities does not allow for meaningful conclusions about gun violence trends because it is not an apples-to-apples comparison.
On the other hand, when comparing blue cities in blue states with blue cities in red states, there are no statistically significant differences in these same indicators, which provides a better comparison.
Using this as the basis for deeper analysis, the trend does not change; cities in blue states are safer than their peers in red states, regardless of the affiliation of the mayor.
Using mayoral party affiliation as a proxy for political association, analysis of the 100 most populous cities in the United States reveals that blue cities in blue states are safer than blue cities in red states, and, similarly, red cities in blue states are safer than red cities in red states.
Conservative legislatures have pursued codifying additional preemption statutes in direct response to actions taken by city officials.
Regarding firearms, preemption laws take authority away from local elected leaders and police chiefs to pass and implement laws that regulate the possession, transfer, sale, ownership, and transportation of firearms, among other regulatory policies.
This has been a particular issue for local officials seeking to confront gun violence in their communities. Some 45 states—both red and blue—have preemption laws on the books that explicitly bar local governments from passing firearm-related ordinances in some form.
Only Hawaii, New York, Massachusetts, Connecticut, and New Jersey do not explicitly preempt firearm regulations. Notably, these states had five of the six lowest gun death rates in 2022.
The consequences of these laws are devastating. Preemption statutes can threaten public safety by ignoring local variations, hindering enforcement agencies, and denying innovation in gun violence prevention strategies.
Preemption laws leave local officials and communities vulnerable. For example, state supreme courts ruled that colleges in Colorado, Utah, and Oregon could not set gun policies and, therefore had no authority to restrict the carrying of guns on their campuses.
Chicago is surrounded by states with some of the weakest gun laws.
As a result, Chicago is under constant stress from guns flowing into the city.
Case in point: Westforth Sports Inc., located just 10 miles from Illinois’ border, in the red state of Indiana, has been tied to 850 crime guns recovered in Chicago from 2013 to 2016, making it the “third-largest federally licensed source of crime guns in the Chicago area.”
Westforth Sports is only one example of a much more systemic problem: gun trafficking from states with weak gun laws to states with stronger gun laws.
City officials can work only with the tools they are given. Unable to pass local gun laws, city officials are forced to fight gun violence caused on them by red states.
Conservative lawmakers and pundits wage misinformation campaigns that prioritize stoking fear over promoting gun safety.
The data reject the false and divisive narrative on which Republicans have spent millions. This political fracture means a growing divide regarding gun laws and public safety. If policymakers in this country were serious about ending the gun violence epidemic, they should promote stronger gun laws, not fear.
SUMMARY
Guns are machines designed to kill and wound, which they do in three ways: Murders, accidents, and suicides.
Anything proven to be that deadly and so often used for all three purposes should be, as our Founding Fathers said, “well-regulated” and have the supervision of a legal group; the founders suggested a militia.
The right-wing dominated Supreme Court belies its “originalist” claims and ignores what the Founding Fathers said in plain English.
The myth that Democrat-run cities are hotbeds of murder, despite strict anti-gun laws, simply is wrong — a lie told to fog the truth that wherever there are guns, there is death.
Their laws neither are “tough” nor are the cities hotbeds of crime.
Where are gun murders, accidents, and suicides most prevalent? Red states and red cities, where the gun danger deniers live.
Sadly, the right wing of the Supreme Court and Congress has proven not only to be immoral on several counts, even criminal, and are subservient to the gun lobby.
The Republicans claim that even without the 2nd Amendment, gun laws don’t work and that if we make ownership of guns illegal, only criminals will have guns. That is a tautology, but the concept implies all laws are useless.
We are a nation of laws. Laws make us civilized. All laws are broken by some people, and all laws restrict us in some way, yet we rely on laws to make us free.
Why, if the federal government has infinite money, are these expenses not covered, and why are there deductibles and added costs to complete coverages?
You have been told, falsely, that the federal government is like state/local governments, business, you and me, in being monetarily non-sovereign. You have been told falsely, that the federal government spends taxpayers’ dollars and can run short of dollars.
You have been told, falsely, that to provide benefits, the federal government must levy taxes and spend taxpayers’ money.
It’s all a lie.
#Monetary Sovereignty - Mitchell 