–The real purpose of federal taxes

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●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.
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Many posts on this blog discuss the fact that the U.S. federal government, unlike you and me, and unlike the cities, counties, states, companies and the euro nations, is Monetarily Sovereign, and so, does not need income. It creates all the dollars it needs for spending by the very act of spending dollars.

When the government pays a bill, it simply sends instructions to the creditor’s bank, telling the bank to increase the balance in the creditor’s checking account. These instructions are in the form of a check or a wire, and when the bank follows the instructions, dollars are created.

Unlike we monetarily non-sovereign entities, the U.S. federal government can send such instructions endlessly. For more background on this, you might wish to read: “I just thought you should know.”

We are left with the obvious question, “Why does a government, that does not need income, levy taxes?” Considering that the U.S. federal tax code is perhaps the most complex, convoluted, inefficient, ever-changing, incomprehensible, economically damaging set of laws ever created in the history of the world, this question is important.

Why indeed, does the government force us to spend millions of unproductive and unpleasant hours calculating taxes, then take dollars from our pockets to pay those taxes, then spend more dollars to investigate, prosecute and even jail those who don’t pay taxes, properly?

One cannot imagine another exercise that costs so much in time and money, causes so much grief, and has so little value (none) as the U.S. federal tax system.

So, again, why do we do this to ourselves?

WHY TAX?

Economic Control Federal taxes are used to control certain details of the economy. By adjusting tax rates among long-term, short-term, real estate, interest, salary and various enterprises (oil drilling, farming, energy saving, etc.) the government encourages and discourages certain activities.

However, the government could accomplish the same things without taxes, by rewarding (paying dollars) rather than by punishing (taxing dollars).

Provide Demand: Years ago, I had this discussion with proponents of Modern Monetary Theory (MMT) a kissin’ cousin to Monetary Sovereignty (MS). It was (and I believe remains) their belief that federal taxes are necessary to provide demand for the dollar. By requiring people to pay their taxes in dollars, the federal government assures that people will want and use dollars.

I suggest this is partly true, but mostly false. The “true” part is that requiring taxes to be paid in dollars does indeed create demand for the dollar.

But, because there are plenty of state, county, city, village, park district, water district, etc., etc. taxes to provide demand for the dollar, federal taxes are not necessary to provide dollar demand.

Control Inflation: A second belief is, the purpose of federal taxes is to control inflation. If dollars were not removed from the economy by federal taxation, there would be too many dollars in the economy, and this would cause inflation.

This is like saying a pail must have holes in the bottom, otherwise it will overfill. Clearly, the solution to overfilling is to pour less water into the pail. To prevent having too many dollars in the economy, the federal government simply could spend (create) fewer dollars.

Further, since 1971, when the U.S. went off the last vestiges of a gold standard, there has been no relationship between federal deficit spending and inflation. In the past 40+ years, inflation has been associated with oil prices, not with federal money creation.

More importantly, our Monetarily Sovereign federal government not only has the unlimited ability to create dollars, but it also has the unlimited ability to set the value of those dollars. It could, if it chose, devalue the dollar relative to other currencies, revalue (upward) the dollar or renominate (introduce a wholly new currency.)

The U.S. federal government being the inventor of the dollar, and having arbitrarily created all the laws that make the existence of the dollar possible, is in effect, the “God of the dollar.” It has unlimited power over all aspects of the dollar.

The Federal Reserve, a government agency, controls inflation to its target rate of 2% – 3%. That target is based on the idea that a small amount of inflation stimulates the economy, by creating the incentive to buy goods and services today, rather than waiting until tomorrow, when prices will be higher.

Redistribute Wealth: A third belief is, federal taxes are necessary to redistribute wealth and to prevent some people and some families from being so rich they, in effect, become sovereign dictators. In theory, it is a protection for the “not-rich.”

But, the United States is loaded with billionaires, and these people have enormous power, verging on dictatorial power. So clearly, federal taxation has not worked to prevent concentration of wealth, and the reason it has not worked is the tax code is a product of the wealthy.

Rather than protecting the middle- and lower-income groups, the tax code, as constructed by the rich, is a far lesser burden on the rich than on the rest.

While the rich pay more in total tax, they still are left with a massive surplus, while the poor and middle-classes struggle to pay their taxes and still save anything for the future.

Consider FICA, the single most regressive tax in American history, and the tax that often exceeds income taxes for many lower-end, salaried people. While it purportedly pays for Social Security and Medicare, in reality its sole purpose is to widen the gap between the rich and the rest.

Thus, federal taxes do not redistribute dollars, but in fact are a kind of “false flag” operation, designed to appear created by a benevolent Congress to benefit lower income groups while, actually having been created by the rich, to benefit the rich.

This is why Congress (having been bribed by the rich, via campaign contributions and promises of lucrative employment), the media (owned by the rich) and mainstream economists (controlled by the rich via contributions to universities and by lucrative employment) all combine to spread the “BIG LIE” that federal taxes are necessary.

“Sin” taxes: Taxes on cigarettes, liquor and other recreational drugs may be the sole appropriate use of federal taxation, though perhaps these might better be the function of state and local governments than of the federal government.

Summary on taxation: Federal taxes do not support federal spending. They are inefficient, unnecessary and having been created by agents of the rich, serve only to widen the gap between the rich and the rest.

Federal taxes can, and should be, eliminated.

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
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. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (Click here)

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

As the lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

–Right wing cuts your nose to spite Obama’s face

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

This goes under the heading, “Unless you’re rich, why do you plan to vote Republican in the next Presidential election?“

Let’s talk health care. Rich people and Washington politicians can afford the best health care and the best health care insurance. The rest of us need help.

Most of those who live in the blue states will get that help. Most who live in the red states will not.

Here are excerpts from an article in today’s Chicago Tribune, a right wing paper.

With states at odds, health care law is uneven
Noam N. Levey, Tribune Washington Bureau

Colorado residents shopping for health insurance next year will be able to compare health plans using a star system that ranks insurance companies on quality.

In Oregon and Maryland, consumers will save as much as 30 percent on some plans after state regulators forced insurers to lower 2014 premiums.

Californians will get extra help selecting a health plan next year, from a small army of community workers paid in part by foundations and the state.

Americans in states backing the Act will receive substantial protections and assistance unavailable to residents in states still fighting the 2010 law.

Now, let’s visit some of those states whose leaders would rather fight Obama than help their own residents:

[Many resistant states] have not set up consumer hotlines, and insurance regulators refuse to make sure health plans offer new protections required by law, such as guaranteed coverage for people who are ill.

Florida suspended its authority to review how much insurance companies charge. Missouri state workers are forbidden by law from providing any assistance to the new health insurance marketplace.

“I certainly would rather live in a state that is trying than one that is not,” said Alan Weil, executive director of the National Academy for State Health Policy.

Apparently, the right wing’s primary goal is to defeat Democrats rather than to help people. In fact, Boehner said as much:

Idaho Statesman
Boehner visits Boise; vows to succeed with entitlement reform this fall
By Dan Popkey

House Speaker John Boehner said Monday that getting the GOP-controlled House to agree to raising the U.S. debt ceiling will only come with a bipartisan deal to make cost-saving changes to Social Security, Medicaid, Medicare, farm programs and government pensions.

“We’re not going to inflict all of this pain and suffering on our kids and our grandkids.”

Translation: “Cutting Social Security, Medicare and pensions won’t inflict “pain and suffering” on HIS kids and grandkids or on rich kids.

“YOUR kids and grandkids will have the “pain and suffering” of less Social Security, less Medicare and less pension security, but who cares? I’m all right.”

Back to the Tribune:

About half of the states, most with Republican leadership, have rejected federal aid to expand their government Medicaid programs.

That means millions of the poorest residents in these states will not be able to get coverage.

Keep in mind that the federal government initally will pay the states for 100% of Medicaid’s cost, through 2016, phasing down to a permanent 90 percent matching rate by 2020.

And even at the 90% rate, the cooperating states make a huge profit. All those federal millions pumped into a state’s economy translate into increased state taxes and state wealth.

In short, the right-wing states would rather fight Obama than benefit their own citizens or increase their own state’s solvency.

In Alabama, Oklahoma, Texas and Wyoming, insurance commissioners will not review health plans being offered on the new marketplaces to endure they provide consumers with the required benefits and protections.

In Florida, the state legislature and governor stripped the insurance commissioner’s authority to block rate increases for two years. This allows insurance companies to raise premiums as much as they choose in 2014 and 2015.

In Texas, more than 6 million people lack health insurance coverage (but) Texas cut staff who could have educated state residents about the new law.

Translation: “We want our citizens to suffer. Then we can claim it’s all because of Obamacare, and that’s how we’ll win the next election.

The article goes on and on, citing benefits to citizens of cooperating states — benefits not available to citizens of right-wing, nose-cutter states.

It takes a special kind of cruelty to deny people health, just to make a political opponent’s program fail.

Yes, I agree Obama has not been much of a President. I’ve said so numerous times.

But he will be gone after 2016. So please give me your reasons why you plan to vote Republican in the next Presidential election:

1. “I am very rich and my main goal is to widen the gap between the rich and the rest, and I really don’t give a damn about the poor.”

2. [Add your own 2nd reason.]

Rodger Malcolm Mitchell
Monetary Sovereignty

As the lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

–Time to do a little war-war.

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

As everyone knows, Saddam Hussein was in league with al qaeda, stockpiling weapons of mass destruction — atomic bombs, poison gas, smallpox bombs — that kind of bad stuff — all of which threatened the security of the United States.

And, as everyone knows, Iraq (population 30 million) was preparing to unleash its mighty army on the United States (population 300 million, and 1/2 way across the world).

Except, of course, he wasn’t and it wasn’t. It all turned out to be a lie, which allowed President Bush Jr. to do his very own conflict, and show his daddy, Bush Sr., how things really should be done, by a rough, tough Yale/Harvard Texan, who was brave enough to sneak out of military duty.

So, to demonstrate his personal courage, President Bush Jr. managed to get 4000+ young Americans killed, not to mention many more Iraqis killed, and today, life in Iraq is much worse than it was when we liberated it, particularly when the wind blows west and you can smell the corpses.

Yet, doesn’t it make for nice funeral services in America, where politician can give stirring, patriotic speeches amid flags unfurled in the breeze, and families can shed tears for their lost children, and reporters can feign sympathy?

Today, we have moved on, and all is forgotten and forgiven. Bush Jr. has remained mercifully quiet, except for passing on the phony legacy of rough, tough, gun-toting Texans. When your only tool is a gun, every problem requires killing someone.

Mission Accomplished.

Now, little Obama is our new President, and what a wus he is. The guy hasn’t begun any new wars, and even has wound down some wars he inherited. Concerned about his legacy as a bank crime aider and abetter, he needs a bloody fight of his very own, to demonstrate his Chicago morality.

It’s time, my friends, to do a little war-war.

Today, Syria is ruled by a tyrant — as is every Arab, every Muslim, and virtually every African nation. And this tyrant is killing his own people, which is what tyrants do.

Perfect.

The excuse about Syria being a threat to U.S. security won’t work. We used that one up with Iraq. But how about humanitarianism?

That Bashar Hafez al-Assad (His name sounds sort of like al qaeda, doesn’t it?), not only is murdering his own people, but he is murdering them with poison gas (which makes those innocent people much deader than if they had been murdered with bullets, bombs, knives, nooses or reading the comments of Antonin Gregory Scalia).

So to prevent the wrong kind of murder, we good Americans (everyone knows Americans have a monopoly on good) must commit the right kind of murder, which requires killing lots of young Syrians without killing too many young Americans.

Our President, who never does anything without a great deal of agonizing thought, after which he compromises on a Grand Bargain, now agonizes about the best way to kill lots of Syrians without killing too may Americans (a couple hundred might be the acceptable max.)

But Obama has a problem. No one wants to play with him. Oh, except for the French — you remember, the brave guys who surrendered to Hitler before he even asked.

Obama called his other playmates and said, “Hey, want to come out and do a little war-war?” And they all said, “Why?” And Obama said, “Syria broke the law by using poison gas to kill a thousand — or was it two thousand — people.”

And they said, “Your banks broke the law and killed a hundred million people, and not one banker has gone to jail.”

And he said, “There’s a big difference. A huge difference. My rich donors don’t want me to do anything about the banks, but they do want me to do a little war-war, because that is good for business.”

And they said, “Won’t the same thing happens that always happens? We remove one blood-thirsty regime that hates us, and replace it with another blood-thirsty regime that hates us even more?”

And Obama said, “Yes, that always happens, but it’s a good thing. The more they hate us, the more excuses we have to increase NSA, CIA, FBI spying on innocent American citizens.

First we do war-war to create the danger. Then we spend billions to prevent the danger by taking away more and more liberties and giving these liberties to the rich, who will pay us. And because we spend more to prevent danger, we must spend less on social programs, so we widen the gap between the rich and the rest. Then we do more war-war to create even more danger. We never stop doing war-war. It’s a perfect, endless circle.”

And they said, “Barack, you are nobody’s fool. That’s damn clever. Maybe we will go along with you after all, drop a few bombs, kill and maim a few foreigners, look tough, merciful and cruel, all at the same time.”

And Obama said, “And there’s one more thing. Can you name a single American President who was considered great, and did not do his very own war-war?“

And a-bombing we shall go.

Rodger Malcolm Mitchell
Monetary Sovereignty

As the lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

if it’s easy, make it difficult. If it’s difficult, make it Obamacare.

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

For those over 65, health care coverage is relatively easy. Basic Medicare contains Parts A and B. In general, Part A covers hospital care and Part B covers doctor care. The government provides a good information site at Medicare

Most doctors and hospitals accept Medicare (though lately, some doctors have opted out.) It covers most medical problems and is effortless. The doctor and the hospital submit all the bills. The bills are paid, and you pay what Medicare doesn’t pay — often about 20%.

If you want more complete coverage, the government makes things more difficult. You must select and buy a Medicare supplement (“Medigap”) policy, of which there are many choices.

To help you select the best Medigap policy, the government operates an excellent site at Medigap. Go there and experiment with it.

I have a Medicap policy. I seldom receive a payable bill (just confirmations of payments made). In our family, we have had several operations costing many, many thousands of dollars. Medicare + Medigap has covered almost everything.

If additionally, you want drug cost coverage (Medicare, Part D), the government makes things even more difficult, though still intelligible. You must find and buy yet another policy. Again, you must spend extra, and the coverage has gaps, but in the past two years, my Walgreens’ prescription bills have been $0.

If you’re not eligible for Medicare, and you don’t have coverage through your employer, things get dicey. The government’s official site is at “How does the healthcare law protect me?” Check it out.

Although this site is a serious attempt to take you step-by-step through the Affordable Care Act, there are so many “if — thens,” the total of variables is exceeded in complexity only by quantum chromodynamics.

And it still could cost you a bundle (depending on where you live, what illnesses you have, how many children you support, whether or not you’re married, how much you earn, and the number of grains of sand on your local beach). The easy is made difficult; the difficult is made impossible; and coverage still isn’t complete or affordable for everyone.

Back in 2000, the World Health Organization (WHO) ranked the United States health care system 37th out of 191 nations. Things have changed since then, and one can argue forever about the criteria for the “best” and “worst” systems, but clearly, the United States has not had the world’s best health care, as so many of us wrongly believe. Not even close. And it’s our own fault.

The government could make U.S. health care easy, complete and superior. Simply combine Parts A, B and D into one policy, include long term care, cover every man, woman and child in America and call it “Medicare for All.”

Additionally, the government could provide us with the best doctors by paying for college educations. This would help assure that personal finances do not prevent potentially talented doctors from entering the medical profession.

Why doesn’t the government simply pay for health care and give us the greatest possible system? After all, what is the purpose of government if not to provide for the well-being of its citizens? And what is the reality of being the greatest nation on earth, if we have a substandard health system?

The reason for our health care failures is “The BIG LIE” — the false claim that the government is deeply in debt and cannot afford to pay for our health care. It is a lie, because the government, being Monetarily Sovereign, can afford to pay for anything. And no, this would not cause inflation.

So why doesn’t the government provide health care insurance for every man, woman and child in America? Because the government is bribed to widen the gap between the rich and the rest.

The rich already have superior health care. But what makes them rich is the ability to buy what others cannot have. If everyone could afford the same house, the same car, the same services, the same education and the same health care, no one would be rich.

To the rich, the single most important goal is to widen the gap. Part of widening the gap involves buying the health care the rest of us cannot afford, while forcing the rest of us into poverty trying to buy health care.

Everything in economics devolves to motive. And the single, most powerful motive is the gap.

Rodger Malcolm Mitchell
Monetary Sovereignty

As the lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

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