Taxes and borrowing prop up failed banking system
Since Bush's appointment by a 5-4 vote of the Supreme Court along party lines, the stock market has stopped moving forward.
Market declines are cyclical in nature, so Bush may not deserve blame. Besides no President can channel stock market performance. So we can't blame Bush exclusively, but contrasting his time in power with Clinton's shows just how counterproductive deregulation and hyper-capitalism have been. Just how natural has this recent decline been? The suddenness and severity of market declines hint at systemic issues like overextended credit and too much borrowing.
We'd have to go back to the Clinton years to see sustained progress in the market. That period saw ownership in the stock market by the middle class climb to unprecedented levels. Everyone had an eye on the market, for their 401(k)s, mutual funds, etc., that had a great run-up--the biggest in American history. What we don't have nowadays is rising participation. More investors mean more participants in the market which increases liquidity.
Individual investors also stabilize the market by holding retirement accounts are less likely to be sold in times of market volatility. investing for retirement produces steady inflows as well which are recurring flows based on income not speculative fervor or margin borrowing.
Easy credit meant that banks could play with money they don't have, generating a mammoth speculative bubble based on derivatives. There are often no real, tangible assets associated with over-leveraged derivatives products. Worse, the Credit Default Swaps were designed to cover the possibility of a borrower failure yet they created a false sense of security. No single insurer could possibly cover the risk of default on a massive scale. Even the government might have challenges trying to come up with enough money to keep the defaults from destroying the banking industry, self-immolated by de-regulation as they have been, immersed in the gas-soaked rags of their own greed.
Phil Gramm's initiative to change the rules led by Phil Gramm opened up the field of high-risk speculation to investment banks through exotic debt products like Credit Default Swaps (CDSs) and Collateralized Debt Obligations (CDOs). Congress passed the Commodity Futures Modernization Act, which contained the infamous Enron loophole. Under Bush--Enron was his biggest corporate donor in the 2000 Campaign--financial companies practicing speculation used political connections to minimize regulation and maximize profits.
The Commodity Futures Trading Commission which lowered margin requirements for investment companies speculating in the market. A notable expansion in debt ratios followed. Profits did soar. On company in the middle of the over-expansion of credit was Paulson's Goldman Sachs, a company where he's reputed to have made some $700 million of personal wealth during his time as CEO there through the mid 00's.
Hedge funds, a relatively minor player in the overall markets, have grown to dominate the entire investment horizon. Many are failing now.
Securitizing risky debt products has brought market-wide risk exposure. Even prudent companies are affected. Even a well-behaved bank, like Ohio-based USBank which had no sub-prime mortgage exposure, can be sunk by the contagion effect.
Under-regulated market typically characterized by large amounts of volatility. Margin calls then trigger increased volatility. Institutional investors, dependent on quarterly earnings, typically get nervous and sell into corrections.
A system by, of, and for the bankers
Who gets to pay the interest paid by the Treasury as it borrows from the Fed? You, the taxpayer. So we will have to pay off the debt in time, all the while feeding the Federal Reserve banking cartel with interest. If we never retire the debt, we will pay interest indefinitely.
With public money, the top banks--the ones too big to fail who compromise the Fed's member banks--have chosen to consolidate their industry. The bailout is a giant profit-making, competition-reducing opportunity for them. This is typical of predatory capitalism which exploits some failure of public services, like privatization in the aftermath of a disaster.
In the recent bailout, we see a grand finale to the pattern of failed deregulatory experiments. Bushites explain that the banks are victims, rather than willful participants in the risky behaviors that led to their own destruction. This kind of thing has happened before, a kind of an "oops, screwed up but can't you--the public--send more money" disaster capitalism-type deal. See this article by Justin Leopold in the Baltimore Sun for more on the hidden bonus that the public, nor apparently Congress, knew about when the bailout passed.
Few media organizations were willing to expose the threat posed by de-regulations. Mainstream financial news sources clearly had no interest in raising doubts about the health of the markets, or draw attention to the obvious conflict between Paulson--representing government and the industry he was supposed to have regulated.
The recipients of bailout money are sufficiently audacious as to finance the purchase of other banks with taxpayer money. Congressmen are rightfully outraged at how the bailout package they approved has been spent. Paulson's Department of the Treasury has also made a change to the tax code, in an un-precedented move bypassing the Congress entirely. See the Washington Post article here.
The taxpayers, whose neighbors' houses on Wall Street are aflame, has no choice put to put out the flames, according to Obama's metaphor comparing the financial crisis to a neighborhood fire. The massive bailout will make Main Street pay for mistakes made by Wall Street, causing huge loans to rest on future generations. How abusive to make the Little People pay for the consequences of (de-)regulatory reforms made by GOP partisans to benefit their friends on Wall Street. No wonder the Republican party is in so much trouble now.
Adding insult to injury is the reality that taxpayers will have to pay for the debt that the bailout will generate.
Any American's blood should boil when they hear about this exploitation. Americans need to understand the forces that created the Federal Reserve in 1913, simultaneously as the Internal Revenue Service was started. The two entities, one public and one private, work to reinforce the status quo: a slow, constant debasement of our money coupled with high tax burdens which go directly to Federal Reserve coffers to pay the interest on the rapidly accumulating debt.
For an important look at the relationship between the IRS and taxpayers go no farther than the 1984 findings of the Grace Commission, a investigatory body convened during Reagan's first term, see this write-up in Google groups.
The Grace Commission determined that the IRS has been feeding all tax payments to the Federal Reserve. In other words, the banks get all the tax revenue. Even the sum of all our tax payments isn't enough to begin to repay the underlying debt--and this was in 1984! Since then we've entered ever deeper into a spiral of debt out of which we're not meant to leave...ever. The monetary system is designed to impoverish those who make money through wages or sponge parasitically off of revenue- and interest-generating bodies. We the hosts, the American people collectively and as individuals, who serve the money masters just like serfs did in the Dark Ages.
People who've read me for some time probably know that I want to be non-partisan. Since Bush, though, I've felt compelled to side with the enemies of my enemy. Bush was indeed the great uniter if he could make me into the Democrat I apparently am, arriving their not by choice but by sharing a common foe. If Obama doesn't represent change, he may become part of the status quo. No longer do I have the common enemy in Bush.
In time, and given enough growing government, my Libertarian persuasions might assert themselves under Obama. Like many others who hold Libertarian views, I'm not drawn to the Liberal viewpoint as much as I've opposed Republican hypocrisy by hijacking the smaller government idea from the Libertarians, then doing nothing but spending and borrowing.
Even now, in the regime's last days, Bush intervenes on behalf of specific GOP-friendly industries like those seeking to expand toxic emissions or build power plants near National Parks. In a last chance giveaway to industries long allied with the Bush Administration intends to shrink passage periods required under the law by executing Executive Orders immediately, without the necessary public opinion and exposure to oversight mandated by law. Obama will reverse some of these last minute decrees but may find it difficult.
Flaws in the system
Capitalism is an imperfect system with abundant flaws. It's also the best known system for creating wealth. Instead of blindly accepting its Freidmanian theory that government is the great inhibitor of the private sector, a more balanced approach to meeting the needs of our society needs to be approached. Results speak for themselves as well--where are we today as a result of deregulation? There are limits to any philosophy, especially in a field as inexact as economics.
The first law of a capitalist economy should be smaller government; this perhaps might be a more appropriate direction to honor Freidman's legacy: less government spending. Government needs to work though, and it must regulate and tax no matter what. Some services will always have to be provided by the insurer of last resort. The only variable we can control is how well government does its job, its efficiency.
Capitalism's central flaw lies with how money flows to the top. In an America that's seen 8 consecutive years of American-style capitalism at work, the percentage of wealth held by the richest 20% has sharply risen. Historically this has led to times of great political tension and stress upon the status quo, likely to the detriment of the ruling elite.
Wealth does migrate to the wealthier for two reasons: 1) tax policy and 2) inflation. Tax policies have accelerated the accumulation of wealth by the rich but not done too much to help the overall economy. (Just because small business owners create jobs doesn't mean they are all rich!) One reason for economic decline is debt: the more the government borrows, the less available for private lending and consumption. Inflation is simply too much money entering the system, without a corresponding increase in economic activity. If everyone increases production and how hard they work, price increases would be nominal.
The capitalism-is-perfect crowd also fixates on government spending. They believe in talking about smaller government while denying libertarians their wish. Talking about lowering taxes is a way to avoid confronting the always growing federal budget. As a political expedient, lower taxes makes sense--people love to hear how they'll get to keep more of their money. And it ignores the systemic problem, which is irresponsible spending.
Herb Stein said that if something can't go on forever, it won't. There are only two likely scenarios that can emerge from reckless spending--or from inadequate taxation, which essentially defers taxation to the future. First, the government won't be able to spend, a situation that can only be rectified by more taxes, assuming no one wants to lend it more money. The second scenario is inflation--the government prints more money and pays for its spending with newly minted dollars.
There's a big catch with the second situation: the Feds don't control the issuance of our money, the Fed does. The latter is a private corporation composed of major banks who lend to the Treasury in exchange for Treasury bonds and notes.
If our government were to spend directly, chance are we'd be spending a lot more. Besides, Presidents who make those kinds of moves seem to end up dead. As I've said before, Lincoln, Kennedy, and Garfield all wound up replaced when they tried to give Congress back its Constitutional right to coin and distribute money. So the business of who controls our money supply is serious stuff.
Your typical American, mind you, won't know why he's paying higher taxes, more at the pump, or more for groceries. You might be told that inflation is the problem, but not that inflation came from spending too much on Iraq, or the bailout, or for inflated medical care costs, of to cover some failed government insurance program. Instead of chopping at the root, to borrow Thoreau's saying, our leaders and the media will deflect attention away from the cause of the inflation: reckless government spending and borrowing.
Inflation is a tax because it reduces the value of our money. Instead of taxing wealth from the rich in the form of taxes, dollars already out there become worth less. And the people who spend more of their money on life's necessities like food and energy will be disproportionally affected.
Unfair tax burden
It's a hallmark of all revolutions to confront disparities in income between the classes. American society has shown a tendency to grow unstable during times of great economic uncertainty. People look for alternatives to the capitalist model. This most recent credit crisis may damage relations between the classes. At a minimum, the perception of equal opportunity for all could be put at risk as social mobility declines.
High tax burdens for those who work, combined with Robin Hood-in-reverse tax liberation schemes for the rich, highlight disparities in incomes. The root of American working class financial struggles may lie with taxation assessed inappropriately. According to the 16th amendment of the Constitution, "No capitation or other direct tax shall be laid unless in proportion to the census or enumeration herein before directed to be taken."
I've struggled to understand what the Amendment means. Whatever the meaning, the 16th amendment has ushered in a period of regressive taxation, a pattern which accelerated during the Depression and continued past the end of World War Two. Some critics of the IRS have claimed income taxes violate the meaning of this clause.
Some like Devvy Kidd--interviewed by worldnetdaily--even challenge the passage of the 16th Amendment itself, claiming it wasn't ratified by the States as is required. In a 2001 interview Kidd explains his interpretation:
Compensation doesn't represent a profit or benefit. Now legally we can be assessed taxes on what is already ours. With wages we give our time and effort and get back a commensurate amount of income back. No net gain is realized. Still, the Courts have consistently said that wages are subject to income tax. To tax, the Feds need an income, and to establish precedent they created the 16th Amendment.
Exchanges of time and services in lieu of compensation typically don't provide a taxable event. Wages are an exchange of value no different than if we traded an hour of our labor to another for an hour of their time. Typically, instead of trading our work for anothers, we accept money, and with it taxation.
Trading one's time with another contains a built-in mechanism to avoid taking advantage of another's labor. No doctor would give an hour of his time for yours, unless your time is well compensated. So you would make a profit, but then why would the doctor give up his time? No such transaction would take place.
If we could trade a acorn for a Cadillac, then yes, that'd be worthy of a tax, or sell land or stock for more than we bought it for, yes, those would justify taxation along Constitutional grounds. But our compensation is an exchange of equal value (time/effort for pay) and no gain is had, which would classify all income taxes as apportioned by census, or assigned to people, not in proportion to income. The federal government could only legally assess a tax unless it was shared equally by everyone at an equal rate.
A recent vindication through the Courts could prove problematic for the IRS. A federal court ruled that US coins can be counted as compensation at their face value. An employer had given old gold American coins with relatively low face values to his employees, in lieu of other forms of compensation. The lawsuit found him innocent, so don't be surprised to see more people try to pay in old US coins. One drawback could be reduced social security benefits if reported income goes down. But if inflation continues, those who've been paid in gold coin will likely be insulated from its effects (assuming they can save some of what they earn.)
Supplanting Federal Reserve Notes or their equivalent with hard currency represents a threat to the banking cartel's control over our money. Also the tax revenue lost by the IRS means that insufficient cash will be brought in to pay off the public debt. Whatever threatens the Fed's stranglehold over our monetary system, and confounds the IRS system constructed to sustain it, is a threat to the status quo.
///
Market declines are cyclical in nature, so Bush may not deserve blame. Besides no President can channel stock market performance. So we can't blame Bush exclusively, but contrasting his time in power with Clinton's shows just how counterproductive deregulation and hyper-capitalism have been. Just how natural has this recent decline been? The suddenness and severity of market declines hint at systemic issues like overextended credit and too much borrowing.
We'd have to go back to the Clinton years to see sustained progress in the market. That period saw ownership in the stock market by the middle class climb to unprecedented levels. Everyone had an eye on the market, for their 401(k)s, mutual funds, etc., that had a great run-up--the biggest in American history. What we don't have nowadays is rising participation. More investors mean more participants in the market which increases liquidity.
Individual investors also stabilize the market by holding retirement accounts are less likely to be sold in times of market volatility. investing for retirement produces steady inflows as well which are recurring flows based on income not speculative fervor or margin borrowing.
Easy credit meant that banks could play with money they don't have, generating a mammoth speculative bubble based on derivatives. There are often no real, tangible assets associated with over-leveraged derivatives products. Worse, the Credit Default Swaps were designed to cover the possibility of a borrower failure yet they created a false sense of security. No single insurer could possibly cover the risk of default on a massive scale. Even the government might have challenges trying to come up with enough money to keep the defaults from destroying the banking industry, self-immolated by de-regulation as they have been, immersed in the gas-soaked rags of their own greed.
Phil Gramm's initiative to change the rules led by Phil Gramm opened up the field of high-risk speculation to investment banks through exotic debt products like Credit Default Swaps (CDSs) and Collateralized Debt Obligations (CDOs). Congress passed the Commodity Futures Modernization Act, which contained the infamous Enron loophole. Under Bush--Enron was his biggest corporate donor in the 2000 Campaign--financial companies practicing speculation used political connections to minimize regulation and maximize profits.
The Commodity Futures Trading Commission which lowered margin requirements for investment companies speculating in the market. A notable expansion in debt ratios followed. Profits did soar. On company in the middle of the over-expansion of credit was Paulson's Goldman Sachs, a company where he's reputed to have made some $700 million of personal wealth during his time as CEO there through the mid 00's.
Hedge funds, a relatively minor player in the overall markets, have grown to dominate the entire investment horizon. Many are failing now.
Securitizing risky debt products has brought market-wide risk exposure. Even prudent companies are affected. Even a well-behaved bank, like Ohio-based USBank which had no sub-prime mortgage exposure, can be sunk by the contagion effect.
Under-regulated market typically characterized by large amounts of volatility. Margin calls then trigger increased volatility. Institutional investors, dependent on quarterly earnings, typically get nervous and sell into corrections.
A system by, of, and for the bankers
Who gets to pay the interest paid by the Treasury as it borrows from the Fed? You, the taxpayer. So we will have to pay off the debt in time, all the while feeding the Federal Reserve banking cartel with interest. If we never retire the debt, we will pay interest indefinitely.
With public money, the top banks--the ones too big to fail who compromise the Fed's member banks--have chosen to consolidate their industry. The bailout is a giant profit-making, competition-reducing opportunity for them. This is typical of predatory capitalism which exploits some failure of public services, like privatization in the aftermath of a disaster.
In the recent bailout, we see a grand finale to the pattern of failed deregulatory experiments. Bushites explain that the banks are victims, rather than willful participants in the risky behaviors that led to their own destruction. This kind of thing has happened before, a kind of an "oops, screwed up but can't you--the public--send more money" disaster capitalism-type deal. See this article by Justin Leopold in the Baltimore Sun for more on the hidden bonus that the public, nor apparently Congress, knew about when the bailout passed.
Few media organizations were willing to expose the threat posed by de-regulations. Mainstream financial news sources clearly had no interest in raising doubts about the health of the markets, or draw attention to the obvious conflict between Paulson--representing government and the industry he was supposed to have regulated.
The recipients of bailout money are sufficiently audacious as to finance the purchase of other banks with taxpayer money. Congressmen are rightfully outraged at how the bailout package they approved has been spent. Paulson's Department of the Treasury has also made a change to the tax code, in an un-precedented move bypassing the Congress entirely. See the Washington Post article here.
The taxpayers, whose neighbors' houses on Wall Street are aflame, has no choice put to put out the flames, according to Obama's metaphor comparing the financial crisis to a neighborhood fire. The massive bailout will make Main Street pay for mistakes made by Wall Street, causing huge loans to rest on future generations. How abusive to make the Little People pay for the consequences of (de-)regulatory reforms made by GOP partisans to benefit their friends on Wall Street. No wonder the Republican party is in so much trouble now.
Adding insult to injury is the reality that taxpayers will have to pay for the debt that the bailout will generate.
Any American's blood should boil when they hear about this exploitation. Americans need to understand the forces that created the Federal Reserve in 1913, simultaneously as the Internal Revenue Service was started. The two entities, one public and one private, work to reinforce the status quo: a slow, constant debasement of our money coupled with high tax burdens which go directly to Federal Reserve coffers to pay the interest on the rapidly accumulating debt.
For an important look at the relationship between the IRS and taxpayers go no farther than the 1984 findings of the Grace Commission, a investigatory body convened during Reagan's first term, see this write-up in Google groups.
The Grace Commission determined that the IRS has been feeding all tax payments to the Federal Reserve. In other words, the banks get all the tax revenue. Even the sum of all our tax payments isn't enough to begin to repay the underlying debt--and this was in 1984! Since then we've entered ever deeper into a spiral of debt out of which we're not meant to leave...ever. The monetary system is designed to impoverish those who make money through wages or sponge parasitically off of revenue- and interest-generating bodies. We the hosts, the American people collectively and as individuals, who serve the money masters just like serfs did in the Dark Ages.
People who've read me for some time probably know that I want to be non-partisan. Since Bush, though, I've felt compelled to side with the enemies of my enemy. Bush was indeed the great uniter if he could make me into the Democrat I apparently am, arriving their not by choice but by sharing a common foe. If Obama doesn't represent change, he may become part of the status quo. No longer do I have the common enemy in Bush.
In time, and given enough growing government, my Libertarian persuasions might assert themselves under Obama. Like many others who hold Libertarian views, I'm not drawn to the Liberal viewpoint as much as I've opposed Republican hypocrisy by hijacking the smaller government idea from the Libertarians, then doing nothing but spending and borrowing.
Even now, in the regime's last days, Bush intervenes on behalf of specific GOP-friendly industries like those seeking to expand toxic emissions or build power plants near National Parks. In a last chance giveaway to industries long allied with the Bush Administration intends to shrink passage periods required under the law by executing Executive Orders immediately, without the necessary public opinion and exposure to oversight mandated by law. Obama will reverse some of these last minute decrees but may find it difficult.
Flaws in the system
Capitalism is an imperfect system with abundant flaws. It's also the best known system for creating wealth. Instead of blindly accepting its Freidmanian theory that government is the great inhibitor of the private sector, a more balanced approach to meeting the needs of our society needs to be approached. Results speak for themselves as well--where are we today as a result of deregulation? There are limits to any philosophy, especially in a field as inexact as economics.
The first law of a capitalist economy should be smaller government; this perhaps might be a more appropriate direction to honor Freidman's legacy: less government spending. Government needs to work though, and it must regulate and tax no matter what. Some services will always have to be provided by the insurer of last resort. The only variable we can control is how well government does its job, its efficiency.
Capitalism's central flaw lies with how money flows to the top. In an America that's seen 8 consecutive years of American-style capitalism at work, the percentage of wealth held by the richest 20% has sharply risen. Historically this has led to times of great political tension and stress upon the status quo, likely to the detriment of the ruling elite.
Wealth does migrate to the wealthier for two reasons: 1) tax policy and 2) inflation. Tax policies have accelerated the accumulation of wealth by the rich but not done too much to help the overall economy. (Just because small business owners create jobs doesn't mean they are all rich!) One reason for economic decline is debt: the more the government borrows, the less available for private lending and consumption. Inflation is simply too much money entering the system, without a corresponding increase in economic activity. If everyone increases production and how hard they work, price increases would be nominal.
The capitalism-is-perfect crowd also fixates on government spending. They believe in talking about smaller government while denying libertarians their wish. Talking about lowering taxes is a way to avoid confronting the always growing federal budget. As a political expedient, lower taxes makes sense--people love to hear how they'll get to keep more of their money. And it ignores the systemic problem, which is irresponsible spending.
Herb Stein said that if something can't go on forever, it won't. There are only two likely scenarios that can emerge from reckless spending--or from inadequate taxation, which essentially defers taxation to the future. First, the government won't be able to spend, a situation that can only be rectified by more taxes, assuming no one wants to lend it more money. The second scenario is inflation--the government prints more money and pays for its spending with newly minted dollars.
There's a big catch with the second situation: the Feds don't control the issuance of our money, the Fed does. The latter is a private corporation composed of major banks who lend to the Treasury in exchange for Treasury bonds and notes.
If our government were to spend directly, chance are we'd be spending a lot more. Besides, Presidents who make those kinds of moves seem to end up dead. As I've said before, Lincoln, Kennedy, and Garfield all wound up replaced when they tried to give Congress back its Constitutional right to coin and distribute money. So the business of who controls our money supply is serious stuff.
Your typical American, mind you, won't know why he's paying higher taxes, more at the pump, or more for groceries. You might be told that inflation is the problem, but not that inflation came from spending too much on Iraq, or the bailout, or for inflated medical care costs, of to cover some failed government insurance program. Instead of chopping at the root, to borrow Thoreau's saying, our leaders and the media will deflect attention away from the cause of the inflation: reckless government spending and borrowing.
Inflation is a tax because it reduces the value of our money. Instead of taxing wealth from the rich in the form of taxes, dollars already out there become worth less. And the people who spend more of their money on life's necessities like food and energy will be disproportionally affected.
Unfair tax burden
It's a hallmark of all revolutions to confront disparities in income between the classes. American society has shown a tendency to grow unstable during times of great economic uncertainty. People look for alternatives to the capitalist model. This most recent credit crisis may damage relations between the classes. At a minimum, the perception of equal opportunity for all could be put at risk as social mobility declines.
High tax burdens for those who work, combined with Robin Hood-in-reverse tax liberation schemes for the rich, highlight disparities in incomes. The root of American working class financial struggles may lie with taxation assessed inappropriately. According to the 16th amendment of the Constitution, "No capitation or other direct tax shall be laid unless in proportion to the census or enumeration herein before directed to be taken."
I've struggled to understand what the Amendment means. Whatever the meaning, the 16th amendment has ushered in a period of regressive taxation, a pattern which accelerated during the Depression and continued past the end of World War Two. Some critics of the IRS have claimed income taxes violate the meaning of this clause.
Some like Devvy Kidd--interviewed by worldnetdaily--even challenge the passage of the 16th Amendment itself, claiming it wasn't ratified by the States as is required. In a 2001 interview Kidd explains his interpretation:
An income tax is certainly a direct tax -- probably the most direct tax of all -- since it cannot be shifted but must be paid by the person receiving the income. By specifying that direct taxes must be levied in accordance with the number of people, not upon what they produce -- as in the days of, say, ancient Egypt -- an income tax is simply out of the question. It cannot be levied upon a man, but must be levied upon what he receives.
Compensation doesn't represent a profit or benefit. Now legally we can be assessed taxes on what is already ours. With wages we give our time and effort and get back a commensurate amount of income back. No net gain is realized. Still, the Courts have consistently said that wages are subject to income tax. To tax, the Feds need an income, and to establish precedent they created the 16th Amendment.
Exchanges of time and services in lieu of compensation typically don't provide a taxable event. Wages are an exchange of value no different than if we traded an hour of our labor to another for an hour of their time. Typically, instead of trading our work for anothers, we accept money, and with it taxation.
Trading one's time with another contains a built-in mechanism to avoid taking advantage of another's labor. No doctor would give an hour of his time for yours, unless your time is well compensated. So you would make a profit, but then why would the doctor give up his time? No such transaction would take place.
If we could trade a acorn for a Cadillac, then yes, that'd be worthy of a tax, or sell land or stock for more than we bought it for, yes, those would justify taxation along Constitutional grounds. But our compensation is an exchange of equal value (time/effort for pay) and no gain is had, which would classify all income taxes as apportioned by census, or assigned to people, not in proportion to income. The federal government could only legally assess a tax unless it was shared equally by everyone at an equal rate.
A recent vindication through the Courts could prove problematic for the IRS. A federal court ruled that US coins can be counted as compensation at their face value. An employer had given old gold American coins with relatively low face values to his employees, in lieu of other forms of compensation. The lawsuit found him innocent, so don't be surprised to see more people try to pay in old US coins. One drawback could be reduced social security benefits if reported income goes down. But if inflation continues, those who've been paid in gold coin will likely be insulated from its effects (assuming they can save some of what they earn.)
Supplanting Federal Reserve Notes or their equivalent with hard currency represents a threat to the banking cartel's control over our money. Also the tax revenue lost by the IRS means that insufficient cash will be brought in to pay off the public debt. Whatever threatens the Fed's stranglehold over our monetary system, and confounds the IRS system constructed to sustain it, is a threat to the status quo.
///
Labels: credit crisis, debt, deregulation, market intervention, taxation
posted by jbpeebles @ 2:48 AM
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