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OP is a conspiracy nut. This thread is just bait so the legitimate responses can be berated while the chorus of evil government stealing the common man's wealth can continue.
Why not do yourself a favor, and educate yourself a little? This speech http://www.google.com/url?sa=t&rct=j...vIrZLfABWSZ1CQ was given by a chairman of the Federal Reserve in order to explain the purpose of the income tax.
Do you think he was a conspiracy nut too?
Why not do yourself a favor, and educate yourself a little? This speech http://www.google.com/url?sa=t&rct=j...vIrZLfABWSZ1CQ was given by a chairman of the Federal Reserve in order to explain the purpose of the income tax.
Do you think he was a conspiracy nut too?
Not necessarily, but the opinion of one man, 68 years ago, who was in control of a regional branch of the Fed, does not prove anything. I can find infinitely more articles from educated and/or economically literate people supporting views you find absolutely repugnant, including genuinely radical views. Does that prove them?
NCole articulated arguments. You didn't address them directly, or point by point, or even generally. You just waved them away. The point about inflation is especially relevant. Moreover, if the purpose of taxes is - in part - wealth distribution, so what? That's far from the only purpose and it's just as valid a purpose as any other. You want poorly structured arguments or straw-men to knock down.
Taxes accomplish two very important things. They help Gov't control people and business. What they do, when, why and where they spend/operate. And they help strengthen and support the the USD. They strengthen the dollar by removing money from the economy, making dollars more scarce, and this also helps control inflation. And having to work a good deal of your year simply to obtain tax money lends the dollar great inherent value. Federal taxes for instance can only be paid in USD.
At the state and local level taxes are the main source of revenue. At the Federal level the revenue source is always optional, as the central Gov't can create money.
There are a lot of people who work none of their year.
income taxes have nothing to do with the strength of the USD.
They have to for at least two reasons.
They reduce the amount of money and money velocity in the general circulation. At least temporarily.
USD and only USD are required by law to pay Federal taxes. That increases demand thus increasing value, and that gives additional value to the USD. e.g. If you pay 33% of your income in Federal Taxes, you essentially are agreeing to send the US Gov't 33% of your yearly work value in taxes, in order to remain a free US citizen.
2. Simple printing of money in order to pay for its expenditures is a bad idea, because it causes the currency to lose its purchasing power (inflation of prices).
3. Borrowing all the money is not sustainable without a means to repay the debt.
4. Therefore, the government needs to charge individuals and/or companies for the expenses associated with governing of the common people. There are a multitude of ways the charge could be assessed. It could be a simple fee, or it could be charged as a percentage of something else, like a "surcharge".
5. Charging in a way proportional to ability to pay is more equitable than a simple annual fee. Charging a fixed fee would be unaffordable to those of lower means.
6. Therefore, the government charges everyone based on their income, which is considered a measure of ability to pay. Corporations also pay based on their income.
1. Only states and local Gov't need tax revenue to run. At the Federal level it is at least optional since our Gov't can create money.
2. Printing more money has no effect at all until the money is issued, appropriated and then spent into our economy. And that new money's effect on the value of the USD itself depends on many factors. Such as where, when and why that money was so created and then spent. e.g. QE, massive money creation has resulted in little if any inflation because that money is not money spent into the general circulation. And because QE lowers interest rates, the private sector has been robbed of about $100B a year in potential interest income. And that in itself has to be deflationary.
3. Most of our Federal Debt will NEVER be paid off.
4. This as always optional at the Federal level. Depending on a whole host of factors. Like the state of our economy. In a deep recession we should all want lower taxes and possibly more central supports.
1. Only states and local Gov't need tax revenue to run. At the Federal level it is at least optional since our Gov't can create money.
2. Printing more money has no effect at all until the money is issued, appropriated and then spent into our economy. And that new money's effect on the value of the USD itself depends on many factors. Such as where, when and why that money was so created and then spent. e.g. QE, massive money creation has resulted in little if any inflation because that money is not money spent into the general circulation. And because QE lowers interest rates, the private sector has been robbed of about $100B a year in potential interest income. And that in itself has to be deflationary.
3. Most of our Federal Debt will NEVER be paid off.
4. This as always optional at the Federal level. Depending on a whole host of factors. Like the state of our economy. In a deep recession we should all want lower taxes and possibly more central supports.
2. Lower interest rates also added consumer spending and capital to the economy, so it's hard to say if the economy was truly robbed by $100B. For example, it is cheaper to buy a car or house or a business or equipment for a business with lower financing costs.
Not necessarily, but the opinion of one man, 68 years ago, who was in control of a regional branch of the Fed, does not prove anything. I can find infinitely more articles from educated and/or economically literate people supporting views you find absolutely repugnant, including genuinely radical views. Does that prove them?
NCole articulated arguments. You didn't address them directly, or point by point, or even generally. You just waved them away. The point about inflation is especially relevant. Moreover, if the purpose of taxes is - in part - wealth distribution, so what? That's far from the only purpose and it's just as valid a purpose as any other. You want poorly structured arguments or straw-men to knock down.
It is not an opinion, it was an explanation of how the system works. The fact that the Federal Government is currently 17 trillion in debt with no possible means to repay that debt or to even balance it is proof that this is exactly how the system works.
Despite borrowing at astronomical levels, interest rates are at record lows indicating that the borrowing has no impact on them.
Inflation is a byproduct of the system of borrowing money into existence at interest and it is obvious by the current situation that the current level of borrowing is not impacting inflation to a greater degree than when borrowing was at lower levels.
I find it especially interesting that given the current level of wealth inequality, and the detrimental effect that inequality is having on the overall economy that you would say manipulation of wealth is a valid purpose.
I take that to mean that the fact that the elite have the power to keep the working class in relative poverty makes it right. After all might makes right, and government should rightly be used to create a ruling class at the expense of the majority of the population. It is good to see we still believe the feudal system is the natural state of mankind.
They reduce the amount of money and money velocity in the general circulation. At least temporarily.
USD and only USD are required by law to pay Federal taxes. That increases demand thus increasing value, and that gives additional value to the USD. e.g. If you pay 33% of your income in Federal Taxes, you essentially are agreeing to send the US Gov't 33% of your yearly work value in taxes, in order to remain a free US citizen.
If you are talking about the impact of the creation of income taxes on money supply, sure, when we saw discontinuous changes in the income taxes, there might have big small impacts that affected money supply. But these are trivial vs. underlying money demand both on the domestic and international markets, even if permanent.
You are also assuming that the removal of money from private citizens gets essentially burned. It doesn't it gets recirculated into government projects home and abroad.
If you are focusing only on the domestic front. Say every single income tax paid gets spent by the Fed overseas and none gets sent back to the US in terms of trade. A true, pure tax. Then one can argue that it has a deflationary effect on the US. But even here, this may not necessarily lead to a depreciation in the value of the USD in terms of other currencies.
But more realistically, federal taxes are spent locally on projects.
Another thought experiment. What if all fed income taxes are spent exactly how you would have spent it? Then the IRS is simply an efficient pass-through aggregator/administrator. Of course, we know this is not the case. It is very inefficient and self-serving. Also, it redistributes in ways almost all Americans have issue with.
But this again, has almost no impact on the global supply and demand of dollars.
The 33% you mention (at the margin, mind you) is the price of having the privilege and costs of carrying a US passport.
And as far as its original purpose, it was to finance a government emerging from two financial crises in 1907 and 1913, engaged in empire building, and on the verge of World War I.
1. Only states and local Gov't need tax revenue to run. At the Federal level it is at least optional since our Gov't can create money.
2. Printing more money has no effect at all until the money is issued, appropriated and then spent into our economy. And that new money's effect on the value of the USD itself depends on many factors. Such as where, when and why that money was so created and then spent. e.g. QE, massive money creation has resulted in little if any inflation because that money is not money spent into the general circulation. And because QE lowers interest rates, the private sector has been robbed of about $100B a year in potential interest income. And that in itself has to be deflationary.
3. Most of our Federal Debt will NEVER be paid off.
4. This as always optional at the Federal level. Depending on a whole host of factors. Like the state of our economy. In a deep recession we should all want lower taxes and possibly more central supports.
Sorry amigo.
1. The Fed has a budget nearing $18 billion.year. It needs that tax revenue to exist. Even the most stripped down budgets for the Fed would be in the billions annually as our economy is also nearing $18 billion/year in GDP.
Elaborate on the create money line. Unclear.
2. You have an outdate notion on what money is. Cash and currency is a fraction of the money supply. M2 and M3 give a better picture for most purposes. But as we saw in 2008, modern money is far more reaching as seen in off balance sheet types of financing and credit.
Without QE, we would have entered a true Great Depression with a massive deflation and the unwinding of the money supply. The impact on interest rates would have been indeterminate. And flight to safety in gold would have been perhaps twice as much as seen.
Loss of income is not deflationary. Prices fall when money demand > money supply. When markets crumble, this difference becomes huge. Look to the late 19th century when tight money led to several 20%+ bouts of deflation.
There are problems with the Fed and QE, but the application of QE to buttress the wreckage wreaked on our financial system by Clinton-Bush political-corporatist abuse of financial markets saved millions of jobs. Obama deserves no credit other than to know to step back.
3. Correct. But it does not matter as long as net interest payments shrink as a % of the federal budget. BTW, they are the lowest since 1947.
S.
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