Conflating Taxes with Spending

Many of the people I have talked to after reading my idea on the CUT Tax (Currency use Tax), comment that it is an interesting idea, but it don’t stop government spending. Thus, it is a failure.

I understand their concerns. However, I do not agree with them. Most of these people are strong believers in the Fair Tax, and for a time I was a true believer in the Fair Tax. I accepted the hidden mantra that if you make a tax that is oppressive at the onset, the middle class would rise up and demand a reduction in spending.

That is where the conflation problem occurs. Governments in general do not equate spending to revenue. Unless they are required to balance the budget through their applicable constitution. In the politicians mind, they are not linked. Most of them view spending as investing. The concept that if you throw money at specific problems, you will be repaid in the future by growth, ending the problem, or some other societal return. The only reason most people would accept a 23% tax on all retail sales is the concept that it would punish the sleepers and wake them up. These newly awoken sleepers would then lash out against the governmental spending.

The problem with spending is that if the person doing the spending is not personally accountable for the spending, they can always justify their proposed spending. It is too easy to justify spending if you can just come up with a valid rationale for doing it. An example, would be. “If I don’t secure this money for my district, someone else will use this money on their frivolous plan in their district.”

The ACA has woken me up to the true reality of politics. In my opinion, the ACA was a plan to conflate problems with health insurance to health care in general. And for the initial argument, they were successful. Many people accepted the fact that since we had a health insurance problem, we had a heath care problem.

Also, in my opinion, the fix was designed to collapse the health insurance industry, and then blame all of the problems for the failure on rich doctors, insurance providers, and your employer. Then they could ride the anger of the voters into a new era of a single payer healthcare system.  

     

The problem with creating failures is that you never know how people will react when faced with the new realities your plan has implemented.

     Since 1970 the Federal Government has only had 4 years in which revenues to the treasury exceeded spending. These where not planned, they were accidental and products of accounting gimmicks, or the sudden growth in tax revenue that temporarily exceeded spending. So don’t tell me that if you restrict revenue at a high tax rate you are going to create a tsunami against federal spending. There is no empirical data to support this.  We already have high tax rates that do not generate enough revenue to support spending, yet every dime that is removed from spending is accompanied with the banshee wail of doom and gloom from this reduction. Need I point out the fiscal cliff, and the government shut down as examples? They were billed as the four horses of the apocalypse. Yet we are still waiting for the end, and it may come eventually through hyper-inflation if the deficits do not resolve into a sustainable level.

                

      Most people project how the government would operate, by how they would operate in the real world. If you are running deficits, you would concentrate on two strategies.  The first would be to see how to increase your income, and the second would be to see where you could cut expenses. You may use both strategies in your plan to accomplish your goals. And in the real world you would be held accountable for your success or failure. In government, you have millions of people who do not view priorities the same way, and you may not be judged on the success or failure of your plan, only your intentions. And intentions can be faked. You only have to act sincere.

                

     That is the problem I see with the Fair Tax. Even if most people see taxes on corporations as just a pass through cost. They still don’t want to completely exclude them from the tax equation. Most are intelligent enough to know that you can pass through personal expenses onto business if you are in a position to do this. And they see this as an unfair advantage to business. I just can’t see most of the middle class going along with giving big anything a 0% tax liability, unless they personally benefit. And it is not just big business that can do this. So therefore, they will demand at least that all businesses are audited to ensure they are not taking advantage of the tax laws, for personal benefits. This will not shrink the need for a compliance agency as the IRS, only confine them to Non-profits, and businesses. Then this governmental agency, and politicians will have even more power over these organizations.

                That is why I think The CUT Tax has a real chance at success. Taxes then become a fixed cost for everyone. And yes I agree, that businesses and the poor will suffer more if rates adjust up, compared to the middle class. However, that is the advantage of this tax. It will align everyone on the same page, lower taxes benefit everyone, and everyone pays more for higher taxes.  Then maybe we can concentrate on the battle over spending, without the grand illusion that we can just tax the rich to fix all our problems. 

Is Currency Your Property?

I am going to step out on thin ice here, and make an observation that will probably drown me thoroughly, get me banned on communities, and viewed as a heretic. I also thought of photo shopping a roll of $100 dollar bills on a toilet paper roll for a Meme. But maybe, that would go too far.

I hear the grumbling of complaints that taxes are nothing more than theft. To a point I agree with this concept. They are onerous and the terms are manipulative and controlling. You will get no argument from me on that point. However, you agreed to these conditions by accepting the currency as your measure of wealth. I will argue the point that you do not actually own the currency you hold. Since, true theft only comes from taking of a possession that the taker has no legal claim to, I do not see taxation as theft, more of a disagreement in the terms of possession. It may be extortion, or usury, but not theft in a strictly legal definition. And force does not constitute theft, it is just as a means to an end.

Currency is nothing more than an efficient tool for barter or government infrastructure. It allows you to trade for a hopefully stable marker, which in turn allows you to trade this marker for other goods. We tend to view our wealth in the terms of this marker. However, it is a marker that the individual has no direct control of its value. Its value is determined by values outside of the holder control.

If you make or buy a good you can determine the value of the marker you are willing to pay or receive for the goods. That is the only control you have.  The marker’s value fluctuates on controls outside the lone individual's control. And currency is not actually sold to the individual.  It is loaned to you. With the true ownership of the value of currency residing with its creator, and has been since the creation of the concept of currency.

By loaned, I mean that it has been introduced into circulation, and not sold into circulation. There is no clear path of ownership of currency, only a record of its exchange. There is no original purchaser, only a point of introduction. The government’s most competitive commodity is not sold to the individual, only introduced into circulation.

The terms for holding this currency is dictated by the creator. That means they have the legal ability to set terms for its use. That includes the setting of arbitrary fees or taxes. And forfeiture laws regarding illegal use. This claim is solid, because the strength of the currency is dictated by the strength of the creator.  If you undermine the strength of the creator of the currency, you undermine the value of the currency you hold.

Now I will take another step further out onto this thin ice and mention Jesus, not in spiritual terms, but in the terms of Jesus the Philosopher. I will not get into the divinity of Jesus. That is a personal decision best left up to the individual. I have my own opinion, I will grant you your own.

Jesus, like Socrates, was a philosopher whose teaching we learn about second hand.  Most of his views came from the writings of his students or apostles. Therefore, we do not have a direct, recorded access to his thoughts, only those seen through the filters of his students, and reported by other people and records in history. And those inferred by individuals studying this mans life.

I believe, that Jesus spoke to this issue of ownership of currency directly in the Pharisees Test scripture. When he said. “Render unto Caesar, What is Caesar’s.”  He was not only speaking of the separation of the material and spiritual, but the concept, that the Roman Empire really owned and controlled all of the coinage. Although, the Jewish people had the Shekel, its use was reserved for use within the temple. However, Roman coinage was the coin of the Roman society, and that the holder was only possessing a thing of value upheld by Roman Law, therefore subject to Roman Taxes, or terms of use. Therefore, if you measure your wealth in terms of a particular currency, you have accepted all conditions and taxes placed on that currency.

What I am trying to say is this. If you think all taxes are theft. Then, by all means seek an alternate route to shield yourself from this injustice. Myself, I seek to change the terms of use for currency. I think it has great value in its efficiency. I do not wish to return back to a barter system. Where you have to trade your chickens for goats, only to trade your goats for a side of beef, which is what you wanted at the start of the trade. I want a stable currency that I can rely on to trade for things I need.

To me, that would entail the complete restructuring of the tax system. That means people have to see currency for what it really is, and not as a personal possession they believe it to be, but a tool for building wealth and trade. It is an efficient infrastructure created by the government to facilitate trade, and for purposes of operating the government. Without a functioning sovereign government to uphold its value, it is worthless paper.

At this point, many of you may be saying. That is why I am investing in gold. So, I am covered, if the dollar collapses.  To a point you do hold something of value. However, even the value of gold is inflated past its practical value. We tend to give gold an emotional value that exceeds its utility price. Therefore, its value also can fluctuated on the disposition of the society. In a total collapse, gold may become more of a liability than an asset. People may not wish to trade for it. They may see that accepting gold only paints a target on their head to bandits, and tyrants. The actual exchange rate for gold then could become all your gold for a few grams of lead and gunpowder. However, that is only in a total or near total collapse. It may hold its value in a stable society undergoing extremely difficult economic times. Ultimately, gold is just as much a fiat currency as paper is, so always keep that in perspective. If you can survive until society reemerges, than your horde of gold may make you wealthy. So, speculate in gold if you wish. It is all a crap shoot anyway.

The only reason I am writing this, is that I do not wish to see the government collapse on itself. I only wish to reaffirm its role as stated by our founding documents. And the best way I can see to do that is to totally reform the tax system, and then try to reduce its size to the role envisioned by the founders of the country. I believe they had a great deal of wisdom in creating a system that was supposed to provide a supporting role for the experimentation of the individual states, not a one size fits all government, that dictates to the states.

That is the reason I have proposed the CUT Tax or currency use tax. I want to remove the concept that government can decide who should pay taxes and how much they feel certain individuals should contribute. To me a fair tax would be a tax that is applied to everyone equally, with no exclusions. Only set up on protocols that are triggered by application. That is why I focused on developing a tax or fee that was based solely on use, and not dependant on how, or where you made the money, and also allow for the conscientious objection to taxation. That is why it only applies to electronic transfers. This conscientious objection ability also serves as the counter-balance to keep the fee from rising above the level of efficiency of using electronic transfers. If the fee rises too much, more people will turn towards cash, thus creating competition.

I mentioned that currency is a government created infrastructure. Therefore, like the highways that are funded with a fuel use tax. Why not create a tax based solely on the volume of usage, and not limited to what the government calls profit, or disposable income. This has created a system where wealth is derived from seeking governmental dispensation from certain obligations.

I believe that the current system of taxation has reached a point of diminishing returns. No longer does the progressive tax rates offer a larger return garnered from “wealthy” individuals. They have long ago learned the lesson hidden in the legal reality of money. It is not about how much money that you have in your possession, it is about how much money you control that is not technically in your possession. Ask one of the richest men in America, What does he need with billions of dollars in his name that is subject to an income tax, or even capital gains? When he can pay himself a modest salary, and control the benefits of his unrealized wealth through the ownership of his organization. That way his secretary has a higher tax percentage burden than him on his real unrealized wealth. Add to that and many wealthy individuals have found that by giving their wealth to a non-profit organization, they can control this wealth until death largely tax free, and then control the distribution of power controlling this wealth through legal criteria, including the concept of a single heir in control of the dynasty. It is all just legal semantics. America has come full circle back to the old world concept of legal feudalism with the creation of the Income Tax code, designed to tax the rich.

To return back to the words of that philosopher over 2000 years ago. “The poor will always be with you.” I conclude with so will the rich. So, why try to scheme to take away their wealth, and just design a system that treats everyone as equal, with no exemptions for the crafty, and let the chips fall where they may. Is this fair, I believe so. Because if taxing the rich was the goal, I wish I had known, because, with the current tax law, I am about to join the ranks of the “working poor”.