47% of Americans don't pay tax...and for good reason!

Remember when Mitt Romney was running around saying that 47% of Americans don't pay tax? The remark got him in a lot of trouble and it probably cost him the election.

That number, 47%, is a very misleading number. It's arrived at by subtracting the labor force (157 million) from the population (300 million). That leaves 143 million not in the labor force. When you divide 143 million by 300 milllion it gives you 47%. So Romney is assuming that if 47% of the population is not in the labor force they're probably not paying any tax. Actually, these days, the number is more like 50% because the population is closer to 320 million.

For starters, Romney's claim is wrong because people still pay sales tax throughout most of the country whether or not they are employed.

More importantly, however, there's the fact that a big chunk of those 47% are babies, old people, sick people, kids, and others who are just not going to be employed. They can't be.

So is Romney saying that as a society we should be making babies pay tax? Or kids and elderly folks? It's ridiculous.

What about robots that are not employed? (Sitting in a warehouse.) Should they have to pay a tax, too? How about when they are working?

The fact is, 80% ($2.07 trillion) of the $2.6 trillion taken in by the Federal Gov't is withheld income and employment taxes. That's Social Security and FICA and stuff like that. That's taken from people working for a paycheck and those people are primarily middle class and working poor.

Corporate taxes amount to $345 billion--only 16%--and individual income taxes (what many wealthy pay) amounts to $72 billion or, 3.4%. By the way, gift and estate taxes (inheritance taxes) only come to a measly, $685 million (three one hundredths of a percent.) but the rich cry and whine about that like crazy.

Here's the data from the Treasury. It's Table IV from the Daily Treasury Statement. All figures are in millions so please read it correctly.

Tax Analysts Are Worried About The "Fiscal State" Of The USA?

   (Commentary posted by Roger Erickson.)



Here's another eye-opener.

Tax analysts are worried about the "fiscal state" of the USA

They say that the fiat currency issuer is issuing more currency than it takes back as taxes.

Uh, ... isn't that a simple prerequisite for a growing population with growing transaction rates?

The only question is how fast the absolute magnitude of our currency supply has to grow, to allow our growing populace to explore it's growing options?

It gets worse from there, as they go on to discuss the importance of interest free loans to the currency issuer. How do "tax professionals" end up so out of context?

Our bigger problem is our school system?

That's what is producing professionals in multiple disciplines who don't know the context in which their discipline operates. That's important, since, per Walter Shewhart, "without context, data is meaningless."

Classical, Class-Based, Orthodox Macroeconomics Explained In One Sentence

  (Commentary posted by Roger Erickson)





Squeezing us c urrency-users"works" because we supposedly spend more of the imaginary income we don't get, since the currency-issuer is not spending currency into existence, since it hasn't yet taxed us to get back the currency it hasn't issued to us.

Capiche?

Call it Farcecardian Equivalence.

Ricardian agents (if there are any) steer clear of Australia

Once you read this essay by Bill Mitchell, you'll never again be able to keep a straight face while listening to an economist, nor take their orthodoxy seriously. Bill skewers them all, and his expose just keeps getting better throughout.

The game's up. The Dismal Nobel Farce winners have no equivalence.

What Does "International Tax Reform" Mean?

   (Commentary posted by Roger Erickson)



Since national tax policy is by definition a reflection of national policy, then international tax reform means international alignment of policies from multiple nations?

Alignment to and over what?

International Public Purpose?

If international Public Purpose is achieved, then are there, by definition, no more policy differences among independent nations? No more cultural diversity?

Or, if we reserve the right to retain variance in state tax policies, then why not retain as much or more variance in national - and by default, "international" - tax policies.

So what, exactly, does this group mean by "International Tax Reform?"  I suspect that they actually mean international standards for income and price REPORTING, but until they clarify, they're going to confuse quite a few people.

US State Tax Considerations for International Tax Reform

The Sane Human Test. See if YOU Pass. Dedicated to Jane and Joe Sixpack.

   (Commentary posted by Roger Erickson)



You'll probably STILL hear the following myth, from ~139 million of our ~140 million eligible voters

"... tax the Rich ... Because that's where the money is?"

Uh ... that was true on a gold std.

However, since 1933 that is NOT where the fiat is!

Please read Marriner Eccles first address to the Senate, in 1932.
http://fraser.stlouisfed.org/docs/meltzer/ecctes33.pdf

Then read Beardsley Ruml's revelation, 1946
http://www.constitution.org/tax/us-ic/cmt/ruml_obsolete.pdf

(Yes, it took BR 13 years to realize what Ben Franklin noted in 1727! Let's discuss that delay for another time. BR probably suffered from a degree in economics.)

Per definition, "fiat" = public initiative.

No, we can NOT let gold-hoarding plutocrats manage our currency supply "for" us, ever again. They screwed that up so badly, so many times, that we can NEVER fall for that BS again. We couldn't have ended the Depression, or mobilized to win WWII on a gold std. If we were on a gold std, our rate of mobilizing for a WWII initiative would still be picking up steam at the station!

So, since 1933, we accelerate agile management of our own, distributed, Public Initiative, using FIAT currency - where every transaction allowed by our culture is - in theory - instantly denominated as a matching debit/credit to buyers/sellers. That still means public responsibility, of course, but the metrics we must co-manage AS OUR NATION GROWS, are increasing national output AND controlled inflation. It is completely irrelevant to "balance" the yearly supply of a floating denomination metric (fiat currency). For those struggling with this as a novel context to picture, managing a fiat currency supply is analogous to managing the amount of oxygen/CO2 which an individual breathes in and out. How much fiat currency do we need? Answer: as much as our activities dictate. No more and no less. Same as during WWII. Breathing, initiative or fiat currency is not something we need to regulate in any way EXCEPT to avoid the extremes of hyperventilating for no reason, or holding our public initiative until the MiddleClass turns blue. 

How the heck does one "balance fiat?" What does that even mean?

Today? We're voluntarily letting fiat-hoarding plutocrats manage OUR fiat for us? Today that's called "fiat austerity" and class disparity. Whatever the semantics, do you think that will turn out any better than letting the same charlatans manage our gold-std currency supply did in 1929? Dream on! I've go a derivative on Wall St. to sell to you, along with that virtual bridge in Arizona.

Next, read:

15 Fallacies of Financial Fundamentalism
http://www.columbia.edu/dlc/wp/econ/vickrey.html

7Difs
http://moslereconomics.com/2009/12/10/7-deadly-innocent-frauds/

& Luther Gulick's original SocSec memo
http://www.ssa.gov/history/Gulick.html

Are you thoroughly FURIOUS yet?

If you're now mad as hell, and refuse to take the class warfare anymore ... then CONGRATULATIONS! You pass the sane human test!!!

It's the 1% idiot savant sociopaths who are insane, NOT you.

Now please leverage YOUR sanity for the net benefit of your culture and nation.

Paraphrasing Gen. Patton: "Never let some faux 'leader' in a slick suit tell you HOW to run YOUR Democracy. Let all citizens suggest Desired Outcomes, then participate in impressing all of us with EVERYONE'S ingenuity."

None of us is as smart as all of us? That's true ONLY if each of us listens, often enough, to ALL of us.

200 Years Ago, Tom Jefferson Agreed With Warren Mosler: The Natural Rate of Interest On State Currency Creation Is Zero

   (Commentary posted by Roger Erickson)

Plus, both realized that public currency creation was always a pledge of future taxes not yet collected. However, Jefferson didn't seem to realize that a commodity peg for public credit was not only unnecessary, but highly constraining. He also didn't bother noting that a GROWING POPULATION OR ECONOMY would never even desire to claw back all previously created currency, by excessive taxation. (Not unless we wanted all citizens to have zero liquidity, all the time - a condition NOT conducive to policy agility.)

STATAL MONEY (by Ezra Pound)

 In 1816 Thomas Jefferson made a basic statement that has NOT been properly digested, let alone brought into perspective with various "modern proposals" for special improvements of the present damned and destructive "system" or money racket. The reader had better FRAME Jefferson's statement:-

"And if the national bills issued be bottomed (as is indispensable) on pledges of specific taxes for their redemption within certain and moderate epochs, and be of proper denominations for circulation, no interest on them would be necessary or just, because they would answer to every one of the purposes of metallic money withdrawn and replaced by them." Jefferson to Crawford, 1816.

The Natural Rate of Interest is Zero

see also, "Economics of Human Energy"

Where The Money Is vs Where The Brains Are

(Commentary by Roger Erickson)

Today, the Washington Post print edition had a editorial board essay called "Where The Money Is." The online edition has a different title.

The essay basically poses the stale question of where the USA will get enough "money" [fiat currency] - and then makes an astounding assertion.

The big money is in two places: tax breaks for the middle class and entitlements. The former category includes the deduction for state and local taxes (eliminating that would save nearly $1 trillion over 10 years) and the mortgage interest deduction (another trillion dollars).

As for entitlements, using the alternative, and more realistic, inflation measure known as “chained CPI” would save $162 billion over 10 years; changing cost-sharing rules for Medicare and limiting Medigap insurance would raise another $114 billion.

They are suggesting that we can obtain more fiat currency by eliminating tax breaks for the Middle Class. And, they are also suggesting that we can obtain even more fiat by halting several forms of public investment in our social infrastructure. ?? Where on earth do we FIND these people? What would Marriner Eccles say if he could hear these dimwits now?

Weepin' MiddleClass on a Recession! No, no, and no!

Let me put it this way.

One does not "raise" fiat by removing it. Perhaps a course in basic logic is in order? Or random sanity checks for editors at all newspapers? Beardsley Ruml must be turning over in his grave.

The big fiat currency source is always in further expression of yet-unleashed public initiative. Is that clear enough?

The big fiat currency sink? That's in stupid policy decisions, to reduce, rather than increase, public initiative. Per the dictionary definition of fiat, fiat currency, and Public Initiative. It's BEEN this way since 1933, Dudes, not even just since 1971. How could newspaper editors not know this? They are either very ignorant, or very dishonest. Let's hope it's purely the former.

What's the danger of purposely increasing or decreasing net Public Initiative? In monetary terms, there are usually two, broad tolerance limits for every fiscal policy decision.

One tolerance limit is excessive inflation. Please wake the economy up when that occurs? Until then? ... WashPo editors imply that our productivity and REAL net national capabilities can sleep on it? No wonder the circulation of their newspaper is declining.

The other tolerance limit is net deflation. Gosh, we DO seem to be close to that, and haven't we seen this before? There are countless people with to-do lists, all starved for access to fiat liquidity units, sitting around, not easily employable by one another. Cashless barter IS rather inefficient.

How about waking the US economy up right now? By resuscitating our former Middle Class. How? By letting our electorate freely express their own, damn, fiat, via unlimited access to their own, fiat currency units! That is the whole point of HAVING a fiat currency system. How on Earth did we end up, 80 years after permanently establishing a fiat currency system, with banks once again denying the public access to their own liquidity units? It's mind boggling. We are literally gagging Public Policy with a gold spoon. For no good reason, unless you consider national suicide as good.

The key to progress is asking the right question. So here it is. Where are the brains? The answer is known! They are unpredictably distributed throughout our population! That, after all, is the whole, historic, evolutionary PURPOSE of sexual recombination. The places where we know the brains aren't, are in Congress, or on the Editorial board of the Washington Post. Why? Because of where the relevant information ISN'T - namely in the heads of a large part of our UN-informed electorate! Thanks, of course, in no small part to the maladaptive efforts of the Editorial board of the Washington Post - and others like them.

"Yer doin' a Heckuva Job, Edi's."  And right about now, the last thing the former US Middle Class needs is to be intimidated ... by people with no brains, and not enough initiative or morals to NOT be Innocent Frauds.

Bill Gross Close To Tripping Over The Definition of Fiat ... Let's Hope He Falls On A Dictionary

Commentary by Roger Erickson

Scrooge McDucks ... Say. Isn't that just an alias for Fiat McClucks? If it spends, taxes and lobbies by fiat ... maybe it IS all just fiat? Yet what good is fiat if we practice it on everything except thinking? Cluck, cluck. Poor McDuck. Clever enough to acquire a duck suit, but still no wiser than a chicken.

Bill Gross notes that extreme wealth disparity triggers declines in distributed savings, and declines in distributed investment too. Both are obvious, logical points. However, his ONLY suggestion is to tax the wealthy more?

Why? To get more fiat? For whom? For the issuer of public initiative contracts and public initiative coupons - i.e., fiat currency?

Note to Bill. The US Treasury doesn't need any fiat back. Beardsley Ruml said so, on page 35, 68 years ago!

Here's a hint to Bill. Let's assume the Treasury DID need to get some fiat back, in order to get more fiat to express. You know, in case the sky was falling. I'm just clucking! Bear, er .. duck with me.

1) What would it do with that extra fiat? Spend it on public contracts? :)

2) Who would get to earn and keep some of that extra fiat? Labor? But ONLY if their income increased more than their taxes did?

So, Bill, EVEN IF THE TREASURY DID NEED TO GET YOUR HOARDED FIAT CURRENCY BACK, IN ORDER TO HAVE SOME ... it would have to spend it and tax labor at lower rates to achieve anything with it.

So, count me dense, but ...

3) Why not just encourage the Treasury to spend more on labor NOW, instead of waiting to get your taxes back?

4) Why not just drastically reduce taxes on labor? NOW! Instead of waiting on both clawed-back fiat AND arbitrarily delayed initiation of further fiat?

What on earth is the difference between 1,2 versus 3,4? Only tempo?

And maybe parsimony? And even then, ONLY for this particular context? Yes, a fiat currency regime ALLOWS for an expanded Policy Space and increased Policy Agility. It guarantees neither, however. Only fiat combinations of awareness/initiative/intelligence guarantee faster/better/leaner application of fiscal and monetary policy tools.

What? Bill Gross says 3&4 might further reduce the buying power of his remaining private savings hoard MORE than strategy 1&2 did? Higher inflation than 1&2? Really? Maybe. It depends .. on a LOT of implementation details. Yet isn't increasing inflation just an increased tax on saved capital - i.e., just what Bill wants? And, hasn't Bill already concluded that the timeless purpose of national policy is to increase our real economic options, not just hoard fiat numerals in bank accounts?

Look Bill, mathematically, it hardly matters whether you raise taxes on capital faster than you raise taxes on labor ... OR ... you lower taxes on labor faster than you lower taxes on capital. Right now, please do whichever is bureaucratically simplest in our current situation. That is, use Occam's Razor. In a fiat currency regime, the difference between those two situations is purely a matter of semantics, not reality. Either way, the amount of fiat used to denominate a desired adaptive rate is a dimensionless number, one that scales with the size, adaptive rate, context and arbitrary habits of a given population. What matters is the social computation latency - and policy latency - required to recognize and implement adaptive policy. Reducing that latency across multiple situations STARTS by recognizing that 1,2 and 3,4 are mathematically the same.

You are VERY CLOSE to rediscovering the definition of "fiat." Go for it! Pull a Ruml.*

* What's that Ruml-ing I hear in the distance?

Are ALL Forms Of Fiat Considered A Taxable Offense?

Commentary by Roger Erickson

Individual? Distributed? Private? Public? Can we afford enough tax collectors to fund ourselves? :(

Who knew that initiative was so taxing!? [Try not to laugh. These are serious questions to some Austrian-E OCD folks.]

Germany is to impose a 25pc capital gains tax on Bitcoin transactions following a ruling that the virtual currency is a form of money.

"Germany is to impose a 25pc capital gains tax on Bitcoin transactions following a ruling that the virtual currency is a form of money."

At least this explains the NSA's paranoia about recording our every thought. The real plan is to allow the IRS to detect and tax all forms of individual or public initiative, no matter HOW they're expressed! Why not just distribute tin foil hats to all citizens, with strings attached?

There's a hole in this thinking.* Who will tax the IRS and NSA? Their taxing intiatives may go untaxed! Can't have that, since we're already running out of initiative .. er .. fiat .. er .. currency. Think that's taxable? Thought it might go untaxed? Tax again, buddy.


Hat tip to @ImplodOMeter

* There's actually a virtual remedy to this virtual dilemma. Just apply virtual taxes to virtual currency, and let citizens pay with virtual initiative! Badda boom!

   This is Angela's variant of an old Russian joke? "You pretend to fund me, and I'll pretend to pay some of the funds back as taxes."

   Hey. I got us an idea. Let's just tax NeoCons and Control Frauds? They can appear to hide fraud from us, and we'll keep on pretending not to see it!

Jeff Spross — Bombshell IMF Study: United States Is World’s Number One Fossil Fuel Subsidizer

Between directly lowered prices, tax breaks, and the failure to properly price carbon, the world subsidized fossil fuel use by over $1.9 trillion in 2011 — or eight percent of global government revenues — according to a study released this week by the International Monetary Fund.

The biggest offender was by far the United States, clocking in at $502 billion. China came in second at $279 billion, and Russia was third at $116 billion. In fact, the problem is so significant in the U.S. that the IMF figures correcting it will require new fees, levies, or taxes totaling over $500 billion a year, or more than 3 percent of the economy.

Climate Progress
Bombshell IMF Study: United States Is World’s Number One Fossil Fuel Subsidizer
Jeff Spross

As Warren Mosler says, a subsidy is a negative tax. Now we learn that it is necessary not only to eliminate the subsidies but to increase taxes and regulation (which increases costs) in order to save the home planet.

But developing an inexpensive, renewable, clean source of transportable energy is of the highest priority to avoid severe culling of the species.

Steve Roth — Modeling the Wealth, Income, and “Saving” Effects of Redistribution: More is Better?

I’m rather taken with this spending + surplus = income dynamic approach to modeling. (But I would be, wouldn’t I?) I’d be delighted to see how others might analyze and display results using various parameters, and how they might adjust, improve, or dismantle the model. In particular: are there obvious, gaping flaws here?

Whaddya think? 

I take issue with is the statement about "redistribution." 

"Some percentage of the rich person’s wealth is transferred to the poorer people every year (by the ebil gubmint man)."

There is no inherent connection between taxing and spending for a currency sovereign, nor should their be. Expenditure is not funded by taxation. There is nothing preventing transfers without offsetting taxes.

Increasing spending power at the bottom increases aggregate demand and flow. Decreasing the stock of wealth at the top decreases the political and economic power of the wealthy without affecting flow in the economy.

Following the principles of functional finance, I would use taxation, first, to control incipient inflation and secondly, to discourage negative behavior such as rent-seeking.

Asymptosis
Modeling the Wealth, Income, and “Saving” Effects of Redistribution: More is Better?
Steve Roth

USA Middle Class is NOT a Bottomless Pit to Loot

commentary by Roger Erickson

"Nearly 6 million Americans - most of them in the middle class - will face a tax penalty for not carrying medical coverage once President Barack Obama's health care overhaul law is fully enacted."

Tax penalty to hit nearly 6M uninsured people

I knew there was a catch, but it's just sinking in. Just another tax, if we don't submit to the FIRE segment.

That sellout might be touted as an incentive to practice preventive health maintenance, but that excuse is a joke. If that were the real goal, provide incentives to drink less sodas, eat less crappy food, be less obese, and stop excessive practice of things we didn't excessively practice prior to at least 1970. The F500 lobby wouldn't like that any more than the FIRE industries. It's very profitable to systematically make American's unhealthy, then twice as profitable
to make heroically expensive efforts to repair the self-inflicted damage.

If an ounce of prevention is worth a pound of cure, they key fraud corollary is that a pound of cure is far more profitable to a few parasites, than is that ounce of prevention. It's all in the perspective, and situational awareness.

Meanwhile, the 1%, Upper Looting Class simply don't recognize that the USA is not a bottomless pit to loot. First we finally depleted the Grand Banks of cod, now we've depleted the US middle class of financial assets.

We could review the passenger pigeon & American Bison too. However the next targets are US middle class real assets, or what's left of them.

We finally got a moratorium to ONLY deplete whatever cod actually show up off the Grand Banks.

Can we at least suggest a moratorium to ONLY loot whatever middle class asset sticks it's head above the crowd - to get lopped off? That's not the end goal, but it has to at least be a start, for Pete's sake!

States Try Fiscal Drag on Pot

Several western states are debating "how much tax money recreational marijuana laws could produce."

Weepin' Buddha on a recline! There may be solid reasons for states to legalize marijuana, but generating tax-revenue is NOT one of them. State taxes do not "produce" currency, they only redirect currency from private use to publicly targeted use. No net change in net financial assets, no net change in local incomes or population capabilities.

Look, the bottom line is mobilizing the capabilities of a local population. Why not institute a state tax that requires people to acquire "time-bank" hours? Better yet, allow people to pay some of their existing state taxes with those time-bank hours.   That way people could get together and propose useful projects where group A[i-j] could do something for members of group B[k-m], who would in turn provide a service that members of group A desired. That approach would actually "produce" a return on coordination, by encouraging people with otherwise idle or spare time to find locally useful things to do. Various forms of drug use by bored citizens might even decrease.

Instead, "pro-pot campaigners say it could prove a windfall for cash-strapped states with new taxes on pot and reduced criminal justice costs."

What part of sector flows don't these people understand? Unless out of state buyers flock in (redistributing currency from other states), all this will do is recycle existing currency assets in-state, and also remove additional aggregate demand, by increasing net taxes.

Their argument might be that significant pot-profits are smuggled out of state, and eventually to Wall St, but the variability, per state, of those assumptions are not even being accurately examined yet in this debate.

Spiraling down through a haze of smoke-tax, man! Like, whatever.

If any good comes from these efforts, it'll be entirely indirect, through reduced crime and other current intangibles.

On the plus side, if they stop spending so many resources prosecuting pot-smokers, maybe they can afford to ramp up prosecution of white-collar crime? If they instead simply spend less on in-state civic regulation, that decline in aggregate demand "spent into the economy" will tend to offset their imagined savings.

Can you play musical chairs while high on pot?

Could be comical.

NY Tax Dept's Hierarchical Ranking of Fraud?

commentary by Roger Erickson

Detect retailers who are under-reporting sales.

New York State tax department attacks fraud on new front.

Is there a cloaking shield around Wall St.? Does The Fraud have a strong effect on the weak minded?

Lord have mercy on the rest of us. Don't get caught stealing pennies (or a loaf of bread), or the people stealing dollars (and whole railroads) will either lock you up, or gun you down with drones.

Wasn't there something biblical, about motes in other's eyes, vs logs in our own?

What is it about an Upper Looting Class that can innately sense and is outraged by a missing penny from a poor person's transactions, but is curiously blind to fraud of epic proportions?  Are we adding Control Fraud to Lies in the category of things that, if big enough, are easier to accept?  Our core problem may be a propensity to believe in miracles, good or bad.

Beardsley Ruml — Taxes for Revenue are Obsolete

For the file, if you don't already have the link.

Taxes for Revenue are Obsolete
Beardsley Ruml
American Affairs, January, 1946, Vol. VIII, No. 1, p. 35
(h/t Unforgiven in the comments)

Gerard N. Magliocca — Clear Statement Rules and Taxes

The most interesting part of his ruling, I think, is the explanation of why letting Congress tax commercial inaction is not problematic given that Congress cannot command us to act in commerce. The Chief gives three reasons for this distinction.

1. Nothing in the Constitution says that inaction may not be taxed
2. The courts would invalidate a tax that was high enough to amount to a penalty.
3. Taxes are less coercive than commands.

What is missing from this list? Do you see it?

Read it at Balkinization
Clear Statement Rules and Taxes
by Gerard N. Magliocca | Samuel R. Rosen Professor at the Indiana University Robert H. McKinney School of Law

Why Tax Economic Rent Rather Than Productive Contribution?

Destruction of U.S. Manufacturing: The Unusual Suspects by Andrew Butter

That line is probably an under-estimate of the value that was sucked out of USA and sent elsewhere.

Because when you set up a factory in a Special Economic Zone in Guangdong Province or somewhere, to manufacture something that you know you can sell, particularly in USA; because you own the patents and the distribution and the brand. You also have the luxury of “transferring” intellectual capital, outside of the beady eyes of US tax-inspectors reading up the statutes on “Transfer Pricing”; so a lot of what get’s transferred is “intangible” (as in the tax-man can’t get his sticky fingers on it).

Here is a statistic, 80% of China’s exports have “value-added”, added, in what they call “Special Economic Zones” (and what I call Free Zones). That’s huge.

Here’s another one, 50% of the earnings of S&P 500 corporations (that’s the “E” in “P/E”) are generated outside of America...

There is a popular idea that cheap labor is why America lost its manufacturing jobs, perhaps that might play a part in something (although if it did, why didn’t Germany and Japan lose more?), but there is nothing I ever saw to support that notion....

Follow the trend-line on the chart from after the War to 1979, and extrapolate, if the investment had not piled out of America, there would perhaps be 24 Million people employed in manufacturing in USA today, as opposed to just under 12 Million....

The point of Free-Zones is to create an environment where free-enterprise, and free-markets can thrive; and when all the rest is so corrupted by silly laws, regulations, and special interests, sometimes you just need to start over.

And don’t talk about the 38% corporate tax which would be “lost”, you can only lose something you got, and there are plenty of ways to make that up taxing rich people, and people with jobs.

This is an interesting post in its entirety, and it shows the thinking behind the move of manufacturing offshore. In Butter's view, the reasons are primarily corporate taxation and regulation.

This relates to Michael Hudson's proposal to tax away economic rent instead of productive contributions in order to discourage rent-seeking and promote productive activity. Since a majority of the wealth that funnels to the top is the result of economic rent, there is an alternative to taxing factors of production that are not parasitical.

Taxation is operationally unnecessary to fund government with revenue, since a government that issues a non-convertible floating rate currency is not operationally constrained and funds itself directly. Taxation serves two purposes, first, to withdraw non-government net financial assets in order to dampen effective demand when inflation threatens, and secondly, to discourage negative economic and social behavior. Taxing economic rent discourages parasitical rent-seeking while promoting efficient use of capital and labor in production.

The other question is regulation. Regulation is required for several reasons. The first and most important is to minimize cheating and ensure a level playing field. Another is to set minimally acceptable social standards such as workplace safety. Another is to limit negative externalities.

As globalization proceeds, developed countries have to choose whether to forego social gains made over the past century or to allow the lowest common denominator to operate. This is going to be an ongoing issue as capital seeks "efficiency" and citizens look to government for effectiveness in pursuing public purpose and general welfare.

Gallup: Public thinks that excessive spending is to blame for the deficit

Given a choice, Americans of all political persuasions are more likely to say that too much wasteful and unneeded government spending is the cause of the federal budget deficit, rather than too little tax revenue. Americans of all political persuasions also say cutting back on federal spending should be a major focus of efforts to reduce the deficit going forward.

Still, some emphasis on tax increases is part of the solution for almost half of Americans. Thus, it appears Americans would most likely tell their elected representatives to attack the federal deficit primarily using spending cuts, but with a secondary reliance on raising tax revenue.

Americans Blame Wasteful Government Spending for Deficit: Prefer cutting spending over raising taxes as way for Congress to reduce deficit

Uh oh. Get your shorts ready. The elevator is going down.

The, "don't tax the wealthy, they're more productive" fallacy

If I hear this one more time I'm going to throw up, seriously. It's a big, fat, lie and it's coming from the most unlikely places.

Why is it that Tea Partiers and others, who reside nowhere near the ranks of the wealthiest in this country, are suddenly so adamant about protecting the earnings of the rich? Have they been brainwashed that effectively? They seem oblivious to the fact that they are speaking against their own interests and more importantly, that what they are saying about the rich being more productive is just a total fallacy.

Now, to be square with MMT, I'll say that I am not arguing for higher taxes on the wealthy. Any MMTer worth his salt would tell you that; a) taxes do not fund governmment, they serve to regulate demand and; b) the problem we are having has nothing to do with excessive demand coming from rich folks.

Furthermore, as much as I am in favor of greater income equality I am not in favor of doing it by some "Robinhood" scheme of rasing taxes on the rich and giving it to the poor (or the non-rich).

On the contrary...what I am attacking here is this ridiculous statement that somehow the rich are more productive than everyone else and therefore, we should safeguard their earnings over everyone else's.

That's a bunch of crap.

Just take a look at the Forbes 400 list of richest Americans. The vast majority of the people on that list owe their fortunes to inheritance, real estate ownership and/or stock investment and speculation. They "produce" nothing. They basically collect rents off assets. They haven't added one iota of real capital to the economy. Why, then, do we prioritize their incomes over everyone else's?

Do you mean to tell me that some landlord collecting rents off a portfolio of buildings in Manhattan, LA or Chicago is more important or productive than the sanitation worker collecting his garbage? Is some hedge fund manager more productive than the teacher who teaches your kids or the cops and firemen that keep our streets safe and our property protected? Are they more important than a nurse in an Intensive Care unit or the construction worker that's fixing a highway or repairing a bridge?

I mean, come on...really!!!

Yet this is the dialogue we are having in our country today. There are people of limited means, working class people, saying that we shouldn't be taking money from productive people and giving it to unproductive people. They've got it backwards. We ARE taking money from productive folks, just not the folks they think are the productive ones.

Budget cuts, spending cuts, cuts in services, education, Medicaire, and all the rest are the fiscal equivalent of taking money from the most productive. This equates to taking money from the people that keep our streets safe and clean, protect our property, teach our kids, care for our sick and infirm, put things together on production lines, operate our trains, boats and planes and everything else that goes into making a modern society modern.

Now don't get me wrong, I'm not knocking the rich and I'm certainly not knocking those who made their fortune creating and adding to the overall supply of real assets (good and services). Those are the things that define our very standard of living. They deserve every penny as do the rich folks who got their money from inheritance or real estate and stock speculation.

But it's time to drop this BS that people who have lots of money are more productive or important than those who have less. It's just not true.