Comments on: Time to junk income taxes? http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/ Sat, 23 Mar 2013 13:49:31 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: PotomacOracle http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-1089 Mon, 06 Feb 2012 19:21:17 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-1089 No one gets it. When the U.S. went off the Gold Standard and fixed exchange rates, the need to balance internal and external accounts was also abolished. Now, all we had to do was guard against inflation since the dollar’s parity with gold was no longer required.

The essence of this paradigm shift in monetary and fiscal policy is that we, as the sole issuer of our currency unit of account, could never be insolvent in our own currency. Government (the Treasury and the privately owned Federal Reserve System (Central Bank)) would issue sovereign fiat currency in cash (coins) and Treasury Securities and Federal Reserve Notes backed by the credibility of the government not specie.

As the sole issuer of the currency, government would never be constrained by revenue to spend. Taxation and interest rate policy would serve only to manage aggregate demand. Tax reciepts would no longer be used as revenue with which to pay for goods and services required by the public sector. Why, when gov. can issue all the currency it needs, would it need revenue?

In this new monetary environment the government would need to, first, spend fiat currency before it could tax or borrow. These stabilization tools would assure the achievement of public purpose… eliminating unemployment, managing inflation and deflation, and providing for the Commons, economic sustainability, absent the vicissitudes caused by fixed rate monetary policy.

However, it didn’t and probably won’t work out that way because not enough people in leadership understand the significant difference between the old system and the new. As a matter of fact not even the President’s advisers appear to know the difference. They allow him to repeat the canard, that America could go broke if we don’t cut “entitlements” defense, etc.

First, we can’t go broke. We issue our own currency. Second, we don’t need to cut programs to eliminate the debt. Doing so increases financial and social costs to society. Third, it is axiomatic that government deficits ADD to our savings (to the penny). This is an accounting fact, not theory or philosophy. There is no dispute. It is basic national income accounting.

A $15 trillion government defict in 2011 means that the net increase in savings of financial assets for everyone else combined was exactly, to the penny, $15 trillion.

The net savings of financial assets is some combination of cash, Treaasury securities and member bank deposits at the Federal Reserve. This simple identity is misrepresented continuously by favored economic advisors, the media financial mavens and pundits, and the highest levels of political authority.

THEY ARE JUST PLAIN WRONG.

If you’d like to learn about other frauds of economic policy in a modern money system visit www.moslereconomics.com and www.modernmoney.wordpress.com

I have excerpted the above from these to brilliant sources, Professors Warren Mosler and L.Randall Wray,
co- founders of Modern Monetary Theory.

If you read there books you will experience an epiphany.
They prove without a shadow of doubt that exports are costs and imports are savings. That deficit spending should be curtailed only when full employment is achieved.

Please, please don’t fall into the deficit terrorist’s trap by thinking a nation producing it’s own currency can go broke.

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By: VATfan http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-953 Thu, 19 Jan 2012 01:27:50 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-953 David,

Mitt Romney’s controversial, personal low tax return rate brings renewed attention to the concept of tax fairness and tax reform. This is the first presidential campaign in 20 years to have taxation and tax reform at the forefront. I hope “the press” stays on the subject. Sweeping tax reform can be pro growth and pro employment.

We have had Herman Cain’s attention spike with the 9-9-9 plan, and Rick Perry’s reincarnation of Steve Forbes’ flat tax. In 1992, Steve Forbes ran on his take on the Hall-Rabushka flat tax, Phil Gramm called for earned and unearned income to be treated equally, and Jerry Brown called for a VAT complemented with a flat income tax. In 2010, Mitch Daniels echoed Brown’s plan, and received a knee-jerk blast from anti-tax republicans who fear that a VAT will be an add-on tax.

The republican primary candidates are all calling for tax cuts at a time when government expenditures are 40% higher than revenues. No one really believes that manageable cuts to defense, medicare and social security can shrink that 40% deficit gap by half. Nor has deficit spending successfully grown the economy and increased employment in the last several years.

After all politically practical cuts are made to spending, taxes will still need to rise. Republicans will argue that lowering taxes will boost economic growth and obviate the need for additional tax revenues. There is no such evidence.

Tax reform that includes replacing the Corporate Income Tax with a VAT as one component would have a positive effect on exports, domestic production and jobs. VAT is used by all our trading partners, including China, to exclude the cost of government from the price/value relationship of goods and services in international trade. It is border-adjusted, i.e., subtracted from exports and added to imports. Replacing the CIT by VAT would eliminate the double-taxation of dividends, encourage the return of multi-national profits now parked in lower taxed countries, and stimulate foreign investment. Imports would carry an equal burden, and domestic goods would be more competitive.

As Mitch Daniels suggested, couple the VAT with zero tax preferences with a zero deduction Personal Income Tax with a high threshold and progressive rates and we will have a tax system that is fair, competitive, and stimulative for jobs and growth. Gone would be the corrupting lobbying for loopholes. And, Mitt Romney would pay a much higher, but fair tax.

Steve

Steve Abramson
VATinfo.org

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By: jcfl http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-917 Mon, 16 Jan 2012 16:23:11 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-917 i propose a simple and straight forward process for taxation(which would be it’s demise) – “income tax” not tax whatever’s left after taking umpteen deductions, credits, special deductions, credits, etc. pure and simple – tax income generated that year – both corporate and individual. the only deduction allowed would be corporate for that portion of income given as dividends or bond interest, so there’s only one taxation. i suspect the number to obtain a balanced budget would be in the 5% range, give or take. of course this would never fly, as the wealthy and corporations typically pay less than 5% of their gross income in taxes. the vast majority of us would benefit – another reason it would never happen in my opinion.

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By: TheOldSodbuster http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-880 Wed, 11 Jan 2012 01:25:56 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-880 Interesting. Mr. Johnston is proposing that in risky times that interest rates rise to reflect that risk. Radical. But wait. Wasn’t that what we were taught in high-school?
The point of interest was to reflect the risk profile. Are these stable, or risky times.

The system seems rigged by the big five players that compose the Fed, and control the Open Market Committee that sets the rates.

King Knut was making a point when he walked to the beach and ordered the tide to go out. Dang, the tide did not obey. The point was that there are limits to power. Apparently, some in the banking world do not see this point. Just like the bankers in Hong Kong would not write down their losses and created the opium wars.

On another point, I wish Gordon2325 and a few others would limit themself, so we could discuss, as a bunch of strangers and civilians how this question might bear upon our future.

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By: ektax http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-869 Tue, 10 Jan 2012 15:35:51 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-869 Is the question here one of ideas to be examined or the qualifications of one who puts forth a proposition? Who cares what his qualifications are?

I cannot see what would replace the income tax but that could simply be my failing. Consumption taxes and a flat tax have the result of penalizing the poor and continuing the 30+ years of redistribution of wealth from the poor and middle class to the wealthy. I am amused by those complaining that raising the marginal rate from 35% to 39.6% (pre-Bush tax cut level) is redistribution of wealth. Lowering the marginal rate from 70% (50% for earned income) to 28% under Reagan was redistribution of wealth. Goal accomplished. Wealth has been redistributed.

You can talk about my credentials as MS/CPA who both teaches and maintains a tax practice, or we can discuss what I have posed to you.

ektax

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By: Gordon2352 http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-865 Tue, 10 Jan 2012 05:11:20 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-865 OneOfTheSheep,

Might I point out that you were the one who questioned my credibility, and challenged me to a game of “degree poker”.

Clearly, you are not holding a winning hand, so your bluff failed when I “called”.

Most of what you say — not only this time, but in other articles — is complete and utter nonsense.

You are not worth my time in order to respond to your rantings.

PseudoTurtle
CPA/MBA

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By: OneOfTheSheep http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-864 Tue, 10 Jan 2012 02:59:47 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-864 @Gordon2352,

I really hate to break your bubble, but life isn’t “about you”. In those cases where we can make others stop and think, perhaps challenge even their own perspective, there can be value given and value received.

Push come to shove, no one CARES that YOU think YOU understand a subject better than someone else (and it shows). The most any educator can do is present information before those they would influence so that any wisdom or value is easiest to see. Intimidation has no proper place in their acceptance or rejection of it.

I will not play “degree poker” with you. You would win, yet my “loss” would make you no smarter or more wise or more persuasive than you are now. Such silliness is simply irrelevant off campus.

Your resume is that of a pencil pusher, not “for profit” business management and related decision making. I am a successful, if retired, entrepreneur; and before that I enjoyed employment in diverse technical fields as both owner and employee.

We have all met people who have years and years of experience but that quit learning the second day “on the job”. Some, perhaps like you, endure years and years of academic drudgery and expense or employment for wages with little to show for it.

The “bottom line” is if the school janitor originates a process by which the human race becomes “clean energy independent”, is the accomplishment any less? I don’t think so.

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By: Gordon2352 http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-863 Tue, 10 Jan 2012 01:34:05 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-863 Mr. Johnston,

The fact that you teach or have written books means nothing to me without the appropriate credentials.

I have met numerous people in both categories with nothing of substance to say about the topic they are supposedly an expert in.

Your “knowledge” appears to me to be very narrow, which means you do not understand the subject in sufficient detail to understand all the ramifications of what you are proposing.

When I read a news article by someone supposed to be an expert in that field, and then find out they are not, it is irritating to me.

I think I understand the subject better than you.

So when you say:

“Ditto Gordon2352, who may be surprised to learn that I teach tax, property and business regulation to law and graduate business students, using the law of the ancient world to illuminate the principles — and the capriciousness — of modern tax, property and regulatory law.”

That sounds like a scam to me, since I know these things very well. I have no desire to teach, but could teach all of these courses with no problem.

I also attended Marquette University School of Law — and had to drop out due to lack of funds — but I don’t try to teach law because I am clearly not qualified to do so.

Your argument that you are qualified to teach me anything about economics or tax law is not going to convince me of that, since I have only your word for it, and I do not intend to waste my time reading any of your books.

The problem is there are many other people out there who do not understand, and accept your ideas without question.

PseudoTurtle
CPA/MBA

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By: Gordon2352 http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-862 Tue, 10 Jan 2012 00:56:45 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-862 OneOfTheSheep,

For your information, immediately after graduating from high school in 1960, I went into the military to finish my service obligation, since the draft was going on at that time and I was not able to find a job because of it.

Since I was born poor — being raised by my grandparents on social security after being abandoned by my parents — I did not have the opportunity to go to college.

After completing my military obligation in 1965, I worked in the commercial printing industry as an estimating department supervisor for one of the largest business forms printers in the US for nearly 17 years, bidding on print contracts for commercial and for the government printing office.

Since the business form industry was clearly dying, I decided to go back to school full-time. So, in 1980 at the age of 40 years old, I went back to the University of Wisconsin as a full-time freshman. I worked as the manager of the University Center Print Shop, and took out loans in order to finance degree.

I completed my BS in Managerial Accounting in 1983 by going straight through without stopping for any summer breaks, and finished with a very high GPA.

After I graduated, I took a job as a cost accountant for a high-tech firm in Hillsboro, Oregon. Since then I worked my way up to Plant Controller and Finance Manager for several international high-tech firms.

My job was outsourced to China, and I was forced to take early retirement at age 62, otherwise I would still be working.

While I was working full-time in the high-tech industry, I managed to become a CPA in 1987, and completed my MBA in 1992.

And, yes, I can document both of them.

Now, if that isn’t legitimate experience and credentials, I’d like to know what is.

I do recognize your “OneOfTheSheep” name from other moronic postings you have made on other websites.

Care to disclose your credentials?

David Cay Johnston, according to his public resume, is “an investigative journalist and author, a specialist in economics and tax issues”, just like any other holder of a high school diploma.

His Pulitzer prize means nothing in terms of real education and experience. I have awards myself, but I don’t try to make a living by exploiting them.

People like him are a scam, and I am annoyed because he is being presented as though he has real credentials in business and economics.

In fact he is nothing more than a newspaper reporter with a high school diploma who got lucky for some reason.

Can you give me one single reason why I should pay attention to a newspaper reporter with a high school diploma?

Does he have anything valuable to contribute to my knowledge? I think not. And for Reuters (or the New York Times, same difference) to employ this individual is a fraud, because most people won’t bother to check someone’s credentials.

Now, your turn — let’s hear all about your extensive experience and education.

I will keep this page bookmarked if you care to answer me.

Perhaps you remember me under another name I usually use, especially on Bloomberg, which is where I think I remember your inane comments.

PseudoTurtle
CPA/MBA

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By: OneOfTheSheep http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/#comment-861 Tue, 10 Jan 2012 00:46:37 +0000 http://blogs.reuters.com/david-cay-johnston/?p=251#comment-861 @ Gordon2352,

It is of no consequence as to why the income tax originated…government is very inventive to jerk feathers off the golden goose from unexpected directions. The “rich” are proportionately few, and therefore the squawking is of less apparent volume. Once the government’s (the camel’s) nose was under the tent, by the end of the 1950s it had exploded to 90% for the most successful Americans.

By punishing the successful to this degree, obviously “society” wanted less success or less successful people. (sigh) The same thing has happened with the “Alternate Minimum Tax”, except it increasingly assaults the upper middle class since the rates were INTENTIONALLY not indexed so as to ever cast a wider net on income. We seem to forget that the U.S. Constitution NEVER intended the federal government to monitor or redistribute the flow of currency between citizens.

It was NOT the “…wealthy class, through manipulation of tax rules…” that is responsible for the lion’s share of the current tax burden on actual income “tax PAYERS”. It is our own, increasingly unfriendly government that sees the bounty created by capitalism as something somehow obscene that should be eliminated. They see only the potential danger of the flame of the economic candle and have no understanding how cold and threatening the triumphant dark will be if they someday extinguish it completely. It is, quite literally, the flame of freedom!

Your suggestion that “…ALL revenue comes from the state in some manner…” is ridiculous. The “state” has NOTHING it does not take from a producer of value. The idea of “…benefits of having a state to protect their wealth…[go] back to the state is also ridiculous. The “state” of America was created by individuals who pledged THEIR personal wealth. lives and sacred honor. It came from THEM and their vision and THEIR personal success.

So long as their efforts and money support the “state” it is the “state” that owes value back for value received. As to a “balanced budget, that, too is owed “we, the people”. We have never authorized ANYONE to spend for ANY reason money WE do not have before we even earn it and our Constitution invests NO ONE with such power, elected or not.

Each human does all that they can in their brief life to improve their lot and that of their family. Taxes should be “fair” if that term’s definition can ever be agreed. They should never exceed in total that amount NECESSARY to accomplish authorized purposes of our federal government, and then only to the degree NECESSARY! Our society acknowledges individual success in the form of patents and copyrights that survive death and the right to educate to advantage or establish in a vocation or business our friends and family. To confiscate all upon death is to return to the hunter-gatherer American Indians who might exclude from the campfire the widow of the Chief upon his death. That is not a good example of a progressive or compassionate modern society.

The two primary problem with governments today. Each and every unelected and unaccountable bureaucrat has at their individual disposal the power to increase the “cost” of doing business or even living in this country. Perhaps worse, our judiciary has made themselves essentially unaccountable to “we, the people” purportedly served, the legitimate laws of the land they purportedly exist to enforce AS WRITTEN insofar as possible, unilaterally and without effective challenge. No longer do the mandatory oaths each must take before assuming the robes and function of office have any meaning for there is no meaningful penalty for violating same.

I’m not sure how or if we can fix these current realities, but is isn’t by abolishing the income tax, the property tax, the sales tax, etc. Tax money is the crack cocaine of the political process, and we will fight a losing battle just to avoid a new and eventually even more expensive “Value Added Tax”. Any tax is the nearest thing to eternal life we are likely to ever observe!

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