Tag Archives: taxes

Taxes? Payment for privileges.

Who doesn’t like socialism? Well, if you consider all that society provides for itself already, nobody shouldn’t like socialism. That is, rejoice in Socialism — cuz’ we’re already in it.

Who likes paying taxes? Well, if you consider calling them payment for privileges then maybe they wouldn’t feel like taxes. Let’s say we DON’T tax anybody’s income anymore. But then everyone would be forced to independently purchase things like the following:

Protection from:
• Foreign nation states,
• Criminal activity,
• Medical catastrophe
• Fire,
• you know, all those things a national, state and local government setup of systems does for our protection.

And then there are the perks we would each have to pay for:

• A maintained and well marked road system,
• A system of education,
• A system of justice,
• A system of water delivery and sewage handling,
• An electricity system,
• Systems for managing air traffic, boat traffic, compliance for building, food safety…

If you examine that list you’ll come to the conclusion that, hell!, we already are living in a socialistic society. Without all that money (taxes) to pay for all those common good services, we’d be a helluva lot worse off.

Now how about upping the tax on the wealth? “Booooo,” all the wealthy will say, but wait a minute Mr. & Mrs. Oligarch, do you like having a trustworthy banking and investment system? You like being able to buy and own vast swaths of land, buildings, planes and boats? You like living in a safe, well protected and just system? Well, it’s gonna cost ya… Because, you know, you wouldn’t be wealthy if We The People weren’t here to provide all of that protection.

One would think that a natural algorithm would be that the more wealth you possess the more you owe it to society as the protector and provider of that wealth. The fallacious theory of “I’m a self-made man!” ignores the fact that all of one’s success is based on living in and working with a society that provides all of the protections and benefits previously mentioned. No one stands alone. The wealthy tend to think it’s they who have succeeded when in reality it is society that enable all of that success. No society, no success.

If the wealthy don’t like this theory well maybe they should consider that in the coming apocalypse, when society has collapsed, dissolved even, and they’re standing there, alone, having to protect themselves, feed themselves, clothe themselves, shelter themselves and they wonder, “how can we rebuild our wealth?”, and the answer comes that you, they, can’t because they’re spending all their time surviving. Then they might realize that only a society can support wealth. And that the more wealth one owns the more one owes society for the opportunity to have acquired it.

Is this wealth hatred? Bah! A certain dynamic of wealth in a society is necessary. Achievable betterment, the lifting of station through education, ideation, creation and hard work should always be possible and acknowledged. But even then, such betterment is a function of society and must be recognized. Taxation is one of the tools for that recognition.

Without a taxation system, throughout its history, to build all of the protection and privilege systems I mentioned above, no society would exist. Without taxes (historic and present) I couldn’t ever have written this blog — nor could you been able to read it. Which, by the way, thanks.

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New FED Mandate – Equality

The Federal Reserve is “governed” by a Congressional mandate:

  • Maximize employment.
  • Keep prices stable.
  • Retain moderate long-term interest rates.

I propose another:

  • Minimize income inequality.

Now, there’s a problem with all of these mandates. The FED has but three primitive tools with which to accomplish their goals.

  • The Discount Rate, that is, the oft stated “interest rate”.
  • Banking reserve requirements, what percentage of deposits banks are required to retain to substantiate their loans.
  • Open market activity, buying and selling of treasuries like the Quantitative Easing they did during the 2008 Financial Crisis.

So, what new (or existing) tool can Congress give the FED to help it with this new “Min- Inequality” mandate? How can the FED do its work with only a throttle/brake (interest rate), a bottle of NOX (QE),  and seat belts (banking reserve)?

If we postulate that the three main drivers of income inequality are corporations that:

  • Pay their executives and officers far more than they are worth, and pay their employees far less than they are worth.
  • That they distribute the income of the company’s business to shareholders rather than a larger portion going to employees (as wage, salary or shares).
  • And that they use net income to buy-back shares of the company from the stock market (which boosts stock prices).

Then those are the behaviors we want to change.

These are therefore the leverage points we can use:
1) Corporations borrow money from banks to fund growth.
2) They borrow money from investors as bonds to fund growth.
3) And corporations issue additional common or preferred stock to fund growth.

We would need to give the FED the power to throttle each of these corporate growth behaviors. With me so far? For each of these corporate expansion tactics we’ll add an inequality tax. This tax will be a calculation of the highest paid employee divided by the lowest paid employee — and that then divided by 100.

   CEO    ÷ low wage ÷ (adj)
5,000,000 ÷  50,000  ÷  100  = 1.00

The FED will now be given additional power, a number the “Inequality Quotient” IEQQ, by which they can lower the inequality penalty or raise it.

With the FED IEQQ number set to 1.00, a corporation with the above inequality metric would have to pay 1% higher interest rate to borrow money from any bank. Would have to pay 1% more in bond interest for any bonds they issue. And they would have to pay 1% gratuity tax on any new shares they offered.

   CEO    ÷ low wage ÷ (adj)
5,000,000 ÷ 50,000   ÷ 100 * (1.00 FED IEQQ) = 1.00%

All funds collected would go into — Social Security!

Simple right? Now, how do we convince Congress that this is important and that this (or a version of it) will work?