Taxes

[harry51]

This is a very interesting thread with many very insightful posts.

Muldoon, once again, you've hit the nail on the head concerning the present financial system with just two words from your last post, those being "confidence" and "game". 'Nuff said.

Scott, regarding your idea of having the gov't print money and spend it into circulation instead of collecting taxes, you're in good company. Maybe a year or two after his stint as Federal Reserve Chairman ended, Paul Volker suggested that such a plan might be preferable to maintaining the IRS and all the private sector waste connected with reporting and record keeping, etc. The remarks were made, IIRC, at a meeting in Mexico attended by Volker, Kissinger, and a number of others whose names we would recognize.

Of course, any plan that would take away the ability of the governing class to direct our spending, pry into our private business, and/or make our lives miserable if they so desire, is DOA in DC or any town hall......... no matter what benefits it might bring to the average Joe and Joanne.

Congress' constitutional mandate to coin money, and regulate the value thereof, has been mostly understood to mean they are charged with the duty to furnish lawful money, which is defined as gold and silver coins, for general use in commerce. To coin money means to stamp out the coins, to regulate the value means to guarantee the weight and fineness of the precious metal content of the coins. Lawful money should not be confused with legal tender, a designation congress can bestow at will upon any instrument it so chooses.

Sonoran, is that 1.07% inflation rate an "official" figure? That number sure doesn't jibe with what's happening at grocery stores and gas stations in my neighborhood.........and it's a sad fact that the gov't fixes the inflation index to make it show whatever they want the inflation rate to be by adding and removing products and services as they find convenient.

The question of what monetary system works best is a fascinating one for me. The fiat currency system we have now has been good to us as far as our standard of living is concerned, but it depends entirely on the insight, judgment, and honesty of the people in charge. The temptation to manipulate appears to be irresistible, based on both history and current events. 

Gold, on the other hand, imposes rigid discipline, but brings quite a different set of problems. For example, unless another huge gold discovery on the order of the 1849 California gold strike happens, inflation, in the strict definition, is not going to happen. Deflation, though, is a given as the volume of goods and services in the economy grows proportionally faster than the supply of gold.

So if in year one, the economy consists of one oz. of gold and 10 widgets, each widget costs 1/10th of an oz. If in year two, widget production has quadrupled to 40, but gold production has only doubled, each widget now costs only 1/20th of an oz.

If the widget manufacturer borrowed gold to go into business, as time passes and his prices go down, it will be harder to repay principal with interest, making it difficult to stay in business. Because of this uphill battle and the likelihood of failure, uncollatorallized startup loans would be hard to get because lenders would be harshly punished for loaning to the wrong borrower. So you can't borrow money unless you have money or property already, meaning the rich get richer.........and opportunity would be scarce for the unconnected.

The upside is that savers would be rewarded by virtue of the increased buying power of their saved gold over time. This would also likely discourage lending  at interest, because in this scenario, there would be little incentive to take the risk. So economic expansion would be slow at best, in theory, in capital intensive undertakings.

Ways to overcome those disadvantages and others not mentioned probably could be devised. It's easily arguable that the safety from monetary manipulation alone might very well make gold the best choice. I don't know. It is an interesting, if vexatious, problem!

But, the thread is about taxes, not just money. My position is that our system of taxation is exactly backward. Most of us get the majority of the most useful government services from city, county, or state gov't, not federal. It would seem to follow that we should pay our taxes to the closest level of gov't, and that level should send enough, but no more, to the next level above to pay its proper expenses, and so forth. It would seem that gov't would be much more accessible and accountable under such a system. The founders expected the functions delegated to the federal gov't by the constitution could be amply funded by import taxes........ food for thought.

[Bill Houghton]

"Building & Design help for the involved home owner."  Wow, that is just a smidgen of what goes on here.  I am thoroughly amazed that a build and design forum could bring such diverse and intelligent folks together.  Thank you.  And I mean that seriously.  I am just thrilled to come here and read. 

Anyone familiar with Zen and the Art of Motorcycle Maintenance and Lila? 

Bill in the U.P.

[StinkerBell]

Hitch Hikers Guide To The Galaxy (BBC Radio) A ship landed on a planet with only middle management and telephone repair people. They used leaves for currency. But then inflation started so they burnt down the forest to control the inflation.

Why did I post this, I dunno.

[ScottA]

Good post harry51. It seems the real issue is not the taxes but the corruption and control they represent. So long as we are governed by a corrupt group of people there is little chance of ever solving the problem. I belive if the constitution was follwed to the letter with a bit of common sense none of these issues would exist. I think there was a reason there was no income tax written into the constitution and that reason is that it is counter to the freedoms thay where trying to garantee.

[harry51]

Scott, I agree. It's just a darn shame that the kind of people who would faithfully follow and defend the Constitution, and apply some common sense, almost never offer themselves to be elected.

StinkerBelle, that sounds interesting. I'm going to see if it's online somewhere.

Bill H., where's the U.P.?

[muldoon]

Hitch Hikers Guide To The Galaxy (BBC Radio) A ship landed on a planet with only middle management and telephone repair people. They used leaves for currency. But then inflation started so they burnt down the forest to control the inflation.

Why did I post this, I dunno.

Because it makes as much sense as fighting bad debt and risky fraudulent behavior by creating more bad debt and rewarding fraud and risky behavior? 

I'll add a quote to the fire too:

(An extraterrestrial robot and spaceship has just landed on earth. The robot steps out of the spaceship...)

"I come in peace," it said, adding after a long moment of further grinding, "take me to your Lizard."

Ford Prefect, of course, had an explanation for this, as he sat with Arthur and watched the nonstop frenetic news reports on television, none of which had anything to say other than to record that the thing had done this amount of damage which was valued at that amount of billions of pounds and had killed this totally other number of people, and then say it again, because the robot was doing nothing more than standing there, swaying very slightly, and emitting short incomprehensible error messages.

"It comes from a very ancient democracy, you see..."

"You mean, it comes from a world of lizards?"

"No," said Ford, who by this time was a little more rational and coherent than he had been, having finally had the coffee forced down him, "nothing so simple. Nothing anything like to straightforward. On its world, the people are people. The leaders are lizards. The people hate the lizards and the lizards rule the people."

"Odd," said Arthur, "I thought you said it was a democracy."

"I did," said ford. "It is."

"So," said Arthur, hoping he wasn't sounding ridiculously obtuse, "why don't the people get rid of the lizards?"

"It honestly doesn't occur to them," said Ford. "They've all got the vote, so they all pretty much assume that the government they've voted in more or less approximates to the government they want."

"You mean they actually vote for the lizards?"

"Oh yes," said Ford with a shrug, "of course."

"But," said Arthur, going for the big one again, "why?"

"Because if they didn't vote for a lizard," said Ford, "the wrong lizard might get in. Got any gin?"

"What?"

"I said," said Ford, with an increasing air of urgency creeping into his voice, "have you got any gin?"

"I'll look. Tell me about the lizards."

Ford shrugged again.

"Some people say that the lizards are the best thing that ever happened to them," he said. "They're completely wrong of course, completely and utterly wrong, but someone's got to say it."

[harry51]

Well, no wonder my candidates never win. I've been voting for earthworms in the write-in space!

Where in the world did that quote come from, Muldoon? I sure got a chuckle out of it!

[muldoon]

Well, no wonder my candidates never win. I've been voting for earthworms in the write-in space!

Where in the world did that quote come from, Muldoon? I sure got a chuckle out of it!

its also from hitchhikers guide to the galaxy by Douglas Adams

[harry51]

Thanks, Chad!

[MountainDon]

... I think there was a reason there was no income tax written into the constitution ...

Ah, read Article I, Section 8, Clause 1 of the constitution

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States


The entire constitution may be found online at:

http://www.usconstitution.net/const.html

[harry51]

Yep, the power is constitutionally delegated to congress. But, I agree with Scott that the Founders likely felt that a direct income tax would be an abridgment of liberty and privacy.

The fact that the first income tax didn't come about until 1861, to help finance the Civil War, leads me to believe it was seen as an emergency measure, not a proper source of general revenue. It was recinded in 1872.

The income tax was revived in 1894, but was found unconstitutional by SCOTUS in 1895. 1913 saw the 16th amendment, which overrode the various constitutional clauses that led SCOTUS to its 1895 decision.

And so we here in the U.S. came to adopt under President Woodrow Wilson three of the ten planks of the Communist  Manifesto:

2. A heavy progressive or graduated income tax.

Misapplication of the 16th Amendment of the U.S. Constitution, 1913, The Social Security Act of 1936.; Joint House Resolution 192 of 1933; and various State "income" taxes. We call it "paying your fair share".


3. Abolition of all rights of inheritance.

We call it Federal & State estate Tax (1916); or reformed Probate Laws, and limited inheritance via arbitrary inheritance tax statutes.

5. Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly.

We call it the Federal Reserve which is a credit/debt system nationally organized by the Federal Reserve act of 1913. All local banks are members of the Fed system, and are regulated by the Federal Deposit Insurance Corporation (FDIC).

Don't forget the direct election of Senators, which effectively reduced the several sovereign states to lackeys of the federal gov't.

Thanks a bunch, Woody. (and Col. House....)

[MountainDon]

All the more reason to do away with income taxes and go to FairTax, a tax on consumption, with a monthly payment equivalent to the basic cost of living given to everyone.

[Bill Houghton]

Bill H., where's the U.P.?

The Upper Peninsula of Michigan is the northern of the two major land masses that comprise the U.S. state of Michigan. It is commonly referred to as the Upper Peninsula, the U.P., or Upper Michigan. More casually it is known as the land "above the Bridge" (above the Mackinac Bridge linking the two peninsulas). It is bounded on the north by Lake Superior, on the east by the St. Mary's River, on the south by Lake Michigan and Lake Huron, and on the west by Wisconsin.

The Upper Peninsula contains almost one-third of the land area of Michigan but just three percent of its total population. Residents are frequently called Yoopers (derived from "U.P.-ers") and have a strong regional identity. It includes the only counties in the United States where a plurality of residents claim Finnish ancestry* The peninsula's largest cities are Marquette, Escanaba, Sault Ste Marie, Menominee, and Iron Mountain. The land and climate are not very suitable for agriculture. The economy has been based on logging and mining. Most mines have closed since the "golden age" from 1890 to 1920, and the land is heavily forested. Logging remains a major industry.

*the Finnish influence here means most homes and cottages have a sauna included.  We are planning a seperate outbuilding for ours (which is the traditional sauna) with a wood fired stove and lots of rock.

Bill in the U.P.

[harry51]

Thanks for the reply, Bill. Do the two parts of Michigan have conflicts like the ones between N. and S. California? I'm in the central part, but we're N. California in spirit. S. Cal has the population, so they dominate the politics. Every so often, some N. Cal politician tries to drum up interest in splitting off because of the difference in needs and priorities, but so far nothing has come of it. One big bone of contention here is water. N has it, S needs it.

I travelled through your part of the country many years ago. I seem to remember paper mills here and there, and seeing on display somewhere big lumps of almost pure copper that had been found in the mines.

I think a sauna is a great idea, particularly a wood fired one. I could use some sauna time right now, come to think of it. I guess a hot bath will have to do!

Best,
Harry

[Bill Houghton]

Hello Harry,

Yes, there are some spats between the U.P. and trolls (people who live below the bridge  )  Our tax money disappears to the folks down state and we have a heck of a time getting projects done up here because of the 3% population, not much of a voice.  There is a musical group here called the Yoopers who turn out some funny songs: 

http://www.youtube.com/watch?v=50IgzksUqpQ
http://www.youtube.com/watch?v=kb9yhhflmvY 

Had to add this one, never saw or heard it before: Da Yoopers- A Love Song Called Diarreah  http://www.youtube.com/watch?v=t3q3x-vB_JE

They have a business out on the highway called the Yoopers Tourist Trap.  http://www.dayoopers.com/thetrap.html

Take care. (Hopefully not offensive to anyone)

Bill in the U.P.