As Beardsley Ruml stated, with an "inconvertible currency, a sovereign national government is finally free of money worries and need no longer levy taxes for the purpose of providing itself with revenue. It follows that our Federal Government has final freedom from the money market in meeting its financial requirements.
All federal taxes must meet the test of public policy and practical effect. The public purpose which is served should never be obscured in a tax program under the mask of raising revenue."
A layman's translation would read, as long as the U.S. issues its currency it never needs revenue per se to fund itself. That means revenue from levying federal taxes (income/payroll) and from the sale of Treasury securities. 99.9% of all economists, MSM journalists, Congress, the Administration, most academics and 99.9% of Americans wrongly believe or cynically assert that taxes must fund federal expenditures.
The perfect modern day retort to this lie is the following: When asked if it was tax dollars the Fed used to bailout Wall St. to the cumulative tune of $29 trillion, Bernanke told Scott Pelley in their televised "60 Minute" interview, "No it's not tax money we use our computers to mark up the checking accounts they have with Fed." It would take more than six years to raise that total through income taxes. click here
Her solution, (5) tax reform that "... Makes us more competitive, stimulates the economy, and raises revenue", can only be a reference to a land value tax since no other tax on goods and services can do what she suggests tax reform should do. Making us more competitive is code for reducing taxes on high-income individuals and corporations. Doing so would only stimulate the economy if the reductions also included the elimination of FICA and significant cuts in marginal rates for the 99% as well. Since Federal taxes do not fund federal expenditures, there is no need to raise revenue through taxation or any other income generating device.
Reform of the Tax Code should be a wholesale scrapping of the current code since the only REAL purposes of taxation are to manage inflation, income distribution and acceptance of the currency. Only the latter is managed effectively.
Ms. MacGuineas desperately needs to reconsider the simple axioms of Accounting 101 inherent in the sectoral financial balances analysis, and the implications of exiting the gold standard and our becoming fully monetarily sovereign. Her advice to Congress and the public-at-large is harmful. Indeed mischievously cynical, and exacerbates, constrains this nation's struggle to achieve a more perfect union.
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