Zero Taxes to Corporations brings in real Democracy…

Claiming that corporations today pay or must pay more income taxes is an oxymoron.  We the people have always  paid 100% of these taxes one way or the other.  Use your head instead of a mantra that was given to you during your formative years to "mislead" your logic.  "Mislead" is the right word!

 

If we want to develop our current democracy the first ones to go are corporate and inheritance taxes.  "Over my dead body" - I hear your loud and clear shouting.   This is the real voice of the real ignorance.  We are conditioned and brainwashed to be ignorant on all issues that carry any value.  Why would those in power ever happily share their power with the simple minded plebs?

You may though agree with me with one important issue:  A drill press or a coffee pot do not eat, do not get tired, do not pay taxes nor do make any decisions.   And like all the other, more complex machines, some run by computers, they all together form a seamlessly working "Black Box" that makes our society highly productive.  Sounds stupid but understanding this concept is much more important than any Government.  There is much more to it but let's leave it to another Blog and go to taxes...

This year our Government uses about US$ 2,400 Billion as take-out slice from the GDP estimated to be US$13,700 Billion.  That mounts to 17.5% of GDP and IRS collects this all one way or the other.  This all is called taxes and/or added federal debt whenever dollars are printed.  Our one time war business forms a "separate" story (will be paid later).

 

You should be aware that about 70% of GDP goes through our own hands while the remaining 30% keeps the businesses (=Black Box) alive.  This 30% that the businesses need to operate include all taxes, profits, investments, daily operations, maintenance, marketing, sales and everything else to the last penny.  Be assured that every penny of this all is added to the price of all products we buy.  Translating this to Pidgin English we give the tax money to the businesses so that they can earn interest with it before transferring it to IRS at the end of the following quarter. 

Regardless we the ordinary tax payers pay directly 80% of all taxes, and then the remaing 20% indirectly through the corporations.  Accordinng to "formal" tax statistics we will pay 14.5% of the taxes while the corporations pay 3.0%.  This transfer payment of 3% has been sinking slowly during the past decades - the lobbying "works"!

 

Sounds silly but most people do not recognize facts.  For them all businesses are greedy and they should  pay higher share of the taxes, why?  To use our money as their own cash flow and to earn more interest on these transfer payments while they linger at their custody for a few months?  This is called a subsidy to the businesses in Pidgin English.  Perhaps we have too much money in our pockets and can offer even higher "salaries" to all directors and the top management for their excellent progress in sending our jobs overseas!

 

Looping taxes through businesses produces nothing to us and the businesses will add even it's handling cost to the prices of all products.  We should rather use this money orselve the same way before sending it to IRS.  By doing so we could keep the interest while the money is in transit.  This would actually show up annually as about US$ 150 per an average tax payer.  With 10% interest US$ 700 billion (corporate taxes) add up to US$ 18 Billion in a quarter  (many pay more than 10% interest on credit cards). 

 

Are you still desperately opposing to give the corporation a permanent amnesty in taxes?  To help you to decide think how the Congress spends it's time.  It is most of the time tinkering the tax laws for the corporations and even for us.  Unfortunately, nobody outside or inside the Congress can understand how the tax laws can be ever made fair inside the Black Box.   The Congress loves to tinker but this effort is eqaully ambitious as would be for you and me to take a spade and dig a hole through the center of the earth and surface on the other side clean, smelling good, and dressed into a spotless tuxedo and evening gown.

 

We have recently heard even from Warren Buffet expressing an opinion of the tax issues in a TV intervie: “..it is disgrace that the ordinary employees in my office must pay taxes at higher tax rate that I pay.  Unfortunately, there is nothing I can do as taxes must be paid according to the laws…”   He also added:  “…I would not mind sharing the tax burden more evenly but it can not break the law of the land.”

 

You may still not be convinced but next are the few steps that we must take to fix the mess we are in.  It is actually simple and can be implemented it all within a few years including a three year overlap for the old and new systems to balance the books during the crossover.  Computers will do the math. 

 

Here is my proposal:

 

1.      no business taxes of any kind (it's our money anyhow)

2.      no inheritance taxes of any kind (after listening to a few seminars on this topic it is obvious that rich pay zero taxes) 

3.      a consumption (sales) tax

4.   a flat tax that starts from zero, say at US$ 100,000 and reaches it’s final value of 5%-10% at US$ 250,000 income level. 

 

You may not want to beleive but that is enough to make a major improvements to the quality our society and how our government will treat us in the future. 

Here is what happens next almost automatically without any further action from the Government:

 

1.      Our beloved lobbyists go home and stay there as the industries behind them have no work for them.  During the past two centuries these industry paid lobbyists have corrupted almost everything we have in this country. Currently most of the lobbyists’ money ends up to the coffers of those in Congress who have the keenest ear for their concerns.  This means in prtactice that the business of Congress can simply not change regardless whom we elect there.  The decisions are made by majority in Congress not by the voters.

2.      From now on the Congress can concentrate to the only job they understand and can relate to – how to maintain our environment and society attractive for the smartest in the world, and how to scale the flat tax rate and tinker the consumption (sales) tax scales.  

3.      The elections become suddenly meaningful as the lobbyists are no more there and the campaign coffers are more evenly filled.

4.      We may get the fairest tax system on the planet. 

5.      With fair tax system we will have a steady influx of young and smart brains looking for a new opportunity.  

6.      The inheritance tax schemes disappear as worthless.  The IRS is totally powerless against the richest estates while the ordinary people get slaughtered with their tiny estates.  Some countries have already abndoned all inheritance taxes.

7.      The businesses will get a shot in the arms as their competitive position improves dramatically.  This means increasing business activity and job opportunities both at home and overseas.

8.      The mystical and elusive 4 year economic cycle is reduced in magnitude as the corporations have no benefits of  their intervention.

 

Note:  Several countries are already thinking on these lines and if one of the majors adopt that country will leave the rest of the pack standing into a thick and slowly settling dust bowl.

For more see: http://www.galacticwind.com/inddemocracy.html