The One-Percent Revolution: National We-Won't-Pay Day
by Bill Sardi
Recently by Bill Sardi: Zimbabweans Figure Out Central Bank Fraud Ahead of Americans
What if the 1-percent holdback their quarterly tax payments?
God, I can hear it now, how dare the rich do a thing like that! Yes, I'm talking about a planned date to holdback on quarterly tax payments to the Internal Revenue Service.
It is easy to see that America has an onerous tax system where the masses vote themselves pay increases from the classes. There can never be meaningful tax reform or tax revolt when only a small number of out-voted wage earners pay most of the taxes. The Federal government gets away with all of its over-spending shenanigans by pitting the poor against the rich.
This is not to condone the ill-gotten financial wealth that Wall Street types have generated by churning fast electronic trades on the stock market, or profits gained from insider trading, or the executive bonuses for reckless bankers while home owners who did business with these banksters were thrown out on the street.
But the wealthy have one advantage — their taxes aren't withheld from their paychecks. They pay quarterly estimated taxes.
Now if the top 1-percent (who pay about 37% of the Federal taxes), or maybe the top 5-percent (about 58% of collected Federal taxes), can agree upon a course of action to holdback on quarterly tax payments until proper reforms are passed to reign in spending, what would result?
There would certainly be calls to jail them all. Great, now we'd have the largest tax payers sidelined and not earning income. That would further throw the economy into a collapse.
Do secretaries really pay more taxes than their bosses?
Recall now, I didn't start this war, the Executive branch of the Federal government did by spending recklessly and then pointing a misdirected finger at the wealthy.
The chief executive errantly says secretaries shouldn't incur a higher tax rate than their bosses. It's a false argument. The wealthy are putting their money at risk to build the American economy and pay lower tax rates (called capital gains) which is an encouragement to invest to help America grow its economy. Go ahead, fix a broken economy by over-taxing when the real problem is over-spending. This strategy will surely backfire.
I'm totally against the Buffet tax, named after billionaire Warren Buffet, the billionaire investor who has complained that rich people like him pay a smaller share of their income in federal taxes than middle-class taxpayers. The President has taken up this maligned issue to again pit the masses against the classes. But a distinction should be made between tax avoiders and tax evaders. The wealthy already pay more than their fair share.
Private vs. public capital
Why is the White House denigrating private capital? Who says money in the hands of the Federal government is better used than by private enterprise?
A worker hired in the private economy is not on the back of taxpayers. But a worker hired by government will be forever on the back of American wage earners.
And why do we assume the Federal government, with all of its largesse and influence, can launch a new venture with any greater success than private enterprise?
Look at the Federal government's recent track record. The Federal government backed Chevy Volt electric cars, and only six-thousand have been sold even with a huge federal tax credit. Or how about new government-underwritten ventures like the failed Solyndra solar panel company backed by a $528 million government loan or the freshly bankrupt $2 billion solar energy plant that was supposed to be built in the California desert. Crony capitalism doesn't work.
Americans are repudiating their debts
Still, you can't stomach the rich withholding their tax payments while babies from poor families need milk and kids need their teeth fixed. But let me tell you many Americans have already started a "We Won't Pay" revolution.
Noted political and economic commentator Gary North has said Americans won't pass on their debt to the next generation. And he appears to be right. Americans are simply repudiating their personal debts.
Almost a trillion dollars of federally-back student loans are simply not being paid down. An estimated 4 million home owners are not making their monthly mortgage payments and are still living in their homes. Given the choice between making a mortgage payment or a car payment, Americans are choosing to avoid repossession of their car they need to get to their job preferentially over going into foreclosure on their home.
The banks made these imprudent loans and they should be held accountable. The banks will fail if Americans don't pay on their loans and that is the proper course. Bankers will only become more prudent if they fail instead of pushing their sins off on the public. We should as a society put a stop to privatized profits and socialized losses.
Why should the wealthy foot the entire bill to help bear the unfair load for more and more public welfare when so many others are punting on paying their debts? Only a taxpayer revolt at the top will stand a chance at reforming a derelict government. If the 1.4 million Americans who represent the 1% who pay most of the taxes can agree on any meaningful reforms, the Federal government is toast.
Don't demonize the American dream
Getting back to the topic of wealth and taxes, if there are no wealthy Americans, what is the use of living in this society and dreaming one day you can make it to the top if you can't become a millionaire?
Wealthy taxpayers earn investment income which is taxed at 15 percent capita gains rate rather than the top-bracket 35% tax rate. In this manner wealthy people are encouraged to invest their money to grow the economy by a lower tax rate on capital gains. Otherwise they can hold their money in stocks and never take profit that will generate taxes. In other words, lower capital gains taxes keep wealthy people from sitting on their money.
The President has proposed that people earning at least $1 million annually – whether in salary or investments – should pay at least 30 percent of their income in taxes. This presumes the nation's debt crisis is caused by free-loader millionaires who are tax evaders rather than tax avoiders.
The American economy collapsed years ago
John Mauldin, author of Endgame, says the problem is over-spending, not under-taxing. Mauldin says the private economy stopped growing over a decade ago, according to Mauldin, and then the Federal government stepped in and began to conjure up phony wars, expand the military, create more government jobs, and put more people on the backs of the wealthy. Continue in this direction and America ends up exactly where Greece is today.
Distinguish tax avoiders from tax evaders
It was judge Learned Hand, U.S. Court of Appeals 2nd Circuit (1872-1961) in Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934, aff'd 293 U.S. 465, 55 S. Ct. 266, 79 L. Ed. 596 (1935) who said:
“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”
Divide and conquer
Public anger against the one-percent is misdirected and divides the nation, which insulates the government from public pressure. Division is how government keeps the pressure off of itself — rich vs. poor, black vs. white, immigrant vs. non-immigrant, union vs. non-union worker.
Furthermore, government can even violate the Constitution with impunity because it picks off dissenters one by one, breaching the rights of one, not all. It was Martin Niemoller (1892-1984), born in Lippstadt, Germany, who wrote the following:
“In Germany, they came first for the Communists, And I didn’t speak up because I wasn’t a Communist;
And then they came for the trade unionists, And I didn’t speak up because I wasn’t a trade unionist;
And then they came for the Jews, And I didn’t speak up because I wasn’t a Jew;
And then . . . they came for me . . . And by that time there was no one left to speak up.”
Most Americans cannot distinguish tax evasion from tax avoidance. Pay your fair share of taxes, just like all the rest of us! That is the prevalent sentiment. The fact is, nearly half of all Americans don't pay Federal income taxes, but they think they do because FICA (Federal Insurance Contributions Act) deducts for Medicare and Social Security.
Paying taxes: a mark of patriotism?
When Americans are asked if they know of any specific law which requires citizens to pay income taxes, most Americans look perplexed as to why a law would be needed in the first place. What is often heard is that every good American citizen should pay their taxes regardless of whether there is a law or not. The fact is, nearly have of American workers pay no Federal income tax and will collect over the lifetime more benefits from Social Security and Medicare than they contributed.
America has drastically changed from its earliest beginning. America started out as a tax protest — the Boston Tea Party being the best specific example. Today, protest taxes and you are considered unpatriotic!
Recognize the White House is demonizing wealthy individuals who don't pay their fair share of taxes while its own Treasury Secretary failed to file tax forms for three years and was paid a tax allowance by his employer for taxes he didn't pay. What a two-faced elitist government.
Undesignated taxes should be abolished
Americans don't realize the Federal government receives revenues for no designated purpose, so it immediately pads budgets and dreams up spending programs that hide any surpluses that should be returned to the people in lower tax rates.
In North Dakota is there is a movement now to eradicate State property taxes. If this law passes, all new spending must be accompanied by a tax approved by the voters for a specific purpose rather than collecting surplus dollars and then finding ways to spend them as if government has a right to the money. In California during the height of the real estate bubble, the State was collecting such huge amounts of money and spending it so fast that it was borrowing against future anticipated property tax revenues. The State wanted to make sure no surpluses ever accumulated. Only Governor Ronald Reagan ever gave California tax payers a refund.
Americans don't realize they are being gamed and huge surpluses could be realized if every tax was designated for a specific purpose rather than giving government an open checkbook to spend what revenues are collected.
Over-complicated tax code
The IRS’ Taxpayer Ombudsman says the U.S. tax code has become so onerous, so complex, it costs Americans about $193 billion a year to fill out tax forms, and if improperly filed, the consequences could be forfeiture of property or garnishment of wages. As recently as the year 2000 almost half of U.S. wage earners filled out their own tax forms. Today 80% of tax filers must rely upon assistance in the form of software or a tax consultant. This means the tax code is beyond the comprehension of most citizens. Has the tax code been intentionally complication-ized as a favor to cronies who own tax filing companies that make political donations? (You can locate the political donations made by a well-known tax preparer here.)
An estimated 7.6 billion hours a year are spent filling out tax forms for the IRS; and that figure does not even include millions of additional hours that taxpayers must spend when they are required to respond to an IRS notice or an audit (7.6 billion hours consume the equivalent of 3.8 million full-time workers).
The U.S. tax code is so complex that almost any tax filer could be found in violation of some rule and be subject to fines and penalties.
Tax revolts are peaceful
It doesn't take guns or street rebellion to reform America. It just takes the will to not pay. If Americans want conservative bankers who won't lend out their banked money recklessly then they are going to have to stand up the banksters who threatened to let the whole economy collapse in 2008 if the Federal government didn't bail them out. The bankers were bailed out while the people lost their homes and their jobs. It's time to make the bankers pay, not shift their dereliction on us all.
It was Winston Churchill who once said: "The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery."
Instructions on how to play the popular board game Monopoly includes these rules (from Parker Brothers): "The Bank collects all taxes, fines, loans and interest, and the price of
all properties which it sells and auctions. The Bank never u2018goes broke.' If the Bank runs out of money, the Banker may issue as much more as may be needed by writing on any ordinary paper." Isn't that the game American bankers are playing. Our paper money is becoming worthless play money. In this game of "bankers take all" it's time to revolt. Don't pay.