Tuesday, December 21, 2010

Income Taxes Are For Redistribution And Control - Inflation Is The Other "Tax"

I read an article the other day that said the Fed wants to keep inflation around 3%. How they will do this, while all along printing billions and billions of dollars of unsupported currency, I do not know. Many economists predict higher and higher inflation as other countries come to realize the sad state of the US economy.

While investments tend to lessen the effect of inflation, those of you who like to remain financially liquid, trusting in bank deposits, low interest CD's or coffee cans in the backyard, the 3% is a direct tax on these savings.

The government, however, pays off their fixed debt with deflated dollars, thus the article below, calling the Federal Income Tax a social control tool rather than the primary source of financial support for the government.

Let's see. 3% of $13,884,000,000,000 (current national debt), is $416,520,000,000 saved each year by the government. Of course that comes out of the pensions and other investments you have that are invested in Government obligations. Over the years that could add up to real money.

I just checked the value of the dollar in the year I was born, 1940. The calculator came up with this: $1.00 in 1940 had the same buying power as $15.42 in 2010. Annual inflation over this period was 3.99%

Actually the income tax has a dual purpose, and neither is to pay taxes to the government. Its first purpose is to control and redistribute the volume of money. James A. Garfield, the 20th President of the United States said, “Whoever controls the volume of money in any country is absolute master of all industry and commerce.”

The second reason the income tax system exists is to keep a dossier on all citizens. The 1040 tax return is your personal profile.

Governments make war on their own citizens by depreciating the currency. As the currency is depreciated (inflated) the people are impoverished. There is no way to protect financial assets with a fiat paper money system except as paper money is converted to gold and silver.

Depreciating paper money is not a store of wealth. Gold and silver are. One can bury paper money and the money creators and tax collectors do not know where it is. Yet the State can steal the purchasing power of paper money by creating more paper money and diluting the buried paper money.

The transfer of wealth from the producers and savers to the government is a simple process of increasing the quantity of money. This fact eliminates the need for income taxes.

Using words spoken by Beardsley Ruml, chairman of the New York Federal Reserve from 1941 to 1946, we can dispel the widely believed myth that income taxes are needed for government income. Income taxes have nothing to do with providing income to the government.

In a famous speech he read before the American Bar Association during the last year of World War II, titled Taxes for Revenue Are Obsolete, Ruml said, “The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government.”

The speech was originally printed in American Affairs in the January, 1946 issue. The editor of American Affairs wrote: “His (Ruml’s) thesis is that given (1) control of a central banking system and (2)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. All taxation, therefore,should be regarded from the point of view of social and economic consequences.”

Read Ruml's full speech here.

Read full Personal Liberty Digest article here.

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