The parasitic financial Elite don’t do any “work” in the sense of something beneficial for society, as no voluntary payment for their services exists.
If a parasite’s entire income is leeched from the productive, then isn’t their entire income a tax on those creating value? In this sense, the share of the parasite’s income which is carved off by the Central State as tax revenues is a secondary tax: the parasite’s entire income is a tax on the economy.
This distinction between legitimate wealth derived from value creation (think Steve Jobs/computer industry) and parasitic wealth skimmed from the productive (think Mitt Romney/investment banker) is the heart of Correspondent James B.’s insightful inquiry into the question: can the parasitic Elite be said to pay taxes at all, given that their income is itself a tax on legitimate wealth creation?
I’d like to add something to your recent essay Income Tax Solution: Apply Social Security Taxes to the Super-Wealthy. (June 1, 2012)I’m a former banking executive and I’ve had the opportunity to figure things out from the inside. (Emphasis added: CHS)
In the article it mentions the disparity between what the rich pay in terms of percentage of earnings for income tax compared to the middle class.
However, a substantial portion of the rich earn their income by co-opting the income of the middle class via money-printing / income suppression. They can do this by being in the loop for the “money printing” machine as the Fed manages the economy to benefit the connected Elite.
I think it’s underappreciated that the banking system and the financial system has been perpetually bailed out on a moment-by-moment basis by printing money to cover duration mismatch while the Fed has replaced transaction balances with credit – thus enforcing a spread for the benefit of the connected financial Elite, corporate CEOs, etc. This has been going on for decades with periodic accelerations of the bailout process due to mismatched duration excess (i.e. the Austrian Economics Business Cycle).
The middle class (the workers) put value into the currency by producing, while the money-printers take that value out (by dilution, and by lobbying with the value they’ve stolen). It is an organized, structured system of theft, and that includes VISA, etc. which are cash substitutes because cash has been replaced with credit transactions. No amount of taxes are ever “paid” by those rich, as all their income is stolen.
For example, quite a number of top banker CEOs have not paid any taxes in the economic sense, they are not productive (they are destructive), and that is true even if their 1040 says they pay “60%”. Someone else (a producer) paid their taxes … Money really is a “veil” in this case. It diverts from the truth.
Unfortunately, the legitimate rich are really hurt by this process, as they impart tremendous value and have that value taxed away. They are, in a sense, the justification for hitting the lower and middle classes, and they suffer particularly for it.
In my view, we should make all cuts and adjustments from the top down, starting with those institutions that destroy value (pretty easy, just let the market work and let the organizations fail), as that is where the problem lies, and there can be no recovery as the poor simply do not impart enough impact in this parasitic process to make the difference. In fact, many poor simply want a job, and jobs are hard to find as the impediments to working rise higher and higher with the necessity of rationing the spoils in a crony capitalist system.
A recent Levy research article noted the total support by the Fed for the banking system was 29 trillion dollars. While that is not direct cash infusion (with FNMA / FHLMC / FHA, and other back door programs) – there is simply no group in the U.S. with as much influence and welfare.
In other words, the connected insider Elite pay nothing at all in taxes – and in fact they don’t do any “work” in the sense of something beneficial for society as no voluntary payment for their services exists.
Thank you, James. That last line is profound: investment bankers like Mitt Romney don’t solicit voluntary payments for buying companies and reshuffling the assets to skim their parasitic siphoning of the wealth created by others.
If we understand the difference between parasitic wealth and real value/wealth creation, we can properly align the tax structure to reality: the tax on authentic wealth creation should be low, to encourage wealth creation and the employment (broad-based wealth creation) generated by legitimate value creation.
We must also understand that the Central State now protects and enables parasitic skimming as the primary function of the nation’s financial system. Thus the entire financial system is parasitic on the wealth of the nation.
Financial parasitic incomes should be taxed at 99%. If Mitt Romney reshuffles assets created by others and skims $100 million, 99% of that parasitic wealth should be returned to the nation via taxes. The parasite still gets to keep $1 million, more than enough to live well but not enough to buy the presidency, the Congress and the regulatory machinery of the Central State.
All those who claim the Mitt Romney/investment bankers are “creating wealth” are either terribly confused about value creation and capitalism, or they are lackeys/ apologists of the parasitic Elite.
If we cannot grasp the difference between parasitic wealth and legitimate value/wealth creation, then we are well and truly lost.
Charles Hugh Smith – Of Two Minds