Wednesday, May 13, 2009

Income Tax Slavery

In America we like to think of ourselves as a nation of free persons. We have been lead to believe that Slavery ended with the Civil War. We have been mislead. Slavery still exists in America. We as Americans own nothing, not even ourselves.

Every year on the fifteenth day of April, we file our Federal Income Taxes. A statement declaring how much money we owe to the federal government based on how much money we earned that year. We think of income tax as a tax levied on the individual, it is not. Income tax is nothing more then the Federal Government exercising it’s ownership of its citizens.

Income tax is, in reality, rent paid by our employers to the federal government for the usage of its citizens. If you are a regular W2 employee, you never get to touch any of the money that the government takes in the form of income tax. It is simply “deducted” from your paycheck and sent off to Washington, with not one red cent passing through your hands.

If you are self-employed, and file a 1099, you are renting your own services from the federal government. The money passes through your hands, but the Federal Government even goes as far to tell you that you are your own business. In that regard it is still the employer not the employee footing the bill for Federal Income Tax.

The undeniable proof that the government regards you, as their property is what happens when rent is not paid for your services. If income tax is not paid then the government has the right to come and repossess you and take you to one of their facilities (prison).

Tuesday, May 5, 2009

Barack wants you to pay more for what you buy

For once I agree with something that Obama wants to do. In his announcement yesterday our fearless leader said that he wants to end the practice of American corporations sending money and jobs overseas to foreign tax havens. The problem is how he wants to do it.

Barack wants to end tax havens by making everyone pay our astronomically high corporate tax rate. As it stands right now the USA has the second highest combined corporate tax rate in the developed world. Only Japan has higher. According to KPMG's 2007 Global Tax Rate Study, US corporations pay at a rate of 40%. An absurd number considering the that same study cited an average global rate of 26.8%.

This measure of effectively increasing the tax rate on any company who does any global business would do nothing but raise the price of goods in America. The reason for this is that corporations don't pay the taxes imposed on their profits, the consumer pays the taxes imposed on corporate profit. Lets say XYZ corp makes soup, and it costs XYZ corp fifty cents to make a can of soup. XYZ corp then sell the soup for one dollar, giving XYZ corp a profit of fifty cents per can. Now lets suppose that the government wants to impose a 10% tax on soup companies profits. XYZ corp isn't going to take that hit to their bottom line. XYZ corp will simply raise the price that it charges for a can of soup, in order to keep the same margins. So instead of XYZ corp charging $1.00 for a can of soup, XYZ corp would charge $1.05* so as to keep it's fifty cent per can profit intact. This would decrease the number of cans of soup bought, which would cause XYZ corp to be forced to decrease the cost of making a can of soup by either paying people less or laying off a few workers. Either way a bad situation for anyone working for XYZ corp.

A far more reasonable and pro growth measure would be to lower our corporate tax rates, and make the USA a tax haven. Lower tax rates would compel more companies to move operations to the USA, which would drive up revenues, lower prices, create jobs, make certain that the USA remain the economic power that is has been for the past century.

* to keep profit at exactly $.50 XYZ corp would have to sell their product for $1.0454545454545etc but fractions of cents aren't that easy to carry around so they would round up.