[SOCIAL CREDIT] Debt free money and a simple tax system

[Jessop Sutton]

Chick wrote:-
 * * * * * * *
 First, the power to own and control the creation of the money must be with 
the people and because that would be a little awkward for a society we have 
for that purpose a government that must act for, of and by the people.  And 
we must understand that it must be for, of and by the people and not a person 
or a small group of persons.  Second the money coming into existence must 
come into existence by bubbling or percolating up from the people and not the 
trickle down effect that is presently in existence.  That money must come 
into existence debt free.  Projects that must be undertaken to serve the 
people, such as, building a road or railway must be developed with that same 
source of money.
 * * * * * * *

It doesn't directly address what Chick said, but the attached .html document, 
which is a tax proposal I made a few years ago (I had the idea long before 
that but never put it in writing), touches on the subject. In the light of 
things that have been said on the Social Credit List and the SANE Forum, 
there are some things I would change, but the essential idea remains. What 
would change is that the Central Bank would not charge interest on credit 
extended to Commercial Banks; and the Commercial Banks would charge interest 
at a rate required to recover the tax levy portion plus their 'mark-up' 
percentage. The Commercial Banks repay only the capital sum (which included 
the tax levy) to the Central Bank. The New money would therefore be 
debt-free. The Central Bank is an institution of government and is funded 
from the fiscus.

The Commercial Banks would have to keep separate books to distiguish between 
loans extended for production and development (new money), and loans from own 
profits (old money) extended to secondary industtries, service industries, 
home buyers

I believe the proposal is not incompatible with Social Credit thinking, or 
with certain landtax proposals and tax on 'BADS' made by  some reformists.

If this makes even just the tiniest bit of sense, I would like to hear about 
it. 

Jessop.
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Title: Taxation without pain

Taxation Without Pain Discharge your obligations to everyone; pay tax and levy, reverence and respect, to those to whom they are due. Taxation is a vexing subject in every society. Therefore I do believe there just has to be a less painful way for governments to exact (extract?) it from citizens. I set out below a method which 'came to me in the small hours of the morning'! I do not claim to have any great knowledge of the subject, nor do I have the means or expertise to research it. But it does seem to answer to the test of COMMON SENSE, so I throw it in for discussion. What we need is a discussion group consisting of people who are used to thinking laterally (who do not rely entirely upon what they "think they know") and are prepared to start off with the attitude which says "It is an idea. Let us see if we can develop it". (I have a weariness with people who immediately say, " No, it can't be done. If it could work, THEY would have done it long ago!", or other such negative attitudes, so such people are invited to stay out of the discussion!!). So, if YOU are looking for a less excruciating way by which YOUR government can deprive YOU of your hard-earned wages, join me and let us see if we can show THE WORLD a thing or two! Here is the idea: In all economies, there is a Central Bank where the money-supply is regulated. Commercial Banks borrow from this Central Bank when a shortage occurs in the money-supply on the market. The shortage comes about when demand for credit exceeds the amount of money available on the market. A good Governor of the Central Bank will try to regulate the demand by manipulating Interest Rates to discourage or encourage borrowings. He has an eye on the potential for real growth in the Economy and will make his decision to CURB or SUPPLY in the light of it. If he decides to SUPPLY, more money is pumped into the Economy and the borrowings are supplied. The increase/ decrease in the MONEY borrowed reflects the growth (or contraction) in the ECONOMY. Thus a relationship is established between MONEY SUPPLY and Gross Domestic Product (GDP), and GDP should establish the size of the FISCUS. So then, if a daily TAX RAKE-OFF can be set as a (reasonable!!) percentage of the daily money-market shortage, the needs of the Fiscus can be met at the most primary level in the country's economy. (But,oops! take a deep breath! The percentage will be at least 25% in one Economy I know about, which when added to the normal Central Bank Interest Rate of, say, 15%, makes the cost of money about 40% !! ) Fine, you say, there are no free breakfasts, so who is actually funding the Fiscus? Firstly, the Commercial Banks pay in the form of the higher Interest Rate (normal interest plus levy for Fiscus) to the Central Bank. Then Commerce and Industry pays and costs it into the price of the goods they produce. And then, of course, YOU pay, but sort of painlessly in the price of the goods you consume! (There could be a one-time leap in the cost of consumer goods that will make everyone nearly die of heart failure! BUT, REMEMBER, NO-ONE PAYS TAX ANYMORE, not even Business!! So when producer, wholesaler and retailer take a lower mark-up, maybe it will balance out and we will all have a pleasant surprise!) So, in exchange for this Golden Goose, the government foregoes EVERY OTHER FORM OF TAXATION! Think about that! Immediately, the expensive Tax Gathering Apparatus is eliminated, so the FISCUS (and, therefore, the percentage Rake-Off!) can be smaller (that is, when the Civil Servants have been re-deployed, golden-hand-shaked, or otherwise accommodated. They could actually be deployed to watch over government expenditure!). Also, immediately, every-one gets caught in the Tax Net, even those informal traders who sell right outside the door of YOUR fine, high-rental shop premises - when they buy, they pay! You know what that means? The more people there are that pay, the less each person has to pay, so, again, the CAKE can be smaller! The obvious implications for ME: (EXAMPLE) My housing loan may cost me much more, but does that matter when my employer is not deducting 25% of my pay-packet to hand over to the RECEIVER OF REVENUE? So folks, thats the general idea for starters. Let's work on it. If you can persuade YOUR government to implement it, maybe you will also persuade them to pay me a little something as the originator of the reform, but if not, then maybe they can give me a small acknowledgement at the bottom of the Dollar bills they print, maybe just below the picture of The President! BUT, HEY! --- THE PROOF IS IN THE FIGURES!! See below. Tax Calculations 28-Oct-97 Proposed Tax Levy System to replace all present State Taxation Systems. Comparative effect on person earning per annum: R120,000 Assumptions: Average Tax Rate 35.00% Prime Rate 18.00% Tax Levy Rate 20.00% Benificiation costs 100.00% VAT 14.00% Wholesaler Mark-up 50.00% Reserve Bank Rate 16.00% Retailer Mark-up 100.00% =========================== Scenario 1 Present Tax System Salary Earner: Earns R120,000 Tax 35.00% R42,000 Expendible income remaining: R78,000 ----------------------------------------- Producer Chain: Borrow for Production R10,000 Reserve Bank Rate 16.00% R1,600 Tax Levy 0.00% R0,00 Total owed to Reserve Bank R11,600 Comm Bank adds 2.00% R232 Producer owes R11,832 Beneficiation costs 100.00% R11,832 Factory Price R23,664 Wholesaler Mark-up 50.00% R11,832 Retailer pays R35,496 Retailer mark-u 100.00% R35,496 Retail Price R70,992 Add VAT 14.00% R9,939 Customer Pays R80,931 Income Left over (R2,931) =========================== Scenario 2 Proposed Tax Levy System. Salary Earner: Earns R120,000 Tax 0.00% R0,00 Expendible income remaining: R120,000 ----------------------------------------- Producer Chain: Borrow for Production R10,000 Reserve Bank Rate 16.00% R1,600 Tax Levy 20.00% R2,000 Total owed to Reserve Bank R13,600 Comm Bank adds 2.00% R272 Producer owes R13,872 Beneficiation 100.00% R13,872 Factory Price R27,744 Wholesaler Mark-up 50.00% R13,872 Retailer pays R41,616 Retailer mark-up 100.00% R41,616 Retail Price R83,232 Add VAT 0.00% R0,00 Customer Pays R83,232 Income Left over R36,768 =========================== Conclusion: The proposed Tax Levy System will leave the Consumer Better off by R39,699 The fiscus receives less from this particular Wage Earner/Taxpayer, but the TAX BASE increases because NO ONE escapes the TAX NET. Whenever consumer goods are sold, tax is icluded in the commodity price. Annual Revenue Budget: R200,000,000,000 Daily Revenue requirement: R547,945,205 Average Daily Money SupplyShortage: R1,000,000,000,000 Daily Revenue required as % of Borrowings from Reserve Bank: 0.05% Annualised % 20.00% =========================== Some points: Foreign capital injections for production would have to come through the Reserve Bank? Present Tax incentives to companies would be replaced by direct grants from the fiscus. Non-earners who do not now pay tax may need assistance in the form of social pensions Beneficiation, Wholesaler mark-up and Retailer mark-up can be lower because no Tax provision More money could be spent on control over SPENDING since no money is spent on tax collection Jessop Sutton. E-mail me: Jessop