HOW INCOME TAXES CREATE INFLATION, UN-REPAYABLE DEBT FOR THE POOR,  AND PROFIT FOR THE RICH

1   BY INCREASING PRICES- 

PAYE is added on to the costs of production at every level, causing prices to increase across the board.  This is a no-brainer.  Accumulating PAYE taxes are also subject to compounding interest at the prevailing rates, further increasing the costs of all things.

Using the ‘reverse test’, if there were no income taxes on wages, the costs of production would be much lower. 

‘Supply’ is an important factor in the Demand/Supply equation.  If there were no taxes on labour there would be no tax inflation, only deflation as prices dropped.  Exports would rise due to a new trade competitiveness, the economy would grow as industry invested to capture new opportunities, new jobs would be created adding spark to the economy, and everyone would be better off.

2   BY INCREASING INTEREST RATES-

Government creates an artificial shortage of money in the private sector by extorting income taxes, creating high demand for new borrowing.  This forces interest rates up, which drives inflation and inflationary expectations.  Again, this is simple supply/demand logic.

3   BY CHANGING THE SUPPLY/DEMAND EQUATION-

Government puts the tax take money back into the economy by supplying consumption-related goods and services.  Those govt. service providers then consume the same value of goods and services while providing their consumptive services; thereby reducing the supply of goods and services in the private economy without reducing the money supply.  This is inflationary, as is all government expenditure, which must be offset or funded by deflationary growth in the whole economy.

4   BY FORCING MORE PRIVATE BORROWING AT INTEREST-

PAYE and income taxes take most private labour profit, forcing more private borrowing from the rich and the banks to improve living standards.  The accruing interest on private borrowings force the money-debt supply to increase with no corresponding increase in the growth of goods and services.  This is inflationary in direct proportional relationship to underlying interest rates.

5   BY CREATING INFLATIONARY EXPECTATIONS-

Income taxes are part of a general government tax mix intended to keep inflation alive and well at or above 2%; and tax-free capital gains are available for rich investors and home owners.  Combine these two factors with present unrestricted home purchase by wealthy immigrants and foreign investors, and we have a perfect inflationary storm causing house prices to rise far faster than underlying inflation or wage increases.  This inflationary mix assures that real inflation continues well above increases in wages, bringing more profit to the rich, and more debt and labour slavery to the workers and the poor.  High rates of inflation are always beneficial to the rich due to the related high interest rates, and oppressive for the poor due to the difficulty in servicing high interest debt.

6   BY BRIDLING PRIVATE SECTOR CREATIVITY-

Income taxes punish private sector creativity and productivity; first with progressive income taxes that discouraging enterprise and economic expansion, and second by distorting investment decisions away from real wealth creation and towards tax minimization.  This is inflationary.

7   BY TAKING DECISION-MAKING AWAY FROM PEOPLE-

The income taxes taken from the people are spent by central govt. far from the source and tend to be wasteful, inefficient, and with little or no accountability to the individual tax payer.  This is unhelpful to the people on the ground, provides little value for money, creates unnecessary administration costs, and produces services of dubious or counter-productive effect; such as WINZ policy that punishes supplementary income, personal relationships, and shared accommodation.

8   CREATING PARASITIC EXPENSE IN TAX ACCOUNTING-

An army of accountants are required to administer and police the income tax regime by govt..  An even bigger army of accountants and lawyers are devoted to private depreciation accounting, tax avoidance advice, and tax minimization exercises.  This is highly inflationary, consuming huge amounts of time, energy, and wealth, creating no additional wealth, but requiring considerable extra expense and borrowing by the private sector.

NEED I SAY MORE? 

Inflation is not the real enemy, but neither is it- as government thinks- a friend.  The real enemy is the policy that creates inflation- income taxation.  It is income taxes that force the private borrowings that bring horrific accumulating debt and un-repayable accumulating interest; further empowering the rich, and enslaving the masses.

Any government that imposes income taxes upon its people becomes, by its actions, enemy of the people.

What's bad about inflation?

Inflation is what makes the world go around- for the rich (capital).  Inflation drives interest rates up.  Who benefits from interest?  The rich, of course; the ‘capitalists’.  The poor suffer from a very expensive cost of survival, and the workers suffer from the lack of capital by paying interest or high rents to the rich.

The poor spend their entire labour output-whatever it might be- simply for the right to exist.

The workers surrender 40+ hours a week slaving for an employer, barely covering their costs of living; and having to pay high interest on debt required to purchase their own home.  And this usually requires a lifetime of wage servitude.

Those that are earning far above average incomes, and have ready capital to invest, can easily afford inflationary effects.  In fact, they benefit from inflation by way of the high interest rates on their investments caused by inflation.

Everything about inflation favours the rich and dis-empowers workers and beneficiaries.  The rich avoid income taxes, and those dependent upon employment or benefits cannot escape them.  The rich retain 90% of profit after taxes, and most workers and beneficiaries are left with no profit at all.

As a result, 99% of all economic opportunity falls to the rich who enjoy low taxed passive investments, tax-free capital gains, and business success by skimming profit off of employees’ labour.

It’s easy to understand why the most successful parts of society want to continue the present economic/political agenda, how the monied part of society rejects threatening economic change, why most political donations fall to the two major parties, and why neither major party is able to break free from the rich supporters that actually place them in power, and, the economic paradigms followed by those parties.

The unwritten politically correct code mandates that govt must be funded by taxes, that income taxes are the fairest way to redistribute wealth from the rich to the poor, and that the banks do a service to society in the creation of our money supply and by shoring up govt and private coffers when times are tough.

It is the inflation caused by this tax policy that ensures it will seldom be successfully challenged by real monetary reform, or, tax reform.

Inflation ensures that there will be continuing pressure to raise income taxes in order to fund govt shortfalls.  Inflation ensures there will be continuing pressure to raise taxes on the rich in order to ‘support’ the poor.  Inflation ensures there will be continuing pressure to raise taxes in order to fund govt to preserve the environment.  Inflation, and the high interest rates it causes, ensures that private debt will continue to increase in an almost direct relationship with income taxes.

And all the while it is income taxes that have created all the social problems, all the fiscal problems, and all the environmental problems in the first place.

The answer, of course, is monetary reform by which our govt takes back the right to create all new NZ money with no interest attached; and with ‘new’ money govt can fund all existing services, new public capital ventures, and a universal benefit bridging the divide between rich and poor.

The difficulty we face is in convincing the voting public that this new ‘funny money’ being added to an already inflationary system will not create rampant hyper-inflation.  This indeed is a powerful argument against monetary reform; but only in the present context of underlying inflation.  

The only foreseeable way to eliminate inflation is to eliminate its causes, namely income taxes, fuel taxes, and road user fees.  These taxes impact on the prices of all goods and services.  The resulting growth in the economy will cause 'good' deflation, which is easily and beneficially countered by the creation and issue of new interest-free money.