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Eco-Nomics ››
Living Green, Affordably ››
Life of a Dollar ››
Tax Reduction
Tax Reduction
Taxes have been levied for at least as far back as the 17th century "to help pay for healthcare,
social security, unemployment, education, welfare and other public programs which are beneficial,
useful and often necessary for the common good of the general population". Federal, state, county,
city and local governments all impose taxes on the citizens, although aside from governmental
business expenses (such as government employee wages and retirement, national defense and
military expenses, and interest owed on the national debt), virtually every public program or
service provided by the federal government is also (or could be) offered by states, counties, cities
and non-profit organizations.
Empty Words, Empty Accounts
"Lucky for rulers that men do not think." ~ Adolf Hitler
Although the government tells us the amount and purpose for which our tax dollars are used,
it does so at its own discretion. Federal tax revenues are deposited into, and government expenses
are paid out of an account the US Treasury keeps with the Federal Reserve. Federal tax revenue that
is earmarked for specific purposes (such as public programs and services) are then transferred and
held in federal trust fund accounts, which are used quite differently than
trusts used by the public. In the private sector,
a person uses their own assets to fund and create a trust for specific purposes, and they choose
a trustee to manage trust funds according to stipulations of the trust, for the benefit of another
or others. The government on the other hand, uses income and assets earned by the public to fund and
create a trust, trust corpus may be used for specified purposes, and trust funds are managed by themselves,
for others and themselves. Trustees for federal trust fund accounts do not have fiduciary responsibilities to
trust beneficiaries (in this case the public), and they can change trust purposes by changing laws, or by transferring
trust funds from one account to another via intra-governmental transfers.
Intra-governmental transfers are one way in which the government loans money to itself (from one department
to another), then charges itself interest, all of which is paid by the public. The departments receiving federal
trust funds then report such transfers as income, thereby making it appear as though there is a surplus in
certain federal trust fund accounts, such as that for social security. These accounts cannot legally have a surplus
however, because income or assets not spent each year for specified purposes of federal trust funds must be "invested"
in government securities issued by the US Treasury, which are reported as assets, but are actually recognized as
part of the national debt. In other words, federal trust funds represent government debt, not money that actually
exists. For example, you may think that the money you pay in taxes for social security is actually set aside for you
to use later, but really this money is being spent right now on current recipients. What remains each
year (if anything) is actually either "invested" in government securities (i.e., more debt), or transferred to another
department for other uses. When it comes time for you to receive social security, the money won't be coming from some
account set aside for you, but rather from current taxpayers after you retire. In short, it doesn't matter what the
government tells us they are doing with our tax dollars because in the end, it will be spent whenever and however
they wish, no matter the said purposes for federal tax revenues.
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