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Taxes account for almost all money in existence

Does the farmer hold the only real money?

     
1:30 pm on May 27, 2016 (gmt 0)

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NOTE: This is not about governments, politics or anything of that nature, strictly the CONCEPT of taxes so please don't post any specifics that drift off into politics or a tirade about any country, laws, government, etc. as it will be deleted. This is strictly a more or less philosophical discussion about how taxes works and the concept of money in general.

The story about Google being taxed by the French brought this back to mind.

[webmasterworld.com...]

This is a bit of a rant that takes some twists and turns, but overall a load of rubbish, which is what money and taxes are, enjoy the read/ride...

I don't believe there's actually any "real" money in circulation because it's a recursive pyramid scheme where everything you buy is taxed, everything you earn is taxed, all the profits are taxed, and all the companies that buy things from other companies and their workers so on and so forth until you get down to the lowly farmer, who is (pun intended) dirt poor. Why that's amusing is the farmer is actually dirt rich, the one thing the farmer has plenty of is dirt but I digress.

Now follow along as this is complicated and if you aren't familiar with recursive things this might blow your mind right out of your brain as it's a bit complicated but I'm going to try to make it as simplified as possible for your amusement.

Taxes in general is such a rip off that we almost make no money, almost every cent goes to taxes

I may miss a tax or two here, but I'm not trying to be comprehensive to don't go off topic about this tax and the other and the point of the discussion is that the recursion of how commerce works means money is almost all going to the gubment!

I'll explain...

1. When we get paid, we pay income taxes
2. When we buy things, we pay sales taxes
3. The corporations we buy products from from pay corporate taxes
4. The money those corporations earned, goes to investors that pay our salaries (income tax again)
5. The money those corporations have left over, post tax, goes to pay investors that then pay long or short term "gains" tax of some sort
6. Here's where it gets loopy, the corporations we buy from also buy from other corporations, pay rent, utilities, etc. which all goes back to #3 in a recursive loops as those corporations and their employees do the same and when you follow this to the end, and I might be mistaken, that only a farmer is left holding the only real money in existence.

Plus we all pay property taxes, luxury taxes (a car is a luxury? well some are... but still), ad nauseum, etc.

It's a vicious circle of taxes, I think the governments actually has all the money in the end except that small bit people have squirreled away in a coffee can or mattress somewhere.

Let's follow a silly simple sample with sample numbers of how a top earning person buys something with 50% of his earnings. Assuming things bought go to a simply business where the profits go 100% to the person that sold it. We won't worry about expenses and other crap here as the simple sample is just to show how much of your earnings ends up in the hands of the government without too much trouble.

For this sample, assume 30% income tax, 10% sales tax.

* YOU get paid $!00, income TAX $30
* YOU buy something from SOMEONE for $50, sales TAX $5
* SOMEONE earns that $50, income TAX $15
* SOMEONE buys something from NEXT PERSON for $25, sales TAX $2.50
* NEXT PERSON earns $25, income tax $7.50
* NEXT PERSON buys something for $12.50, sales TAX $1.25
* Wash, rinse and repeat until it's all gone.

In this short silly simple sample example, your $100 earned quickly ends up with the government taking a whopping $61.25 in very short time meaning your earnings really got taxed at 61%. Had you spent all your money, like many living from paycheck to paycheck do, not all poor surprisingly as some live way beyond their means but that's a different rant for a different day, I'm guessing as it recursively moves through the system almost every penny ultimately ends up in the hands of the tax collector. Not that you're directly being taxed that high, but the way the system works the only guy left holding a nickle is at the bottom of this pyramid, possibly the farmer, more likely the tax collector. LOL

Next mind bending thought to add to this is that the taxes you pay also employee people that pay taxes which adds to this recursion in that there are people employed off the funny money the government collects, some of this exchanged, borrowed and loaned with other governments, I don't think anyone honestly knows where it starts and stops, what it's worth, if anything at all.

That was a segue to rant #2 ...

If you really think about it, money has no value anyway except the value society agrees to assign it as a method for exchanging labor for goods and services. Think about this, if an alien landed and you offered it $1B to take it to their planet, it would laugh in your face as $1B of Earth paper money would be meaningless to it. However, if there was anything on Earth that the Alien wanted which could be obtained, short of just taking what they want by force, then they would exchange your transport to another planet in order to be able to get those Earth commodities, such as Earth women. Hell, the best way to start intergalactic trade would be tourism to get us to hand over the money, they take us on a little vacation to another planet and take all our stuff with them in the cargo hold! LOL

I should write scifi but it would be boring because the concepts of what I think would happen in reality are far too boring for a Hollywood movie.

More importantly, if civilization collapses all that tax money stuff in your pockets isn't worth squat, nor is the gold, diamonds, or those expensive cars. Your house has value, it's shelter, and those without shelter will want it, along with your food and your women. Don't get me wrong, I believe in equality in a civilized world but when it hits the fan, the weak (not all are weak) tend to be up for grabs and no sense yelling at me for this as history shows it repeatedly over the millenniums. People make such a fuss over possessing firearms but when the systems collapses, firearms are the great equalizer of the weak. However, that bottle of water, salt, canned goods, those will be your currency and the fools that don't stock up today or even maintain a decent sized pantry will be in serious trouble. Just look at what happened to New Orleans during Katrine, not that long ago and most got caught off guard and simply looted stores.

So when it hits the fan, the have nots will just take whatever they want from the haves, such as the local grocer.

Hope the door to your bunker will withstand dynamite and large machines trying to get it open. :)

Anyway, now you know money isn't real.

You also know that almost all of this fake money goes to taxes as long as that money maintains any value.

This is what drives me a little bugs knowing that everything I've worked my entire life to own is an illusion that can easily vaporize if the state or our existence suddenly changes and I'd be unable to afford the medication that keeps me alive, which wouldn't matter because nobody would make it anymore and after the short supply is exhausted, I could expire it as little as 30 days, as long as a year.

Isn't that a cheery thought?

Living in my head is brutal, want to come join me? :)

Enjoy.
8:30 pm on May 27, 2016 (gmt 0)

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Plus we all pay property taxes
This is why I maintain that you never truly own your home even if the mortgage is paid off. Miss a tax payment, and the government will seize it. In essence, you are doing nothing more than renting your property.

Hope this is not considered off topic.
10:23 pm on May 27, 2016 (gmt 0)

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You can't take taxes out of the concept of economics. Read Adam Smith's Wealth of Nations [gutenberg.org...] . All taxes are burdens on productivity that a population has agreed to bear for the purpose of benefiting society and government at all levels. You can't remove taxation from any discussion of economics on the basis of "politics" as taxes ARE the result of politics (nation, state, local, city, etc. where humans have agreed these sums are REMOVED from commerce for other purposes ... some of which is returned to society for infrastructure and government salaries).
5:31 am on May 28, 2016 (gmt 0)

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where humans have agreed these sums are REMOVED from commerce for other purposes
I am sure there are some who would argue with this point. Taxes are nearly as hold as civilization itself and I am sure the first people taxed where not willing. And as I pointed out about property taxes, you have no choice: you either pay or they take it. However, when taxes have reached the level they have today, I believe there is a net loss on society and suspect that is the point Bill is making. Taxes are essential, when done responsibly. But too often they are leveled not as a means to benefit society as a whole, but to be self serving to a select few or as the result of poor decisions on the part of politicians resulting in fiscal irresponsibility.
7:26 am on May 28, 2016 (gmt 0)

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@incrediBILL I think your argument if confalting the flow of money (i.e. money in and out in income and expenditure) with the store of money (the total amount of money that exists).

The value of transaction carried out over a year, is far greater than the amountof money in an economy. You are picturing the flow of money as a linear flow like a river that has successive tax takes out of it until it slows to a trickle. It is actually a circular flow. This looks like an OK explanation: [khanacademy.org...]

The same money passes through lots of people hands in the course of an year. This is easy to see if you imagine a purely cash based economy, where any individual note or coin will change hand many times an year.

As for your other point, yes fiat money would be worth nothing if civilisation collapses. But that level of collapse will probably mean no one would be making medicines, or anything like enough food to go around, and no one would be enforcing property laws anyway.
7:32 am on May 28, 2016 (gmt 0)

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@Marshall, the problem with that is that you cannot reduce taxes without cutting either expenditure or increasing government debt. If you look at the big ticket items of expenditure most people back any one of them. In other words you may find a lot of people who want to cut government expenditure, but you will find one group of them wants to cut defence, another education, another welfare, another health....
12:45 pm on May 28, 2016 (gmt 0)

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In other words you may find a lot of people who want to cut government expenditure, but you will find one group of them wants to cut defence, another education, another welfare, another health....
I am referring to the self indulgent "pork" spending that so many politicians engage in to gain favor with their constituents, e.g. "bridge to nowhere" if you remember that.
1:40 pm on May 28, 2016 (gmt 0)

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I agree to an extent, but in most cases wastage is hidden amidst a lot of things people want. There is not easy cure for it - short of getting more honest politicians or more aware voters.
5:38 pm on May 28, 2016 (gmt 0)

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More honest politicians would help plus not allowing a government to run a deficit unless it is a time of crisis (war, natural disaster, etc.). Allowing governments to spend money that they do not have allows them to pass responsibility for the expenditure onto the next government.

If a government wasn't allowed to run a deficit it would force them to be more efficient with our money and keep expenses from ballooning and cost overruns with large projects from happening, and keep benefits and salaries for employees in check (from a Canadian perspective). It would also force them not to make outrageous promises to the voting public that they know they cannot afford to pay for.
5:35 am on May 30, 2016 (gmt 0)

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The problem with not running a deficit is that governments need to be fiscally responsible over the economic cycle - i.e. running a deficit in bad years and a surplus in good years.

Another problem is enforcing that. Governments can easily run up LOTS of off-balance sheet debt and get away with it. For one thing the accounting standards required in national accounts are nothing like the standards legally required of everyone else's. That is yet another problem, of course.
 

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