Generating revenue for funding government functions is without question vital to a cohesive and functional national structure and though I frequently make reference to the dysfunctional U.S. Tax Code we must differentiate between methods by which the government generate revenue and those methods which the government employ to confiscate it; it is to the later the greatest dysfunction occurs and to which this E-Op refers (we will discuss the former point in our upcomming TIMF E-Op No: 4).
The Corporate structure was originally created to separate/remove the Individual from specific attachment to an entities ownership. Creating an inanimate structure, by which the implicit value of their enterprise could be partitioned/collateralized, allowed a near infinite form of fractional ownership (shares) which in turn could be exchange for capital the accumulation of which is used for further business development and/or expansion; simple enough. Over the last 60+ years this structure has morphed into a form that has legal standing and positioning on par with an Individual (and in some cases far greater, e.g., legal protections). Moreover, this form has accumulated a level of political influence beyond that of an Individual; it has self-partitioned its form by integrating its governing body (Board of Directors) between and among other corporations both domestic and abroad; it has managed to create various mechanisms by which it can conceal income, horde massive cash reserves, off-shore revenues and avoid taxation.
The greatest and most conspicuous consequence of the unchecked growth of corporate influence can be easily observed by way of the following reference:
In 1947 Individuals accounted for approximately 26% of the Federal Government Tax Revenues; approximately 63% by Corporations. By 2010 that same ratio had reversed significantly: 83% from Individuals, 17% from Corporations.
Not only has government and politicians reinterpreted and redefined the status of corporations the public has been smitten with its own rather peculiar from of ignorance as well; “…tax the rich!” not seeming to be aware of the true abuse. Further still is a recent novelty that appears in the trite recitation, “U.S. Corporate Tax Rates are the highest in the world” which of course is patently untrue; the U.S. Effective Corporate Tax Rate is, in fact, the world’s lowest!
The Corporate Animus has become global in nature and this is due, primarily, to the governments orchestrated collusion and affinity with the global institutionalization of banking/finance and industry the consequent effect of which has rendered the Corporate Structure sacred and outside of the U.S. Governments’ ability to control (specific, in this instance, as to taxation which is due to various Trade Agreements which require the U.S. to “conform” its Tax Code to WTO mandates) leaving the Individual as the only crop from which it is able to harvest revenues without challenge. The problem with this approach is that government is consuming tax revenues at an exponential rate far beyond the Individual’s ability to regenerate their income (note: the U.S. Household liquidity rate, as of November 2011, is approaching that of 1934). Further still, regardless of what many may think of the 16thAmendment, taxing the revenues generated by an Individual exchanging their efforts, for value received, has always occurred by way of excising freedom and by constraining the exhibition of ones liberty and there is only one word for this; tyranny.
To bring the point of the preceding paragraphs into greater focus let me offer a few specific points around which you might center your thoughts:
- The purpose of Enterprise is to provide a product or service in response to a Native Demand. From this process occurring, i.e., meeting a Native Demand, the enterprise is in want of creating a profit from which, in part, it distributes to its owners/investors and reinvests into a “pro-generative” process whereby the entire cycle self-perpetuates.
- The U.S. Government, and by extension the U.S. Tax Code, uses a tax methodology that is decidedly destructive and one which is easily defeated by Corporations. It seeks to generate tax revenues after-the-fact instead of a more efficient and effective method, e.g., as part of the process such as in the case of a “franchise fee” or by moving the assessment of a tax closer to the gross revenue source and before manipulative accounting methods.
- Because of the Federal Governments subordination of its role to Corporate Interests, by way of the WTO Trade Agreements, the entire Economic Cycle that fueled this Nation’s prosperity has been transformed into a global economic regime that has no domestic alliance or allegiance. Equally important and more financially devastating is that these Enterprises have no economic burden for compensating the Domestic Environment for the privilege of having access to its markets and/or paying for the costs associated with maintaining the Domestic Environment such that said privilege might exist ( I am amazed that no Senator, Congressmen, President, Governor or State Representative “gets” this point). This one thought exposes one of the many reasons in support of the economic fundamental that states: all economic actions originate at the point of demand; otherwise the market for supply would not exist.
- It is not the role of Government to provide an economic infrastructure; it is certainly within its enumerated powers to both define and “make regular” (the original concept behind the Commerce Clause, e.g., could you imagine the chaos of 50 States with 50 different currencies?) such that there is “normalcy” in the economic infrastructure but certainly NOT to pay for it by extorting taxes revenues from Individuals; the economic cycle occurring should fund the infrastructure as a cost associated with the privilege of doing business.
- It is not the role of Government to fund, guarantee a profit or indemnify against risk of loss an Enterprise for which the Public (Individual) has no direct ownership; these attributes or attainments are the sole responsibility of the Enterprise. There is no economic benefit to the Government or to the Public in perpetuating economic failure particularly if the economic failure is due to an implicit defect. Pouring water on a drowning man will not regenerate his lungs into a pair of gills.
- Economic Opportunity is both the price and the means by which economic prosperity occurs; the potential of each exist; they are however not guaranteed.
- I proffer that this Nation’s economic failure rests, ultimately, in two structural failures: (1.) The National sell-out to Corporate Governance. And, (2.) Government’s failure to safeguard economic sovereignty and its specific lack of understanding Economic Fundamentals.
It should be clear to most that the influence of the Corporate Animus has resulted in the role of government having evolved into nothing more than a tool of Enterprise whereby the legislative process has been used to subsidize a global economic agenda and as a means for funding both economic inefficiencies and the social costs attributed to the redefining of free-market economics.
I readily confess this is an incomplete essay on the philosophically astute construct of economic fundamentals in crisis; it requires far more time than this feature allows; I trust however that each of these point will tease your thoughts and trigger a process that will strip the callous and destructive processes eating away at the very underpinning of a vibrant and pro-generative economic environment and offer alternative means for challenging the status quo.
The Opportunity of Animus:
Restructuring the U.S. Economy and restoring faith in our system of government will require integrating functional routines specifically orientated to the following:
- The role of government and its domain of influence relating to the Nation’s economic cycle, structure and processes.
- The standing of Commerce and its various Enterprises as to their interaction with and influence on the Representative/Legislative Process. And,
- To restore a pretext of value specifically attributed to the economic domain of these United States; there is both a privilege and a price for entry and access and this revenue generating feature can be accomplished in a manner that can only be described as breathtaking simplicity:
- Create two distinct Enterprise Classifications: Service and Industrial.
- Modify accounting and reporting standards to create a distinct reportable income: Net Service Income and Net Industrial Income. These incomes would be representative of income (net of direct income-productive expenses) attributed to producing the specific class or type of income.
- Corporate Tax rates will be tiered and tethered to Domestic vs. Foreign generated income. The tax rate, for Industrial, would be based on a minimum rate of 25% (for 100% Domestic Income), 35% for (65-99% Domestic Income) and 45% for the remaining. All Service entities would be subject to a minimum rate of 35%.
These rates would apply as well to Sole Proprietorships and Partnerships as well however we propose a “floor distributed income exemption” equal to the Individual Household Income Exemption ($250-$350k). It is important to be aware that the Foundation proposes an entirely new Tax Structure for Individuals as well; this topic has been the subject of previous articles.
“Americans are not a perfect people, but we are called to a perfect mission.”
– Andrew Jackson –
The time has come for the American Public to dedicate their efforts toward formulating a national agenda aimed directly at affirming the promise of Citizen-directed Representative Government. It is to this outcome, the perfecting of the Sovereign Individuals Unalienable Right to those attributions we hold to be true, we hope to enlist your influence.
Curtis Greco, Founder
TIMF E-Op is a bi-weekly series the purpose of which is to hi-lite what we believe to be strategic components integral to a national economic reformation. We hope that you will find them of interest and give one great cause for expressing your influence by passing them along.