Tax Reform Economic Science 101.

Posted April 2, 2014

by Jerry Alatalo

“Wherever there is great property there is great inequality. For every rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”

– Adam Smith (1723-1790) The Wealth of Nations (1776)

cumberland 1-1While researching further into the International Union for Land Value Taxation, their YouTube channel (theIU.org) features a documentary on the history of political economy which they’ve titled “Treason”. It’s a three-part documentary and the first – “Treason 1: Casino Capitalism” – has been posted here. For men and women who have great interest in how the world operates from an economic standpoint, the producers of the film have done an excellent job of conveying information to match that curiosity.

For Americans interested in the “big picture” historical facts about the birth of predatory business that has operated to this day, the film rightly begins with the first land thefts from the Native Americans. Since those times the ways in which the original inhabitants of America became victims has provided the template for similar actions in other nations for centuries that followed. Millions of human beings were killed or felt the negative consequences of greed since then in later quests for land, natural resources, and wealth.

During the years leading up to the worldwide financial crisis of 2007-8, the subprime mortgage economic atom bomb placed African-Americans, Hispanics, and poor white people in a similar place as the red man of centuries past. Subprime mortgages signed by them could be compared to the hundreds of treaties signed by the red man with the U.S. government that were then broken by the government. The people who became trapped in mortgages that began with small monthly payments – because the loans were variable-interest – faced very high monthly payments when the high interest kicked in and were innocently part of a massive fraud – perhaps the great financial fraud in history.

Perhaps men and women can gain a better understanding of the subprime mortgage fraud through imagining they were the bankers who carried out the frauds. Because the fraud is already planned from beginning to end. You loan to any person who breathes no matter their ability to repay the loan, because the subprimes already have the planned destination of complex financial securities bundled with all other subprimes. You will falsely enter the customers’ financial information, close the deals, find a friendly company to rate the securities “AAA”, sell those securities to fooled investors, then pocket the money that you first created out of thin air.

Charles Ferguson won an Academy Award for “Inside Job”, his documentary which gave viewers the truth about the massive frauds. He walked up before billions of television viewers in 2011 to accept the award, and made sure to let the world know that no bank executive facing prosecution three years after the crisis “is wrong”.

Western governments refuse to take the steps which will result in sharing of the Earth’s resources equally. Basing the tax system on income earned by landlords earning “in their sleep” would have a number of positive benefits compared to the present tax setup. Governments would no longer have to tax wages, they wouldn’t have to apply sales tax, and wouldn’t have to collect business taxes. The massive, multi-trillion dollar per year industry of tax evasion enabled by the world’s largest accounting, legal, and banking firms would evaporate.

Raising more revenue from land value taxes – and less from work, sales, production, etc. – would place more money in the hands of citizens, resulting in a much more prosperous economy. The concerns of John Perkins, author of “Confessions of an Economic Hitman”, regarding income inequality increased in nations falling into debt traps set by the World Bank, IMF, and associated institutions, would be addressed. The concerns of Nobel Prize winning economist Joseph Stiglitz, with regard to the “unlevel playing field” where Wall Street has five lobbyists for every member of Congress, would be addressed.

Fred Harrison, the man who hosts Part 1 of “Treason”, says solving the problems of the 21st century begins with reforms to the way governments raise revenue. He shares a quote from Adam Smith – considered the “father of political economy” – where Smith said: “to achieve efficiency and fairness, a modern economy needed to tax land.” Instead, the parliament invented income tax.

Mr. Harrison then presents a quote from Henry George (1839-1897): “poverty and unemployment were inevitable when people were deprived of their fair share of the rent of land”. The book “Poverty and Progress” by Henry George sold more copies than any other book of the time but the Bible.

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(Thank you to theIU.org at YouTube)

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