I don't think so. 45% of Americans pay zero income tax, even accounting for withholding.
https://mises.org/blog/myth-half-americans-dont-pay-federal-...
Income tax -> Federal income tax (discretionary spending)
Payroll tax -> Social security and Medicare (non-discretionary spending)
Everyone pays into entitlements via payroll tax. Not everyone pays into discretionary spending (everything except social security and medicare).
> The government bond traded for SS and Medicare funds is not sold on the open market.
https://www.stlouisfed.org/publications/regional-economist/j...
"Government debt of the United States is typically issued in the form of U.S. Treasury securities. These securities—simply called Treasuries—are widely regarded to be the safest investments because they lack significant default risk. Therefore, it is no surprise that investors turn to U.S. Treasuries during times of increased uncertainty as a safe haven for their investments. This happened once again during the recent financial crisis. In fact, the increase in the demand for Treasuries was sufficiently large so that prices actually rose with an increase in the supply of government securities."
http://www.cbpp.org/research/social-security/policy-basics-u...
"The Social Security trust funds are invested entirely in U.S. Treasury securities. Like the Treasury bills, notes, and bonds purchased by private investors around the world, the Treasury securities that the trust funds hold are backed by the full faith and credit of the U.S. government. The U.S. government has never defaulted on its obligations, and investors consider U.S. government securities to be one of the world’s safest investments."
https://www.ssa.gov/oact/progdata/fundFAQ.html
"By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.
In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash."
Special issues are literally more valuable than gold, backed by the taxing authority of the US government.
Sure, it's great that in theory your payroll tax is converted into a bond, and then when you retire they sell it and pay you from that, but ... that's not what's happening in the big picture, because if there's surplus then it just lowers the yearly deficit in the federal budget. (As it happened for years, but the fund will be depleted around 2034.)
You start looking at it hard and the pyramid shape begins to appear.
I'm young enough that I plan my retirement assuming 0 money from Social Security despite the vast amounts I pay in. I see it as wealth redistribution from the young to the old who are already better off.
Just curious where you get your belief from since the data shows otherwise.
http://www.cbpp.org/research/social-security/social-security...
"Social Security Keeps 22 Million Americans Out of Poverty: A State-By-State Analysis"
"Social Security Lifts 15 Million Elderly Americans Out of Poverty"
"Social Security Lifts More Than 1 Million Children Out of Poverty"
62 million receiving social security.
Using your numbers, that means 40 million aren't in poverty receiving it, while there are 7 million non-elderly receiving it who are kept out of poverty.
My claim, if I make it a bit more wordy is that the elderly receiving social security have more wealth on average than those paying into it. To be a bit more exact, I was referencing those young enough to not be receiving it anytime soon. I didn't exactly give an age range, but we can go to the following site and see some interesting findings.
https://dqydj.com/net-worth-by-age-calculator-for-the-united...
For example, $10k for a 25-29 year old was about the 50 percentile. For someone 65+, it is the 12 percentile. You can try a number of data points and see that the trend is that the older have more wealth.
>Because most of them are just kept out of poverty by social security.
Most? Even with the worst numbers, it is only around 2/5 of the elderly who receive it.
Social security is a large regressive tax. It is generally paid by younger people who have less wealth and goes to older people who have more wealth.
And that should have NEVER been legal. That money should have stayed in the funds. Any growth from those funds should still be in the funds. If they had not effectively stolen the money for other uses, those programs would not be in the mess they are in now.
Consider what would happen if the IRS was efficient enough (through these automated tax accounting systems) to not get an interest free loan from working America for an entire year (ie dynamically modifying every pay period how much was collected in federal tax withholding based on estimated total year tax liability); the federal government would have to be more judicious about its cash flow.
You'd think that's something Republicans and small government advocates could get behind. Go figure. "Fiscal conservatives" in name only.
EDIT: For the pedantic: s/IRS/US Treasury/ in my comment.
The federal government's "cash flow" is made up entirely of creating dollars out of nothing by spending and deleting dollars out of existence by taxing. The federal government doesn't "have" dollars.
http://www.moslereconomics.com/wp-content/powerpoints/7DIF.p...
Does it mean that taxation in another country is different than taxation in US? Especially in a country where local currency has a fixed exchange rate to US dollar? They presumably can't create money that easily.
When the U.S. left the gold standard it was giant fuck you to all the countries who held dollars and could no longer exchange them for gold. The U.S. maintains and exercises military power globally in part to protect the dominance of the dollar.
Note also that state/local taxes in the U.S. are completely different from federal because they can't just make dollars and can only spend dollars received through taxes (which are not deleted in that case) or received from federal spending (or in some cases through the state itself doing business in the market).
Taxation works pretty much the same way everywhere. The central banks are separate entities in any modern state/economy/monetary zone. The federal and state/local taxes are the same. The federal government takes on debts like states. You might remember the brouhaha about the debt ceiling and the big sequester in the past few years.
The Bretton Woods system was doomed to fail anyhow, it was a nice try to help the non-US post-war economies, but obviously as soon as some problem arose in the US (looming rise in unemployment), the system fell apart.
The petrodollar thing is real, but it's not important. The US import-export is enormous, the trade with China/India and the EU has a lot more influence on the dollar than oil interests. (And thus conversely the US power structure won't use the US central bank to try to exert power, because it'd fuck up its own economy the fastest - because the US benefits the most from global trade.)
The import/export issue is real in the sense that Chinese folks holding U.S. dollars could buy up lobbyists and land and such in the U.S. if we let them. It's not real in the sense that we could, if we wanted, just give every U.S. citizen an extra $50,000 to dilute the buying power of foreign holders of dollars. That would be aggressive for sure, but we have the power to do that. It's a complex set of arrangements here.
Yes, the U.S. benefits the most from the current arrangement, so we aren't interested in screwing that up. But we could and would take action if the foreign-held dollars started getting used in ways that were bad enough for us to do something about it.
The same cycle goes around in other countries, the fixed exchange rate (it's called "pegged to the dollar") means that the central bank has to do open market transactions (on/in foreign exchange market venues) to achieve that fixed ratio.
That means that in case the rate of inflation, economic growth, balance of accounts of foreign trade, etc. differs between the particular country's and the corresponding metric of the USA, then they will have to act. (Of course it's not a top-to-bottom thing, but it's directly influenced by forex markets, therefore there are a lot of speculation when central banks try to maintain a fixed ratio of anything to whatever. [You might remember when the CHF/EUR ratio started to go haywire and the Swiss central bank intervened ... and then suddenly stopped that intervention.])
No, it's not. Federal government revenue is real revenue, federal government borrowing is real borrowing, and federal government spending is real spending. The Federal Reserve creates and destroys money, but that monetary action is separate from the fiscal action of government revenue, borrowing, and spending.
I read it, and the point you are using it to support is still not true; the government could, Constitutionally, do what you describe (and what the linked article is part of the author's failed Senatorial campaign advocating), but it doesn't, for the same reason that the Fed exists; moneterizing spending and not unlinking fiscal from monetary policy undermines faith in the currency.
> But seriously, just read the link, you don't seem to understand the basic facts I'm expressing.
There's a difference between not understanding your claims and their relation to reality and disagreeing with the first and with your assessment of the second.
No. Taxes are not prepayment for services in the future.
I doubt it. By the time I retire I expect that SS will be bankrupt. It has been going further down that road for years, and I don't see anything stopping the train.
http://www.moslereconomics.com/wp-content/powerpoints/7DIF.p... fraud number 4. Short read, but easiest to understand if you read the first frauds.
Federal "revenue" is a mistaken concept. The federal government just deletes money via taxation in order to offset the created money from spending. The government doesn't need or have any dollars, they are the source of the fiat currency in itself.
The entire point of any tax or spend decisions is to further some political objective. For example, we tax everyone in order to assure the fiat currency has value. We also tax to discourse certain behaviors. We tax to have some impact on who has how many dollars in order to address social issues.
> Federal "revenue" is a mistaken concept. The federal government just deletes money via taxation in order to offset the created money from spending. The government doesn't need or have any dollars, they are the source of the fiat currency in itself.
Does it mean that taxation in USA works differently than taxation in a country with currency tied to US dollar by a fixed exchange rate? In that country government can't, I assume, so easily print money and delete them.
but YES, different