The Government Burden Goes Way Beyond The Income Tax
Washington DC is not buzzing with activity so that taxpayers can be permitted to keep more of their earnings. Washington and the surrounding areas are some of the richest places in the entire country. While it may appear that government cuts taxes in one area, they always make sure to raise them in another. A new philosophy on the role of government is desperately needed. Ron Paul discusses on today’s Liberty Report.
Washington DC is not buzzing with activity so that taxpayers can be permitted to keep more of their earnings. Washington and the surrounding areas are some of the richest places in the entire country. While it may appear that government cuts taxes in one area, they always make sure to raise them in another. A new philosophy on the role of government is desperately needed. Ron Paul discusses on today’s Liberty Report.
Hello, everybody, and thank you for tuning into the Liberty Report.
With me today as co-host is Chris Rossini.
Chris, welcome to the program.
In a way, Chris, we're going to be talking about taxes again because it's a big issue in Washington right now, and everybody's anticipating how many tax reductions they're going to get.
Of course, our projections have been that people should not hold their breath because it doesn't look like they're going to accomplish a whole lot.
Let's hope they do better than we think they're going to do.
But with the Senate version coming out and not agreeing very much with the House version, I think the markets are recognizing that that build-in boost to the markets might not be for real because it doesn't look like tax reform is going to amount to be much.
But we want to talk about taxes, the excess of taxes, and it's something we've visited quite frequently.
But I also want to talk about the cost of government, which is slightly different.
You can measure a tax.
If you pay 20% taxes, that's a measurement.
But then there's a cost to government, all that government does to us, and it's in a way hard to measure all the penalty.
Take, for instance, just your filling out your IRS form.
Yes, you have to pay your taxes, but who pays you for the labor?
That's involuntary servitude, keeping these records that we can be incriminated by.
So it's such a terrible, terrible system.
But it has a tremendous cost that people complain about, but nobody can quite measure it.
So I want to talk a little bit about that today.
And I want to start off with talking about double taxation.
We've heard about that because sometimes if you're working in a corporation, the corporation will pay some taxes.
Then when the individual gets a paycheck, then they pay taxes again.
So the same generation of new funds is taxed twice.
And that's one form of double taxation.
But also, what about the inheritance tax on principle?
You know, they're talking about that in Washington.
But what if a family saves a couple million dollars and builds a business which is over many, many years, and it's worth some money, and they paid for it all after tax money.
And then to pass it on, of course, you pay taxes again.
That means that the government owns this property.
And unfortunately, that's what the income tax tells us.
The income tax makes the assumption that the government owns us and they tell us how much we're allowed to keep.
So this is a form of taxation that is really a problem.
But you know, the other thing that I think is double taxation is first, you know, if they come and take your money from you, that's a tax.
But, you know, and that's harmful.
But almost inevitably, when they spend that money, that's when we hit them again, hit all the citizens again, because they're going to get something that they don't need or they can't afford or is inefficient or they distort the markets.
But they're always giving you something for free.
You know, they're going to give you free medical care and free insurance and all of these things, and yet it's going to make it much worse.
So it's the whole principle.
But basically, I see the problem going on in Washington right now is the fact that they're talking about taxation, which is very important because if we had our type of government, we wouldn't have to talk about this.
And they don't talk in a serious manner on why they're talking about taxation.
They talk about taxes because they're trying to figure out how can we further deceive the people?
How can we borrow and inflate the currency without stressing the system?
I saw a very dangerous statistic this week.
Came out to show that the three richest Americans, their wealth is equal to the wealth of 50% of the American population, the lower 50%.
That's a little hard to believe, but it's quite possible when you think of these astounding amounts of money.
Now, if you just say that and throw it out there, it sounds like, oh, you must be a socialist.
You want redistribution of wealth.
But no, I want people to understand why there is this male distribution of wealth, and it is not a reflection of a free market economy.
It's not a reflection of liberty and sound money.
It's a reflection of a very seriously flawed system.
But on top of, you know, looking at the cost of government, when you put on regulations and taxes, and governments or corporations absorb and take care of that problem, they don't pay it by themselves.
They pass that along into the costs to the customer.
So this is something that becomes more complex because corporations keep making more money, you know, under today's circumstance.
And Wall Street is doing quite well.
Their stocks go up and their markets are protected and all those kind of things.
But the whole thing is, is that the people are working with a fixed wage, essentially.
And that's where the anger comes from.
And their concern is justifiable in my estimation because the real wage has essentially been frozen since the breakdown of the gold standard in 1971.
So there's very little movement.
And the average person cannot keep up with the inflation rate.
And they actually get punished because the government raises the inflation rate to not allow people to get an increase when they're on a fixed income of sorts.
So this is a source of great anger.
And why I'm concerned about this and to understand the real cost of government.
Yes, we deal with the taxation that we can understand.
We want low taxes.
But the real cost of government is going to stay there as long as we have this perception that we need this government, whether it's domestic regulations and welfarism and international conflicts that we're involved in constantly.
If the people don't challenge that, there's still going to be more of this until finally it seizes up and the dollar doesn't work and the debt overwhelms.
But I am very pessimistic that what they're talking about in Washington today is not going to arrive at any long-term solution.
There'll be some tinkering and there'll be some bragging rights by a few people.
But the whole thing is, is the system that we have created, where the lower 50% are doing badly and the top a few percent are doing exceedingly well is going to be a source of social friction.
And I think that's what some of this friction that we're witnessing today demonstrates because when people get angry over economic things and they don't understand exactly why the economy is so unfair, you know, that's when they slash out and say, you know, it's as capitalists, you know, people making profits, which is a long way from the truth.
Yes, and you mentioned things seizing up.
We're heading in that direction for sure.
If you think about it, we're talking about taxes and tax cuts.
Our government has debt of $20 trillion that it could never be paid.
Why anybody would loan the money is beyond me.
And they also have a population, almost 50% or 50%, that are on some kind of federal assistance.
So That they're going to be cutting taxes, they could raise our taxes to 90 and 100%, and it won't make a dent in the hole that they've dug for themselves.
So it's really just a political show.
And like I always want to mention, there's nothing wrong with tax cuts, but we need government cuts, not just a political maneuvering.
No, and that is the case.
And I think the more the people understand where the hidden taxes are is essential, because it's always discouraging to me when you'll talk to somebody who has a reasonably good job and they get their paycheck, but the taxes are deducted.
And for some reason or another, they may have deducted a few more dollars than they were supposed to or needed to, and they get a check back from the government.
And they're sort of excited.
Oh, the government sent me back some of the money, not realizing that that is so deceptive.
The American people, all people who pay taxes, would wake up if they wrote a check every month.
That's why the withholding tax is a form of deception that really helps the government, not the people, realize how much they're paying for government.
So that would be one thing you could do.
Matter of fact, I had a bill introduced that way.
I just eliminate the ability of government to withhold taxes.
I think it was started during World War II because they wanted to make it smooth and make people not think about how much taxes they were paying.
But I think people don't realize how much they're really paying when you add that on to the cost of government and all the other invisible taxes.
Just think of the import taxes, the tariffs that go on, and there's some people arguing for more.
That all gets passed on to the consumer.
That all gets on to this lower 50%.
They have to pay more for goods.
And the jobs don't seem to materialize to compensate for the higher cost of living.
Yes.
And one area where people think that government spending is a positive, they'll think, oh, well, Trump will spend a trillion dollars here.
That's a good thing.
Well, no, it's not because government spending crowds out private spending.
You know, the people that are actually doing things for us, all the stuff that we see around us and the services.
Government spending crowds that out.
So if, you know, what happens is if somebody has an idea or a project and they don't get private investors who they don't think they'll get money, they'll go to the government and get the loans there.
But every dollar that's used for these bridges to nowhere crowds out resources and dollars and labor to something productive.
So government spending is a tax.
These are unproductive things.
Just because someone is digging a ditch and another one is filling it in and it's called a job, it's not productive.
But government makes it like, look at all these jobs we created.
So these are the hidden ways the government gets back at us.
You know, the other thing that's been going on, especially since 1971, because the currencies of the world have all been fluctuating, but the dollar has been the reserve standard, and we have been benefiting by that ability to print the reserve currency of the world.
And a lot of people complain about it because what we do is we buy more goods from overseas, like we buy more goods from China and they're cheaper and they'll take our money.
But it's because we're able to issue this currency.
If all the world had a unified currency, you know, free market people aren't against the global currency as long as it's honest and not a government currency and is backed by gold, which had been the way it has run for literally centuries, off and on.
It usually breaks down when governments think there's going to be an advantage.
But because of this, people are misled into believing that, well, we have a weak economy here because we don't tax the imports enough.
And of course, if you tax the imports, you're just passing that charge on to the people.
It's a tax.
They end up paying it.
But this is a problem.
But the fluctuating currencies is a major problem.
And we get deceived into thinking that it's a benefit and not harmful.
And all we have to do is have better management of the international value of our dollar.
But we can't have it both ways.
We just can't print money endlessly and think that we can be the policeman of the world and not have the downside effects.
And that's what we're witnessing now.
It's way out of control on the spending side.
And, you know, even when they measure by the government's measurements of percentage of debt to GDP, you know, it's still outrageous, even though there's some shortcomings in measuring that way because the GDP is nothing more.
It also reflects on how much the government is spending.
So that is not a reassurance.
But even under those circumstances, it looks like this debt is unpayable.
And when it gets a certain point, it's never paid.
So I think we're at a point now where we can talk about the details of the tax code.
We can talk about the problem of a big government.
But ultimately, this is not going to change until there's reform, true reform, which the market will force on us.
And that is that we have to do something with the monetary system.
And of course, a lot of this mischief that we've been just talking about is facilitated by the central bank, the Federal Reserve.
And that's why we've emphasized so much over the years the importance of the Federal Reserve because these deficits couldn't be handled.
They can't tax, they can't borrow.
So they need a central bank.
And we have really been in a position where we have received tremendous benefits from this and have become the policeman of the world.
But that will come to an end.
The deficit will be liquidated.
Always is.
The question is, how will it be?
Will the deficit be liquidated by us paying off in a conventional way like an individual would have to or even a local community should?
Deficit Liquidation Ahead00:03:23
No, it's not going to be that way.
Governments always liquidate debt by paying it off with cheap money.
And that is, they lower the real debt by just debasing the currency, which isn't immoral, should be illegal.
It's unconstitutional.
But that is the way we have lived.
It's just amazing that it's lasted so long.
And people have been deceived in that we just need better managers.
If we just had a different political party, they can go in and do it.
But it won't be that.
That won't solve the problem because they work in cahoots.
They work together.
It's bipartisanship when it comes to deficits.
All this arguing about taxes, yeah, that's just for their base.
But they all support deficits.
They all support welfare.
They all support wars and intervention and spending.
And nobody would dare suggest that you cut a nickel out of the militarism, the militaristic budget.
That is just never entertained.
And that really explains why they're having a mess and you shouldn't expect too much to come out of the debates over taxes that's going on today.
Yes, and if I'll close along the lines that you're talking about, we need a new philosophy because our government has done themselves in.
There's no way out of it.
And there's going to be a lot of economic pain.
And unfortunately, a lot of people are going to be shocked about it.
But what rises up afterwards is what's important.
I mean, we could go in a direction of a Bernie Sanders and go relive the last hundred years, or we can go towards what our founders thought they were on to something great, and that could be built upon.
So we're in the latter camp, and hopefully our ideas spread far and wide.
And I'll just go ahead and add on to that because I think the turmoil now, which is social as much as anything in cultural, and we have these cultural wars going on, I think they're basically economic and they originate there.
But because of this dissension on the economic disparity, this invites the cultural Marxists to come in and they foment the disruption and the anger and the demonstrations and the attack on anything decent.
And that is done on purpose because they are Marxists and they want to have total socialized medicine, all these things, but they're looking for an opening.
The approach right now by the cultural Marxists is a bit different than the Soviet type of Marxism because that was purely economic.
Here they want to disrupt socially, then they're going to come in with all the government regulations and government authoritarianism.
So that's where the real problem is.
And that's why it's vital that we do our very best and others join in this effort to get as many people as possible to understand what's really going on and understand the soundness of economics, really, which starts with the soundness of understanding what personal liberty is all about and where liberty comes from.
And it's a natural right for all of us.
Then I think we could make some progress.
Chris, I want to thank you very much for being with us today.