Understanding taxation

https://publications.parliament.uk/pa/cm201011/cmselect/cmtreasy/memo/taxpolicy/m32.htm

Taxation is central to the interests of every citizen, business and special group Each group has its own economic interests and perspective foremost when it analyses the economy and promotes a particular viewpoint Politicians, economists and business people rarely promote analysis which conflicts with their group interests Clarity and analytical integrity generally work against private interests and are usually absent

13 In this response, it is assumed The Committee is seeking to further the public interest, even where this may conflict with the private interests which usually dominate the analysis and debate. This will pose a major challenge to those who have learned their analysis exclusively through channels devoted to promoting private interests, and must "unlearn" erroneous but pervasive assumptions and principles

What are the economic principles of taxation?

14 Taxation is at the economic core wherever government supplies significant services such as civil and military protection of property rights, infrastructure, education or healthcare. The UK is no exception.

15. Taxation comprises three fundamental economic parts: l Creation of the medium of taxation and issue into the economy l Distribution of the medium of taxation through the economy l Collection of the medium of taxation

The medium of taxation

16 Over the course of history, the medium of taxation has changed several times Under the earliest systems, taxation was paid in cattle, later moving to grain – generally rice or wheat (tithe systems) or labour (corvée systems) Whenever payments moved to metal tokens issued by the rulers, a money system was born. These tokens were usually made out of scarce and distinctive metals to prevent counterfeiting – silver, sometimes gold The tokens would move through the economy through economic exchange, but would be demanded back by the rulers as the means of collecting taxes Wooden tally sticks were the most successful English tax medium The public demand of tokens to pay taxation ensures a sustained demand and maintains their exchange value across the economy

17 Modern taxation systems are still based around the creation, distribution and collection of tokens, but the tokens now take electronic rather than physical form. These tokens are bookkeeping entries in the banking system. The structure of the taxation system and the economy it controls is determined by the rules under which these electronic bookkeeping tokens are created, distributed and collected Coins and notes are still issued in small quantity, but are subsidiary to to the banking system's bookkeeping entries

18 The economic power of the tax system is determined both by how and where in the economy the medium of taxation is created and where and how the medium is collected

19 Contemporary governments grant the exclusive power to issue the medium of taxation to a state sanctioned banking cartel

The banking cartel comprises a central bank and private member banks The central bank is responsible for price fixing, information sharing, promoting member interests and preventing member defaults Serving the public interest is not a primary goal of a central bank. The cartel holds the exclusive power to set the price of and issue the medium of taxation. Governments generally prohibit the issue of alternative media for exchange and mandate payments of taxes only in the cartel-issued medium

20. The collection of the medium of taxation is under direct government control. Most tax is collected whenever economic production takes place This places a burden on producers, who must acquire the medium of taxation directly or indirectly from the private banking cartel The economic effect of taxation is dependent on the rules for calculating the amount of tax which is paid, regardless of who the tax is collected from Usually, the person from whom the tax is collected can pass the burden of acquiring the medium on to others, generally by paying less for economic inputs, but sometimes by charging more for economic outputs

21. The spending power derived from taxation is shared between the government and the private banking cartel. This spending power is transmitted through the economy by banking cartel to their favoured associates, and by the government and their favoured associates The system is effectively one of dual sovereignty since the sovereign powers of tax collecting and the corresponding issue of money is shared between the government and the banking cartel This is the most distorting aspect of tax policy

Change the medium of taxation

22 The spending power derived from taxation should accrue wholly to the government, and not be shared with the private banking cartel The only satisfactory ways of achieving the involve abandoning the collection of taxes through the medium of money created by fractional reserve lending Taxation defines and underpins the money system

23 Principle : Taxes should only be payable in government issued money l Money should be issued into circulation exclusively by the government when it pays wages, suppliers, pensions and welfare l Money should be withdrawn from circulation by the government when taxpayers pay taxes l Money created by private businesses should no longer be accepted in payment of taxes