Re: The Full Employment, Green, Democratic Solution

John Gelles wrote:
> 
>             The Full Employment, Green, Democratic Solution
> 
> Burt, Priest and Gelles are looking for enough of a consensus to build
> one or more agendas for change to solve our most urgent problems.
> 

Dear John,

We are making some progress here.

In my last reply I addressed the result of a government
employing "debt free money." (DFM)

Your first article on the "Channel Islands model" says:

  Income tax is only 20%. There is no VAT, inheritance tax or
  capital gains tax. 

This is said as if there were some kind of coup with
their (magical) monetary system.

But, quite to the contrary, if the government is
permitted to spend money it does not collect via
taxation, then, of course, explicit taxes would be
low.

But, there is an implicit tax, and this tax is
mightily progressive.

  progressive tax: A tax in which people with more income pay a larger
  percentage in taxes. A progressive tax is given by this example -- You
  earn $10,000 a year and your boss gets $20,000. You pay $1,000 in
  taxes (10 percent) and your boss pays $4,000 in taxes (20 percent).
  Our income tax system is designed to be progressive, but assorted
  loopholes and deductions keep it from being as progressive in practice
  as it is on paper.
Source:
http://www.amosweb.com/cgi-bin/gls.pl?fcd=dsp&key=progressive+tax

Notice, however, that progressive taxation is typically
pegged to "income."

But, let me take "your form of taxation."

For every "dollar" a Channel Island government spends,
there is a corresponding dilution of every "dollar"
that each and everyone holds.

We can examine one implication, to illustrate.  A
school teacher is a miser or saver.  While our saver's
income may not be very high, the teacher salts away
half s/he's income each year.  Later, we will read that
this thrifty soul is the $1 million "dollar" benefactor
to the local library.

Now.  What happens at a Channel Island?  Our low-income,
thrifty teacher falls into the same "tax category" as
a high-income earner, who also has savings.

At the Channel Islands, both are "taxed" equally.

I.e., if each has a $1 million in the bank, and the
Channel island government decides to spend $100,000
per capita (per person) then both holdings are diluted by 10%,
i.e., the buying power of their "dollars" is only 90% of
what it was.

So, the George Soros' of the world are sorely, progressively
taxed, but so, too is our thrifty teacher.

Is this the kind of taxation you want?

***

Further, what limits are there to the amount the
Channel Islands' governments spend?

In the U.S. we attempted to contain this via 
legislation for a "debt ceiling."  And, regularly,
we fail to stay within that ceiling, and so, one
of the items our legislature passes, year by year,
is a raise in the debt ceiling.

What determines the limit on the Channel Islands'
governments?  Your articles don't say.

So, if you further wish to espouse "Debt Free
Spending" (DFS) by governments, you must tell us exactly
how such a power is not abused.

***

In summary, I find DFS to be:

        1.  peculiar in its progressiveness
        2.  uncontained without iron-clad rules

Regards,

Curtiss
-- 


           W. Curtiss Priest, Director, CITS
   Research Affiliate, Comparative Media Studies, MIT
      Center for Information, Technology & Society
         466 Pleasant St., Melrose, MA  02176
   781-662-4044  BMSLIB@MIT.EDU http://Cybertrails.org