Why the sheeples are stuffed…..

11 07 2016

Over the weekend, while ‘holidaying’ in Queensland, I stayed with a very close acquaintance of mine in Brisbane.  They are selling their house and moving to the country, a good move, though I would have chosen somewhere else, but at least they’re moving out of the big smoke….. and they will be able to grow at least some of their food there.

In conversation, to cut to the chase, it came out that the move wouldn’t happen until at least one of them had a job at the new location. I asked “will you be in debt after selling the Brisbane house”, and the answer was no……

So I then asked “why do you need a job then?”

She replied “I need an income”… to which I just said “then go on the dole”.

“My husband won’t let me.”

“Seriously?  WHY is that?” I have to add at this stage that this acquaintance of mine, whilst a little younger than me, is not in great health, not really….

“It’s against all his principles”……..  turns out of course, neither of them had any idea of money creation, nor that paying people the dole is no burden on the government.  The whole burden thing regarding social security is just propaganda…

The conversation quickly degenerated into me evangelising and Glenda kicking my shins under the table.  I just find it so frustrating how everyone I know, almost, is simply so ill informed. Especially when they’re people I really care about.  The Matrix has too much momentum, shifting the populace’s mindset will be impossible, at least in time to achieve much at all…..

When it comes to economic policies, I discovered before the last election that the Pirate Party’s leave the Greens’, and everyone else’s, for dead….

Basic income through reverse taxation

The advance of digital technology potentially threatens vast numbers of jobs,[9] making it increasingly urgent to reduce tax on labour to keep it competitive. At the same time, a host of issues around transparency, bureaucracy and misaligned incentives need to be addressed. Ultimately, what is required is a comprehensively different model of tax and social support.

Pirate Party Australia proposes a replacement of current systems with a unified tax and welfare system underpinned by a negative income tax. Negative income tax is tax in reverse – money paid by the government to those with low or no taxable income. It is social support provided directly through the tax system rather than through a separate welfare system. The Pirate Party plan is for a tax threshold of $37,500 in conjunction with a tax rate of 37.5%. Under this plan the first $37,500 of earnings will be tax-free, with a tax rate of 37.5% applied on earnings above that. However, people earning less than $37,500 will receive 37.5% of the shortfall transferred to them from the government in the form of negative income tax. Thus, persons earning nothing at all are guaranteed a basic income of just over $14,000 (representing 37.5% of the $37,500 by which they fall below the threshold). All thresholds and levels would then be indexed to inflation to preserve their value. The following examples show how income is modified under a negative income tax:

 

Income before tax Tax threshold Gap between income & threshold Tax rate Change in income Income after tax Effective tax rate
$0 $37,500 -$37,500 37.5% +$14,062 $14,062 0%
$27,500 $37,500 -$10,000 37.5% +$3,750 $31,250 0%
$37,500 $37,500 $0 37.5% Nil $37,500 0%
$47,500 $37,500 $10,000 37.5% -$3,750 $43,750 7.9%
$100,000 $37,500 $62,500 37.5% -$23,437 $76,563 23.4%

A lower and simpler tax rate can be brought about by closing loopholes and unifying tax and welfare systems. A basic income guarantee will replace complex welfare measures, clearing out poverty traps and bureaucracy.

A basic income system will provide a platform beneath which nobody can fall. It will ensure nobody can be forced into exploitative work or abusive domestic conditions under the threat of homelessness and poverty.[10][11][12] Low, unstable wages will be stabilised and topped up, smoothing the path for those seeking to improve their skills and shift from welfare into work. A higher tax-free threshold also provides a simple and transparent replacement for the present cluttered array of thresholds and offsets. Negative income tax is a progressive tax system which currently has near-unified support among economists.[13][14] The basic income guarantee will be an enabler of ‘positive liberty’, granting freedom to seek education and training, volunteer, create art and culture or raise children without bureaucratic obstacles and complex payment rules. It will be a platform on which entrepreneurship and creativity can be built.

A basic income guarantee will also play a role in re-balancing the power of individuals with that of the state. Many forms of middle class and business activity are already supported with automatic tax credits: providing social support under the same principle will mean government can no longer take income from citizens while refusing counter-obligations to citizens whose income collapses. A simple and adaptable safety net will remove welfare ‘churn’ since no taxpayer will receive benefits or vice versa. This will reduce swaths of bureaucracy and save significant costs, making the plan readily affordable.

As Malcolm Turncoat declares victory at the election, and Christopher Pain spouts idiotic stuff showing no contrition or understanding of the result, I wonder why the Pirate Party only got ~0.3% of the vote.  I know a lot of people would be put off by the name, but it was that very name that actually attracted me to investigate them in the first place!

Meanwhile, back on the Tasmania project, I have bought a third ute….. I can’t believe it any more than you, and I must be a real glutton for punishment because driving this 4WD version of the first two will be even more tedious, so truck like it feels to drive.  All the same, it does drive very well, with no rattles or vibrations.  It is what it is, and it means being able to bring even more of our stuff down from Queensland; it was such a bargain, I will certainly make a profit from selling ute II when I get back in a couple of weeks.

20160711_075808

Ute III is getting its pre-flight checks done at my favorite garage in Pomona as I type, where a new radiator, thermostat, brake master cylinder, assorted bushes and other annoying fiddly little things will be fixed so that I should have no trouble getting a safety certificate in Geeveston.  And of course it’s having all its oils changed to make sure nothing untoward happens on the trip down.  I expect this car to be just as reliable as the other two, otherwise I would not have bought another!

Whilst it’s great to have Glenda around, I’ve been away far more than I had originally planned, and I feel the urge to get back where I really belong……

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15 responses

11 07 2016
ejhr2015

Interesting. Tax is, for federal governments, just a benchmark for its spending budget. A “budget surplus” means they didn’t spend enough into the economy to make up for the tax taken out.The so called surplus is actually a budget hole, a shortfall and which requires the private sector to fill in.

The pirate party initiative will complicate this arithmetic, but if we treat it as an analogy it should work. Tax money itself actually vanishes [as money] as soon as it gets sent to treasury. It’s never recycled. It’s just ledger entries. The actual spending is done by Treasury through Central bank money creation.

Few realise, although you do, that funding all government projects is simply by marking up accounts in the central bank. Tax is not relevant, just the productive capacity of the economy, at full employment, is the relevant marker.

11 07 2016
mervyn Burr

Hi Mike great blog & I am enjoying your tasmanian adventure, my wife & I will be in Geeveston area about 16th Oct.16 for a motorhome trip for 17 days
and would love to drop in for a chat /cuppa.
keep up the good work, Merv & Thel Morayfield QLD.

11 07 2016
mikestasse

Would love to see you……

11 07 2016
rabiddoomsayer

The sheeple cannot even imagine another paradigm.

I do like the negative taxation concept, particularly as it would simplify so much. The complexity of the current system costs so very much to administer and deal with. Poverty traps exist, extra income can make one worse off once costs are taken into account. With a negative tax system you are always better off financially with extra income. (But then how would we be moralistic with those who have no income)

11 07 2016
Brendon Crook

“The sheeple cannot even imagine another paradigm’

Exactly…………………….Their eyes are like the deer in the headlights if you even mention anything outside the comfort zone of this culture of denial.

The denial is the mask that the zombies can’t see past to free themselves or see the reality of their very own existence.
They live in a world of delusion & lies that safety in numbers ensures it works in the short time, hence the political smokescreen & cultural lies this culture ensnares them with.

To challenge it is to challenge human progress……………………..

Is that the horsemen I hear in the distance…………………………………..?

11 07 2016
king1394

Your friend can’t just go on the dole, whether or not it is OK with her husband. If he continues to earn an income she will probably get nothing – it’s one of the barriers to employment (poverty trap if you prefer). A couple with no job between them can both receive Newstart as a couple – he receives his money and she receives hers. One gets a job (not a high income job) and if he/she earns even a small amount the other member of the couple will find their allowance reduced. If he/she earns enough the other member will get no payment at all, and become completely dependent on the partner to provide for him/her. No need to take my word for it, check on the CentreLink website.
Also, if someone gives up a job, they don’t get Newstart straight away, but will have to use up all of their final payment (holiday pay, long service leave etc).

12 07 2016
kika

negative tax will never work as it it far too easy to manipulate and expensive to administer. proven way is to simply eliminate all taxes except one – a tax or rental on the land you own. local councils already have a good rating system in place and you can’t hide a piece of land in a tax haven. this is why the wealthy property speculators and negative gearers hate this way of generating public income.
https://www.prosper.org.au/

12 07 2016
Harquebus

Every time I watch Q&A and theDrum, the “they think they know it all” talking heads confirm our destiny. Last nights Q&A was particularly gruesome and foreboding.
Prepare as best you can. It’s going to be a wild ride.

12 07 2016
Blue Peter

G’day all, George Orwell here:-
“The further a society drifts from the truth, the more it will hate those that speak it”
Look it up.
Here in Tasmania, the other day I am ordering a book on CC.
In the conversation I say to the shop person do you realise that in the last 8 months, with the Drought, Fires, Floods, Bass link(that was a solar flare) More floods, Oysters. Each man woman and child in the state is up for about $1000 in products. That is you went to the Supermarket and brought a $1000 in product and just dumped them.
That is why there is no money for hospitals, schools, ambulances.
The person got visibly angry with me. I am still not sure if they ordered the book.
The question I put, is what should one do????

12 07 2016
ejhr2015

The Federal government can stump up the money. They do it whenever such an event occurs, like for the Queensland floods recently. They just mark up the accounts in the Reserve bank and from there is’s transferred to the victims and local authorities etc Like helicopter money only targetted.

18 07 2016
Blue Peter

Thanks, ejhr2015.
The point I was trying to make is somewhere, sometime this “make believe money” (fiat currency) has to be turned into something real. Food on your plate. Roof over you head. If it has washed away in a flood, you can have either a replacement roof over your head OR a new hospital but not both.
The real world physical resources are just not there, gone to nothing.

What say ya??

18 07 2016
ejhr2015

BP, It’s not that simple to create currency. The Federal Government can only create currency in response to a debt that it has to service. As you know commercial banks create their loans from thin air too. But first there has to be a loan agreement in place. Then the bank deposits this new money into the customer’s account. Debt precedes the money, which precedes tax. For the Fed it never needs to save or borrow its own money as it is always on tap.

17 07 2016
Oelsen

For a Swiss, that is a very weird way to look at politics. A surplus means there is money left over to pay off either debt or to use it the next year to invest in high gain state investments, either long or short term. An example:

http://www.swissinfo.ch/eng/federal-budget-ends-with-surplus–not-deficit/32130546

Further, your so called no problem dole is payed via pay roll tax, i.e. others pay with their time. To be on the dole just for fun is highly asocial. If you are on social welfare otoh, this part comes from taxes and can sometimes be paid by corporate taxes, where ethics isn’t clear cut – in money and labor terms. But corporations aren’t the best way to extract wealth from others too, holistically spoken. But go on, destruct our welfare system with false information. We won’t need and can’t run it anyway when we are overstuffed with foreigners.

The best way to arbitrage low expenditure is to extend the life of buildings relatively to the rest of the economy. Which is called saving or making something more efficient. Living in cheap places and working politically to keep those cheap places has a much bigger influence on the needs for household expenses, up to a point where one income suffices again for a handful of dwellers. (This does not mean deliberate destructive work as a black block would do, but politically force a city establishment not to gentrify whole city parishes).

(And what other commenters said: The dole is globally mostly tied to your working history, not what your household did. It may be capped at a certain rate, so that managers can’t take out “millions as a part of even more millions”. Welfare otoh is limited to a household, but sometimes not programmatically. So relief for mandatory health care or especially expensive housing can be decoupled from the overall expenses and income a household has.)

18 07 2016
ejhr2015

You, like most of us, suffer from the misuse of the language in economics.
A “budget surplus” sounds good, but it actually means a shortfall in federal government spending. It means they taxed more spending power away from the economy than they put back. It means the shortfall is a hole, not a savings, which does not exist – as the Government which creates all its money for spending did not create any money to fill the hole. Instead the non government sector has to make it up from its savings. [The sectors have to balance to zero]

If you understand that the rest should fall into place.

18 07 2016
mikestasse

You’re confusing politics with economics……. you wrote “Further, your so called no problem dole is payed via pay roll tax”

And where does the payroll tax come from? Money generated from debt.

As more and more jobs are canned through automation by technology, what used to be productive jobs are now unproductive service industry ones. So we’re cooking each other’s take away meals instead of cooking at home, because we’re too tired from working in a fast food shop…. or we’re looking after each other’s children, or cleaning each other’s houses, etc etc….

We have transitioned from a society to an economy. EVERYTHING’s about money…. nobody does anything unless there’s something in it (money) for them…. and none of it is sustainable.

I don’t know how old you are, but in MY youth, we were actually promised loads of leisure time as technology took over all the dreary work/jobs…. trouble is robots and computers don’t consume and spend money buying stuff, and, to cut to the chase here we are.

We need a new economic system, the old is totally broken, and is about to die anyway. Surpluses and payroll taxes and untold other economic fantasies will soon be irrelevant nonsense…….

http://basicincome-europe.org/ubie/2016/06/economy-for-the-common-good-ecg-and-unconditional-basic-income-ubi/

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