"Taxation is to regulate the value of the dollar"
Fed Chairman Got it Right in 1946
'April 15th has come and gone, but the issue of taxation remains the
course de jour. I was recently forwarded an article entitled Taxes
For Revenue Are Obsolete, written in 1946 by Beardsley Ruml,
the former Chairman of the Federal Reserve Bank of New York and
published in a periodical named American Affairs. While Ruml was writing
about the merits of corporate taxes, it is his discussion about how the
function of taxes changed after the nation exited the gold standard
that make this a must read. As Ruml's stated, with an "...inconvertible
currency, a sovereign national government is finally free of money
worries and need no longer levy taxes for the purpose of providing
itself with revenue... It follows that our Federal Government has final
freedom from the money market in meeting its financial requirements...
All federal taxes must meet the test of public policy and practical
effect. The public purpose which is served should never be obscured in a
tax program under the mask of raising revenue."
He goes on to
explain how, with Federal spending not revenue constrained, the first
function of taxation is to regulate the value of the dollar, which we
know as regulating inflation. The notion of the Federal government
'running out of money' and 'dependence on foreign borrowing' as well as
'sustainability' is categorically inapplicable. The operative CBO
'scoring' is the inflationary effect, rather than simply a revenue
forecast. And while Social Security and Medicare may turn out to be
inflationary, they are not 'bankrupting the nation' as most believe,
including a Democratic Congress that cut Medicare spending with the
recent health care bill and has all entitlements 'on the table.'
The entire article can be found at Huff Post
(wonder why they are posting this now and are delivering this to a "left audience?)
_________________"For every thousand hacking at the leaves of evil, there is one striking at the root."
David Thoreau (1817-1862)
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