WHY IS INFLATION A TAX? — PART 2

In the first post of this series, Part 1, we considered the definition of inflation. Here we examine what our leaders are doing. Of course, the answer is not terribly complicated. They are recklessly spending lots and lots of our money. Thus, we have a question.

How Much Money Do Our Leaders Want To Spend?

Power-mad politicians (both in the Senate and the House) just passed the so-called “Inflation Reduction Act.” See the references at the end of this post.

The so-called “Inflation Reduction Act”is the compromise that resulted when a few Democrats balked at recklessly spending trillions instead of hundreds of billions. So, when the politicians we have foolishy elected have tried pass even more tyrannical laws and to spend even more of our money, I suppose we should thank the Lord for moderating their insanity.

Will the so-called “Inflation Reduction Act” reduce inflation? Probably not. The so-called “Inflation Reduction Act” will do something foolish, raise taxes during a recession. Supposedly, the so-called “Inflation Reduction Act” raises taxes more than it raises spending, and that makes it a tool for inflation reduction. The problem is describe by the Laffer Curve (laffercenter.org). There is a point where the diminishing margin of returns from raising taxes becomes so substantial that revenues begin to actually decrease. In all likelihood, we are at that point.

Moreover, even the Congressional Budget office does not have anything positive to say about the so-called “Inflation Reduction Act.” See Estimated Budgetary Effects of H.R. 5376, the Inflation Reduction Act of 2022 (cbo.gov) and CBO Confirms to Graham: Dems’ “Inflation Reduction Act” Won’t Reduce Inflation (budget.senate.gov).

So, why do Democrats want something as destructive as the so-called “Inflation Reduction Act”? Politicians acquire power and wealth by spending other people’s money. Politicians gain influence by diverting other people’s money into the pockets of their cronies. Spending, even if it results in inflation and lowers the value of the dollars held by the public, rewards the cronies of big spending politicians.

Of course, big spending does create problems for big spenders. Those other people do not like power hungry politicians taking and spending their money. Therefore, those power hungry politicians have included funding for 87,000 additional IRS agents — armed IRS agents — in the so-called “Inflation Reduction Act.”

Think about it. Why do we need 87,000 more IRS agents. Who will power hungry politicians use those new armed IRS agents to harass, bankrupt, and otherwise punish? Rich people who refuse to lawfully pay their taxes? No. Instead, the people who object to unconstitutional government ought to start getting ready for IRS audits.

Consider the Chinese Social Credit Scoring System and some of the articles that have been written about it. See the references below.

Our reflexive response is to look upon whatever happens some place else and wonder what it means for me. So, each of these articles on the Chinese Social Credit Scoring System has been written to deal with an American concern. Most Americans wonder what the Chinese Social Credit Scoring System is and how such a system could be implemented in the United States.

How would the IRS figure into an American social credit score system? Liberal Democrat organizations like the Southern Law Poverty Center (splcenter.org) already identify Conservative organizations (which they call hate groups), and the IRS has been used to target the tax exempt status of such groups. Unless such efforts are rigorously opposed and fought, it is just a matter of time before Liberal Democrats find ways of systematically identifying Conservative individuals and using the IRS to harass them with expensive financial audits.

How do we know Liberal Democrats are pursuing personal power and wealth instead of what is best for the welfare of our nation? Consider:

  • The Democratic Party’s relentless persecution of President Donald Trump, including the FBI Raid on the Trump estate in Florida.
  • The way Democrats have persecuted Supreme Court nominees and, in the aftermath of their reversal of Roe vs Wade, sitting members of the Supreme Court.
  • The magnitude of the George Floyd riots and the Democratic Party’s utter indifference to the death and destruction caused by those riots.
  • The determination of the Democratic Party to politicize the investigation of the relatively small riot at the Capitol on January 6, 2021.
  • The incredible growth of the Federal Government, unchecked by constitutional restraints.
  • The deprivation of constitutional rights during the COVID-19 pandemic.
  • The polarization of the mass media. How do we know who is telling us the truth, the whole truth, and nothing but the truth?
  • And so forth.

Do we know what is going on? Whose responsibility is that? If we are not skeptical enough of the mass media to check as many sources as we can, then who should we blame if we are almost totally misinformed?

References

Congressional Passage of the so-called “Inflation Reduction Act”.

Chinese Social Credit System

15 thoughts on “WHY IS INFLATION A TAX? — PART 2

Add yours

  1. Tom,

    I looked into how the 15 per cent minimum tax will be assessed and it is based on corporations book value instead on the same way as corporations are normally taxed.

    I’m not a tax accountant, but I believe there is going to be a lot of tax accounting shahatagens to avoid paying this supposed 15 percent tax increase.

    Regards and goodwill blogging.

    1. Taxation gives government the power to destroy. So, it is foolish to give people who don’t like us the power to tax us.

      That said I think you misused the expression “book value”.

      1. Tom.
        Check into how the 15 per cent tax will be assesed on google.

        It will not be the same as most people assume It will be bssed on sto cr book value which is an incren th ive for corps ro add liabilities or exhpand to avoid paying the 15 percent tax for paying down their liabilities.

        Regards and goodwill blogging

        1. The main difference is that companies will have to pay taxes on their profits including profits which heretofore not included as taxable income. Since I have not studied the issue and know relatively little about how corporations avoid taxes, I will leave it at that.

  2. Tom,.
    Spot on, especially on the growth of government adds to both inflation and result taxation.

    In my opinion, Congress needs to only allow one issue only be depated and passed for funding instead of grouping numerous issues to allow politicians to steep Bills for their pet projects funding they want.

    Regards and goodwill blogging

  3. Excellent and frightening post Tom. Our politicians are leading us in to unchartered waters of stupidity and self inflicted economic harm.

    1. I wish weI could rightly say the waters are uncharted. However, such is only true for the United States. Aristotle documented similar stupidity and self inflicted economic harm long ago.

  4. Inflation is a tax because governments use it to monetize their debt. Using simple numbers, if a government goes into debt for $30,000,000,000 (30 trillion dollars) and creates 50% inflation, the value of dollar is cut in half. That means the $30,000,000,000 debt just became a $15,000,000,000. Magic, no?

    It is a tax because the products and services people buy are twice as expensive. Thus a person must work twice as hard just to break even.

      1. And because the US Dollar is the global currency, the United States gets to export its inflation across the world. As the entire world sinks into inflation induced poverty, US politicians get to spend, spend, spend. It’s beyond criminal. The US Congress going back 50 years is guilty of crimes against humanity.

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