Entries Tagged 'Economics and Investing' ↓

The ignorant way that politicians talk about money these days is not only irritating, but it’s also dangerous.

Many seem to think that money is an object. They are wrong. Money is a concept, not just a thing. Money has shown its face in numerous different guises throughout the milennia of time on earth that is known to us.

Some money is tangible to our human senses. But in this century of  the “financialization” of all things, money is becoming more and more intangible. and even hidden from us. Money is now bits of data in computers—computers that are networked with other computers on and off of the World Wide Web.

Here is why I strongy object to the view of a member of Congress saying on TV that “Government money is ‘Confederate money'”. Money may be hidden in places where it isn’t transparent to others, but the chief essential thing that makes money be real money is trust!

Money is only valuable where more than one person has trust in it.

If  there is no trust in money it becomes an object, a thing that is treated by every other object that is bought and sold in any kind of market—or hoarded. Confederate money is indeed an object. It cannont be circulated for use when buying other kinds of goods or services. But U.S. government money has won trust all over the planet.

Financialization

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The Rich and The Not-Rich

In my previous post on “Earned” vs. “Unearned Income”, I  concluded that the IRS keeps Americans at the bottom and the middle of the income scale from achieving their “American Dreams” by use of “limits” on contributions, and “carry over deductions” .

As proof,  I’m going to show about two examples of IRS tax credits for charitable giving that serve to keep the Not-Wealthy down.

Then I’ll reveal how the wealthy avoid paying taxes on their unearned incomes. Because, in actuality, today there are only two social classes left in the U.S. – The Rich and The Not-Rich.

The Not-Rich are workers: the Rich are investors and inheritors.

I will show that workers, including self-employed professionals and small busines owners, earn lower incomes, while being taxed at significantly higher tax rates on their earnings than investors.

Why? Because the IRS limits the amounts that workers can use their”earned” or “unearned income” to obtain tax credits (i.e., deductions from gross income) on their taxes.

Meanwhile, IRS tax shelters on “unearned income” (i.e,. investments and inhertiances) by the rich are making them even richer.

Ways The IRS Holds the Not-Wealthy Down

The IRS allows those who make “earned income” only very small portion of the the huge amounts of untaxed income granted to wealthier taxpayers who make “unearned income” from their inheritances and investments.

The IRS calls tax loopholes for the not-wealthy “Deductions” or “Credits”.  “Earned income” ensures that workers will rarely be able to progress up the ladder to become wealthy after they are taxed. Here’s why:

Read some of the instructions in IRS manuals or on its web site. You’ll see the word “LIMITS”.

Like traffic signs they’ll blare at you! You’ll also see the phrase “CARRY OVER” combined with this word “LIMITS“.

I first became aware of limits on tax credits for middle class earned-income workers when I got a 20 percent homeowners’ credit for my first-time mortgage on a condo.

Every tax year there would be a limit on how much money I could claim credits for. Every year I had to carry over money until the next tax year. Over ten years of payments, I never even got close to getting 20 percent deductions on my taxes! Continue reading →

In my previous blog post on Brucenomics, I traced the history of the terms “earned income and “unearned income” back to Karl Marx’ infamous book, Das Kapital. Was it coincidence that the U.S. Internal Revenue Service (IRS) chose those two terms to use in its federal tax system back in the early 20th century? I think not!

In this post  I’ll discuss how the U.S. Internal Revenue Service and other government agencies use these terms to ensure that most Americans will find it difficult if not impossible to get out of lower and middle income levels to achieve their “American Dreams”.

The IRS continues to provide the wealthy with with largess and leaves wage earners, retirees, and minorities behind in the dust when it comes to their efforts to build wealth. In my next post I’ll show how the IRS does this. But first let’s look at who is impacted by these IRS lables.

Who Earns What Kinds of Income?

I define Marx’s two categories of income as used by the IRS this way:

1. Earned Income is what workers get from their labor (“the sweat of their brow”).
2. Unearned income is what capitalists (a.k.a., investors and inheriters) get from their corporate and real estate incomes.

The IRS framework for federal taxpayers rests upon this hierarchy of these two types of incomes. They split Americans into groups based on types of income we make and the amounts of income we make.

This use of a hierarchical framework of privileged and less privileged individuals instantly creates discrimination against many groups of Americans. Also importantly, it fosters the growing income inequality found within our government—in favor of investors over workers.

Moreover, it isn’t just the IRS that differentiates Americans based on how much money we make and how we make it. Discrimination against minority groups and the poor and middle classes can be found in many of our federal and local government agencies as well.

For example, the title of the so-called “Small Business Administration” is a joke. That agency has evolved to give preferential treament to funding multimillion dollar corporations, like Microsoft, Apple and Chipotle by linking them with hedge fund funders—not to aid to truly small businesses on Main Street.

Bias exists in the EPA too which lets loose toxic chemicals in poorer neighborhoods, and in banks’ redlining for mortgages. Many other agencies throughout our government too. And it’s really obvious when it comes to retirees!

How Definitions of Income Define Individual’s Social Class

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