The contemporary US Taxation System in the early 21st century is in many respects a byproduct of the haphazard implementation of Total Mobilization after Alexander Hamilton’s death and the dissolution of the Federalist Party. Much of it was introduced under wartime conditions. While there was a Federal Sales Tax introduced in the War of 1812 and a Federal Income Tax in the Civil War, the vast majority occurred during World Wars I and II, when Jeffersonianism was at its height of power under Presidents Woodrow Wilson and Franklin Delano Roosevelt. Given this frame of reference in mind, it is inevitable to expect the complexity of US Taxes to grow exponentially to ensure not a single US Dollar in Kapital escapes the watch of the Internal Revenue Service (assuming the IRS is being well-funded, of course). This is essentially what will happen if Total Mobilization has Kapital and Schuld as its metrics, not the Arbeit and Geld of the Work-Standard.
America has twelve different Taxes (and a hidden thirteenth) that can be organized into three verbs within the English language, all of them revolving around Kapital itself: Earn Kapital, Buy Kapital, Own Kapital. It helps that the Work-Standard is now detecting the psychological and psychic conditions governing these processes, especially in contexts where there is neither Arbeit nor Geld. A more accurate description of these psychological and psychic conditions within the American Way of Life is “to give Pain and receive Pleasure” or “to give Pleasure and receive Pain.”
1. Earn Kapital and receive “Personal Income Taxes,” “Corporate Income Taxes,” “Payroll Taxes,” and “Kapital Gains Taxes.”
Personal Income Tax affects the amount of Kapital allocated to a person’s annual wages, salaries or investments. Corporate Income Tax affects the amount of Kapital generated by the profits of privatized commercial firms. Payroll Tax affects the amount of Kapital being redistributed to the fruits of FDR’s New Deal programs such as Medicare, Medicaid and Social Security. And the Kapital Gains Tax affects the amount of Kapital that can be generated from LCFIs (Liberal Capitalist Financial Instruments) like stocks, bonds, commodities, derivatives and so forth.
2. Buy Kapital and receive “Sales Taxes,” “Gross Receipts Taxes,” “Value-Added Taxes” (VAT), and Excise Taxes.
Sales Tax affects the amount of Kapital spent on purchasing goods and services. Gross Receipt Tax affects the amount of Kapital from those same sales of those goods and services. VAT affects the amount of Kapital that occurs from the process of creating goods and services. And Excise Tax affects the amount of Kapital spent on specific goods and services like gasoline, alcohol, gambling and betting, soda and tobacco.
3. Own Kapital and receive “Property Taxes,” “Tangible Personal Property Taxes,” “Estate and Inheritance Taxes,” and “Wealth Taxes.”
Property Tax affect the amount of Kapital that can be generated from the commoditization of land and buildings. Tangible Personal Property Tax is similar to Property Tax, except it is levied against the Figure of the Arbeiter and the Art of Technology itself—vehicles, equipment and inventory, furniture, and anything intended for Total Mobilization. Even more problematic are Estate and Inheritance Taxes, which affect the amount of Kapital that can be passed on to future generations, and come with a hidden thirteenth Tax called a ‘Gift Tax’. And worst of all, a Wealth Tax affects the amount of Kapital that somebody borrows from commercial banks as loans and the amount of Schuld that exists as a consequence.
These twelve different Taxes may seem easy enough until one realizes there are Federal Taxes from the Federal government and then there are State Taxes from the State governments. Even more problematic are Municipal Taxes levied by a local metropolitan area, city, or county. Everything adds up and everyone must report all of the Kapital to ensure that not a single US Dollar in Kapital is left unaccounted for.
It is well-known in the Western world that the US still has one of the lowest Taxation Rates on Earth. In the UK and the EU/NATO member-states, Taxes are even more painful as their Welfare Capitalism has been engaging in more aggressive techniques since the Cold War. The Scandinavian Social Democracies make the US Taxation System resemble a sexual fetish because the Scandinavian Model is backed by the Kapital from Petroleum and Free Trade.
The Prussian or Federal Socialist way of dealing with something as complex as the US Taxation System is to neither raise Taxes nor cut Taxes. The choice between “to give Pain and receive Pleasure” and “to give Pleasure and receive Pain” is not an authentic one at all because the result will always be the same in the end. The only real difference is who else gets to be exploited.
New policies require new tactics; never pour new wine into old wine bottles. If the US Dollar gets pegged to the Work-Standard, the US Taxation System will become obsolete because of its impractical nature and its inability to exist without Kapital and Schuld as overriding factors in the American Way of Life. Its abandonment will coincide with the introduction of Arbeit and Geld and everything else which defines the characteristics of the Work-Standard. An example of those changes is the psychological and psychic conditions of the concept of Property.
In Liberal Capitalism, there is Private Property-as-Wealth and Common Property-as-Wealth. The latter term is where the English-speaking world got the term “Commonwealth,” which can be found in the legal names of US States like Virginia or Pennsylvania and the Commonwealth countries that once constituted the British Empire. To abolish Private Property is to also abolish Common Property, and what shall be the replacements for those two conceptions of Property? Under Socialism, there can only be “Personal Property” and “Productive Property,” their significance to the Work-Standard to be explored in another SMP Compendium entry. What can be discussed here, however, is the tendency among Americans to develop mixed feelings about the everyday lives of the wealthy, how that ties in with the concepts of Private and Common Properties as well as the US Taxation System.
Any close glance into the lives of wealthy Americans will come away with the impression of a deliberate choice to live frugally. This must not be mistaken with the Prussian or Federalist way of living for three important Intents. First, wealthy Americans need to convey an image of themselves being inconspicuous and not attracting too much attention about their wealth. Second, the concept of Kapital functions as an informal Ranking System influenced by the metrics of “Net Worth” and “Credit Score.” And third, they need to preserve as much of their Kapital as possible to avoid the US Taxation System. It is often the latter which influences their decision-making process insofar as it affects the first two Intents.
A wealthy American, in order to preserve their Kapital, will try to invest in LCFIs (Liberal Capitalist Financial Instruments), which are known to serve as a manifestation of Private Wealth. This accounts for why their Net Worth can be said to grow rapidly over the course of several years in spite of the livelihoods of the American people. After all, given the abstract characteristics of Kapital since the death of Bretton Woods, the financial markets are able to operate independently of the national economy. Under US Tax Law, LCFIs do not count as a source of income until somebody decides to sell the LCFIs by converting them into Liquidity.
Another potential avenue is for them to borrow Kapital from a commercial bank by relying on the Fractional-Reserve Banking System. Since Kapital is literally being created out of thin air, what limits how much Kapital any wealthy American can borrow is the Schuld and Interest Rate (if there is any). A good indicator for this trend, of course, is discernible from their attempts to ‘live frugally’ by reducing their salaries and minimizing their expenses. Any big purchases on their part means having to pay more Schuld or the banks becoming hesitant in allowing them to borrow because they are expecting them to pay back what they had borrowed.
And finally, if they have children and not have any divorce settlements, they can establish philanthropies and charities to obtain Tax Credits and Tax Benefits. The more Tax Credits and Tax Benefits they obtain, the more Kapital they can pass on to their descendants. This is also a great way to improve how they are perceived by other Americans since their attention will be redirected to those philanthropies and charities.
Most wealthy Americans, as with the rest of the US, are more inclined toward obeying the law and refraining from resorting to illicit means of hiding their Private Wealth. Those who do hide their Private Wealth tend to be involved in criminal activities or else have convinced themselves that the US Taxation System is unjust, which has happened throughout US history. Obviously, the idea of the wealthy illegally hiding Private Wealth for any Intent beyond personal self-interest is rare. They know that there is far too much lose from engaging in such behaviors. Thus, it makes perfect sense for some of them to reform the US Taxation System by lowing Taxes, but not replace it outright with a different way of doing things. It also makes sense for them to avoid places with higher Taxation Rates in a manner comparable to somebody instinctively removing their hand from a hot stove.
The behaviors exhibited by wealthy Americans and the manner in which others perceive them are indicative of Marginal Utility’s application within the US Taxation System. It should be repeated over and over that Marginal Utility emphasizes the most pleasure for the least pain or “the greatest happiness for the greatest number.” When the US Taxation System is altered, what is being done is the decision to choose between “to give Pain and receive Pleasure” and “to give Pleasure and receive Pain.”
That is the secret trick behind the concept of “Wealth Inequality” as a diversion from addressing the failures of Liberal Capitalism. Granted, these conclusions should not be seen as an excuse to overlook the plight of anyone living in America. All Americans, regardless of where they exist in the Union, are overburdened by an excess of Kapital pegged to Schuld. There is plenty of pleasure and pain to go around insofar as Marginality Utility itself is concerned. Everyone finds pleasure in the pain they inflict on others, and everyone finds pleasure in the pain inflicted on them by others. The term “Sadomasochism” is appropriate in describing what is happening here.
As for the Work-Standard, the dynamics of Arbeit and Geld operate according to different psychological and psychic conditions. This extends to the manner in which taxation policies are addressed politically and how they affect the nation economically. The distinctions will become apparent in the third part of this SMP Compendium entry.