The Payroll Deduction Scam

One of the biggest frauds of the income tax has been recently brought to light by changes in the tax code.  Because less money was withheld from many people's paychecks last year, people are getting smaller tax refunds.  Some are even owing taxes when they file.  The response to this in articles about the subject shows the complete ignorance on how the process works.  NPR had a February 14th headline of "Anger, Confusion Over Dwindling Tax Refunds.  Is Trump's Tax Plan To blame?"  The Worcester (MA) Telegram writes "Reduced tax refunds surprise Bay State taxpayers," on February 15th.  Some people are complaining that they are getting smaller refunds.  Others that owe say they do not have enough money to pay.

This is because the government of the United States has set up a scam.  Although the money goes to the government, it is taken out of paychecks by employers.  Typically the government takes more than is expected throughout the year.  Then, at the end of the year, people get a refund of the overpayment.  This sets up the government as one giant gift giver.  The IRS sends out millions of checks each spring.  As can be seen by the reaction of people who aren't getting checks this year, this is seen as free money.  Most don't realize that they have paid too much throughout the year. 

There is a simple way to stop this fraud.  Eliminate payroll withholding.  This would be a boon to businesses small and large who spend an inordinate amount of time collecting money on behalf of the federal and state governments.  Having people send a payment on a regular basis would ingrain in them how much of their money is actually being taken.  It would also dissuade any notion that the government is in the business of handing out checks each spring.

San Francisco Fed President Ponders Permanent Easing

After the financial crisis of 2008, the Federal Reserve began the controversial practice of Quantitative Easing .  The Fed used bonds to rapidly increase the money supply.  This was justified because the economy was supposedly in a time of unprecedented distress and poised for collapse.

Both Reuters and Bloomberg are now reporting that San Francisco Fed President Mary Daly is talking about making Quantitative Easing a permanent program.  Although she spoke with the usual timidity of a Federal Reserve official, Daly admitted that more frequent use of Easing was being discussed.

There are two main problems that can be caused by this intervention in the economy.  The first is that flooding the markets with money can cause horrible inflation.  Since this inflation is related to easy money rather than economic growth, it can become the dreaded stagflation.  In stagflation, prices rise but wages remain stagnant and unemployment can increase.  The other problem is that inflation lowers personal savings rates and investment by individuals.  When money is becoming less valuable by the day people spend their money before the prices go up.  When banks have easy money they can lend at very low interest rates and less stringent underwriting.  That pushes private lenders out of the market.  The low interest environment is especially hard on the retired which rely on CDs and bonds for income as well as pension funds which rely on a low risk, stable lending portfolio for sure and steady returns.

We can hope that those running The Fed have more sense than to make Quantitative Easing a mainstay of intervention.  However , recent decades have shown that decisions are often made more to benefit the member banks and the stock market than the people of the United States.  The market rallied moments after Daly's statements were released.  We will have to wait and see.

Law Enforcement or Simply Theft?

The Greenville News (Greenville South Carolina) recently did an investigation of property seizure by South Carolina police agencies TAKEN: How police departments make millions by seizing property.)  They found that "Police are systematically seizing cash and property... netting millions of dollars each year."  They came to the conclusion that "South Carolina law enforcement profits" from these seizures.

How does this happen in the United States?  The Fourth Amendment clearly states that "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probably cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized."  Because of the profits involved, states have been playing fast and loose with this definition of "probable cause."  Many use the standard of any suspicion that a crime might be committed.  Here is a sample from the North Dakota Century Code (29-31.1)    "Forfeiture is a civil proceeding not dependent upon a prosecution for, or conviction of, a criminal offense..."  Since it is a civil proceeding, many of the important protections against taking of personal property are absent including guilt beyond a reasonable doubt.  

It is time for citizens to demand a stop to this practice.  Seizing ill gotten gains from individuals who have been CONVICTED of a crime can be a valuable law enforcement tool.  Allowing police to take property on suspicion is merely sanctioned armed robbery.