I challenge anyone to prove to me that our income taxes go ’straight into the pockets of international bankers.’
Shane April 8th, 2008
If you can, I’ll change my banner for a week to say “(insert Internet nickname here) was right, I was wrong, we really are all being screwed!” or something like that. If you notice my banner, you can see I am not a fan of money or bankers. That does not mean that the rumors are true though.
The idea that some big bankers are pocketing all of our income taxes floats around the Internet quite a bit, and it is getting more popular. I remember hearing it almost a year ago, when I first started to find out that things were not as we are always told.
Some things are true. The Fed practices an inflationary monetary policy that ‘taxes the poor and middle class’ according to Ron Paul. This is absolutely, digustingly true, and is the real scandal going on. The idea that all of our income taxes go into the pockets of a few big bankers is absurd though.
The Fed can ‘create’ money, and it does. Do they print money at will? No. The key to inflating a currency is to keep is slow. The inflation we are seeing seems to be the result of multiple factors that I am still researching and won’t get into here.
I was skeptical of the idea that our income taxes ALL went directly to make a few guys rich when I first heard it, so I started digging. Eventually I found the source, I think, of all of these rumors. It is called the Grace Commission Report. The link goes to a pdf that shows you the original report.
The report does have some pretty amazing information about our income taxes. On page 14 it says that:
Resistance to additional income taxes would be even more widespread if people were aware that:
- One-third of all their taxes is consumed by waste and inefficiency in the Federal Government…
- Another one-third of all their taxes escapes collection from others as the underground economy blossoms in direct proportion to tax increases and places even more pressure on law abiding tax-payers, promoting still more underground economy — a vicious circle that must be broken.
- With two-thirds of everyone’s personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by the interest on the Federal Debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.
This does not say that the money goes into the pockets of international bankers. It does not say that we pay interest on every dollar created - another rumor.
I actually have some doubts about the whole Grace Commission report too. Maybe the report itself was to push some agenda. A quick search finds one of the Grace Commission authors, Phillip N. Truluck. He is the COO of The Heritage Foundation, a conservative think tank. He worked for Strom Thurmond, a racist. Hey if they can blame Obama for what his pastor says, then we can blame this guy for working for a racist. A think tank is an organization of private individuals who try to influence, and sometimes even write up, political policies of all types. Private individuals, all rich, who are influencing government. Why is this legal again, to let unelected individuals influence our government? Anyway, just look at their home page. “What would Reagan do.” Reagan broke labor unions, repealed labor laws, funded dictatorships, and was generally a shitty, shitty president. All conservatives, for some reason, love Reagan. Probably because he reduced inflation - by removing housing from the CPI index, which means that housing is not calculated into inflation. I would think this explains how we claim our inflation has been low for 10 years, while our housing prices skyrocketed… I am no expert on the CPI though, feel free to correct me on this.
Back to the report. This Grace Commission report was written for Reagan. Notice also on page 14 where it says:
Importantly, any meaningful increases in taxes from personal income would have to come from lower and middle income families, as 90 percent of all personal taxable income is generated below the taxable income level of $35,000. Further, there isn’t much more that can be extracted from high income brackets.
It goes on to propose that if the government took 100% of all income from the upper class bracket, it would only run the government for 7 days. This is… a horrible argument. They are claiming that the rich should not be taxed further by showing that all of the income for the top bracket *IF it were the only source of revenue for the government* would only run it for 7 days? Does this show that increasing taxes for that bracket would not help at all? No.
To me, this sounds like Republican Propaganda. “Lower taxes! You can’t tax the rich any more, it won’t help!”
I also have an issue with the logic of the explanation of where the taxes go. They claim 1/3 goes to waste and inefficiency. How? Inefficient does not mean the money does nothing, it implies it is not being used effectively. Yet they claim that this means the money does *nothing* to help the tax payers. Then they claim that another 1/3 is never collected. So 1/3 of our income taxes is not collected? If it is not collected due to the reasons they present, then it is never recorded, and the government does not even know it is lost! The idea is that businesses ‘hide’ revenue, and so they do not pay tax on it, or people avoid paying the taxes in other ways. No business tells the government they owe $X dollars in taxes, and just does not pay. They are lying about how much they charged in taxes. This is a lost opportunity for revenue, but it is not *paid* income taxes that are then lost or misused, or wasted. It is money the government never had. Again, I am no expert here, someone correct me if I am wrong.
If you watch the documentary ‘The Power of Nightmares’, you can see how neocons like Rummsfeld and Wolfowitz were involved in making Reagan believe the Russian threat was greater than it was. Perhaps this report was to fool Reagan into believing that there were justified reasons to reduce taxes for the rich, and to tax the poor more? This is pretty much what this report states, using horrible, horrible arguments.
The income tax was put in place in 1913, pushed by ‘progressives’ the same group pushed for the Federal Reserve Act. In 1914, Woodrow Wilson started attacking other nations. He attacked Mexico alone SEVEN times in his presidency. The income tax gave the federal government a huge income. As you can read here, the real reason for Prohibition was that the income tax was generating so much revenue, that the government did not need the alcohol tax anymore. Prohibition had been pushed for decades before 1920. They repealed Prohibition because the Great Depression caused income tax revenue to drop dramatically. Surprise! Alcohol is made legal, for tax money.
As far as I can tell, the US started attacking neighboring nations in 1914. It would seem logical that if you want to wage war, you need money. Possibly the income tax was just put in place to fund the American Empire.
No matter what the purpose though, the money is most definitely not going into some banker’s pocket.
If someone can prove me wrong there, well just leave a comment here and I will start changing my banner. 
- Economy
- Comments(20)
Interesting. This is the first I’ve heard of these particular rumors, but I tend to agree with you.
I detest bankers with the heat of a million EZ Bake ovens and wholeheartedly believe that if they COULD pocket that money, they’d do it in a hot minute.
Luckily, I don’t believe that they can.
A year or so ago it was only the most extreme websites that promoted this idea, but now I see it creeping into the mainstream.
I also agree if they thought they could get away with it they would, but that would be too much money - the other greedy people like the politicians would want their piece of the pie…
not only grace commission, every commission has some or the agenda to promote. setting up any commission is just an eyewash for public. though the taxes have always been a matter of contention for every one.
Yes because if it were such a secret that income taxes were not being used for anything… why put it in a Commission Report that would be public? Or maybe this was some secret commission…? I don’t think so though.
it was the same rumsfeld who made bush believe that iraq was a threat greater than what was perceived. regarding taxes and inflation, its better left unsaid.
I like that you emphasized “International Bankers.” I’ve come across a lot of hate mongering and paranoia with the fear of “the global banker conspiracy.” And as for Quentin, no one made Bush believe anything: he had a goal the second he got into office.
I lean toward the idea that Cheney is the more evil one, and that Bush really does think he is doing what is best for America. Who knows though, it could just appear that way because Bush seems so senile the last few years…
The most insane part of the banker conspiracy is that people feel ALL of the money goes to make just a few men rich. I subscribe to some conspiracy theories (JFK was NOT shot with one bullet…) but the banking conspiracy is crazy.
It strikes me that a ballpark estimate could be produced, with a few (hopefully) easy to obtain figures and a bit of logical deduction. Firstly, you must know what ‘fractional reserve banking’ means, if you don’t know already there is a nice little videoclip called ‘Money as Debt’ which explains it quite simply. The upshot of it is that the central bankers print about ten times as much money as they have assets and then lend it to your government. You also need the following data:-
A) The total amount of Federal taxes collected from Americans (forget the uncollected taxes rubbish)
B) The size of your governments debt.
C) The rate of interest that your government pays on the debt.
Remembering how ‘fractional reserve banking’ works (the central banks are lending ten times more than the worth of their assets) The central banks are getting ten times the rate of interest on their actual assets, minus the rate of inflation and their costs (printing the bills, administration etc) it is hard to believe that most of the interest collected from the government is not clear profit. For the sake of argument lets assume that costs take the same size chunk out of the profits as inflation does. That would give them an 80% share of the interest as pure profit.
Using the Grace Commission report as an example (ignoring the ‘uncollected taxes’ distraction) half of the income tax went towards the interest on the governments debt, 80% of this (remember the assumption) would be profit. So at the time of the Grace Commission report, something like 40% of your taxes went straight into the pockets of the central bankers. Now I am not an economist, nor am I an American, so I may be missing something. If I am wrong then please correct me (stating that I am wrong without backing it up, won’t cut it) I think that you will also find that your government debt is much bigger now (thanks to George W)
ya its good..it forces me to think about it
I am shocked to listen to all this stuff.But how is this possible that our taxes are going in the pockets of international bankers , if its true then I guess u have done a great job mate.
@Falco - most of the money paid to the Fed goes back into the Treasury. Much of the interest we pay on our debt goes to other countries anyway…
@Kristiran - you misunderstand the article. The money is NOT going directly to bankers…
@Shane — I wasn’t trying to suggest that all of the money paid to the Fed is pocketed, that is clearly not true. I was simply trying to track the interest payments on the debt, I suspect that most of that is profit (whoever is collecting it) I also suspect that that is why warfare is so popular with the big bankers, wars tend to increase the government debt, the more the government debt, the more interest payments, the more profit for them.
Ahh, now I see what you meant. As for where the interest goes, it seems much of it gets sent to other countries that we borrow from. I would think they could not inflate the currency enough to just ‘print’ enough money to pay for the Iraq war, that would cause huge inflation I think.
But wars do cause inflation though, it seems they do inflate the currency somewhat to pay for things… which essentially means that the citizens are paying for it and don’t realize it.
Very interesting read. I discussed this with my friends. Hopefully it will all turn out well.
-Sasha
Im well versed in politics and I don’t really remember hearing this said. Maybe Fox news and CNN doesn’t count as an education.
Interesting post.
Not sure I understand - I said that this is something that people say on the Internet. That the hidden scam or conspiracy is that our income taxes go ‘directly into the pockets of international bankers’. I was saying that this is absolutely not true.
Treasury bills are subsidized by taxpayers. Those T-bills are ( or were) bought by Japanese, Chinese and other international banking interests who profit from the discounted paper.
That’s just one way our income taxes go ’straight into the pockets of international bankers.’
Conspiracy or no conspiracy, I’m sure we all agree on the same thing.
The U.S is a great place to live, even with the little problems we do have.
I agree with what you are saying. The reality is screwed bad enough as it is. We dont need to make up something crazy that isnt actually happening. That actually hurts the cause.
exactly. By making up weird stories, it makes it so that people who bring up legitimate issues with the Fed get laughed at, as people assume they are ‘conspiracy theorists’.