FATCA: Congressional Idiocy

Is H.R. 2847 the Worst Proposed Law of the Year?

by Rodger Malcolm Mitchell, www.nofica.com

Considering how inept and indeed, criminal, Congress is, to call something the “worst” law really says a lot. But that is my opinion, and I’ll let you be the judge.

If you haven’t already, you soon will hear a great deal of garbage about a truly garbage law: H.R 2847, aka “Hiring Incentives to Restore Employment Act” aka HIRE.

Summarized in Wikipedia, one purpose of the law is:

. . . to provide payroll tax breaks and incentives for businesses to hire unemployed workers.

The law includes the usual complicated, convoluted formula, which is Congress’s method for obscuring the real negative effects of its legislation:

Employers are eligible for a payroll tax credit when the employer hires certain new employees.

The employee must have either been unemployed for at least 60 days prior to hire or worked fewer than 40 hours for another employer during the previous 60 days.

Employers do not pay the employer portion of social security tax, which is 6.2 percent, on wages paid to eligible new hires.

In addition, employers receive a general business income tax break if the employer continues to employ the new hire for at least 52 weeks.

The tax break is the lesser of $1,000 or 6.2 percent of wages paid to the new employee during the 52-week period.

Ineligible are employees who earn more than $106,000 per year and employees who displace a current employee, unless the first employee resigned or was terminated for cause.

If that unintelligible law isn’t twisted enough. Congress claims the need to “pay for it” by adding another more sinister law: Foreign Account Tax Compliance Act of 2010(FATCA). According to Money News

FATCA deals with U.S. taxpayers that hold foreign accounts overseas.

It requires them to report their foreign accounts and offshore assets to the government and foreign financial institutions (banks, stock brokers, hedge funds, pension funds, insurance companies, trusts, etc.) are also required to report information about the ownership of overseas assets.

These institutions will have to send annual reports to the IRS on the name and address of each U.S. client as well as their largest account balance in the year and their total debits and credits within the accounts.

If an institution does not comply, the United States will impose a 30 percent withholding tax.

There are other features of this monster set of laws, which I won’t describe. First I’m not tax-law competent enough, and second, the details aren’t the point, which is thatthe law is based on three myths.“

Myth 1. In exchange for a payroll tax credit, an employer will hire someone he doesn’t need. As a businessman, who over the years has employed thousands of people, I can assure you of this: I never hired someone I didn’t believe I needed.

The cost of employees is so great, that a small reduction in taxes would not entice me. In fact, my thought always was to do everything possible not to hire people.

As business grew, I would create efficiencies, add equipment, farm out certain functions, and only as a last resort, would I hire people.

And I certainly would be reluctant to hire someone I had to keep for 52 weeks.

Myth 2. It’s better for the economy, i.e. reduces unemployment, to hire someone who currently is unemployed than to hire someone who is employed. Only in the world of Congress, could this make any sense at all.

As mentioned in Myth #1, businesses only employ the people they feel they need.Whether a company hires an unemployed person or an employed person, makes no difference in total employment.

Yes, hiring an unemployed person can reduce unemployment. But hiring an employed person, causes him to leave his previous job, which creates a need there. So they hire someone, which also reduces unemployment.

The key to reducing unemployment is not a naive, complex law to reward employers for hiring the unemployed, as opposed to hiring the employed. The key to reducing unemployment is to increase the need for hiring.

How? By strengthening the ability of the middle- and lower-income groups to purchase.

If the people are stronger financially, they will buy more goods and services, which will stimulate businesses to take on more employees. The “Ten Steps to Prosperity”(below) would do just that.

Except in rare circumstances, companies don’t hire first, then hope business will improve. Companies wait until business improves, then hire to meet the need.Business precedes hiring. The government seems to think hiring precedes business.

Finally, even reducing unemployment is not a worthwhile goal. The goal should be to increase the standard of living of all Americans and to help us achieve happiness we all pursue. That is accomplished, not by making more of us work more. Quite the contrary.

The goal should be for more of us to work less, but receive more. That is what increased efficiency was supposed to accomplish. Instead, we have more of us working less and receiving far less.

The cure: Increased federal social spending. More people receiving more, would spend more, thus encouraging more production,leading to more hiring, which in turn would encourage even more spending, in a rising helix of prosperity.

It all begins with money flowing to the middle- and lower-income groups. It begins with a narrowing of the GAP between the rich and the rest.

Myth 3. The federal government needs additional taxes to pay for H.R. 2847. By now, you have learned this is called the BIG LIE, and is utter nonsense. The U.S. federal government is Monetarily Sovereign. It has the unlimited ability to create its sovereign currency, the dollar.

Even if all federal taxes fell to $0, the federal government could continue paying all its bills, forever.

Bottom line: For the false need (the BIG LIE) to “pay for” a complicated and completely useless employment bill, Congress has established a NASA-style, international information-sharing program, the goal of which is to ensnare the entire world in a gigantic, financial database, allowing all governments to know everything about everyone.

H.R. 2847 in nothing more than the stalking horse for FATCA. Even after H.R. 2847 is shown to be useless, and disappears, FATCA will remain, and yet another step will be taken toward overall and absolute government rule over, and intrusion into, our lives.

Knowledge is power, and in America, the powerful continue to increase their intimate knowledge of us.

Mitchell’s laws:

• The more federal budgets are cut and taxes increased, the weaker an economy becomes.
• Austerity is the government’s method for widening the gap between rich and poor, which ultimately leads to civil disorder.
• Until the 99% understand the need for federal deficits, the upper 1% will rule.
• To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
• Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
• The penalty for ignorance is slavery.
• Everything in economics devolves to motive, and the motive is the gap.