Where Does Our Tax Money Go and Who Controls It?
The allocation and control of tax money are critical aspects of modern society, yet the mechanisms and implications of how our tax dollars are utilized can be obscured by complex financial systems and powerful entities. This article delves into the sources, uses, and control mechanisms of tax revenue, highlighting the role of government spending and the impact of private financial cartels.
Government Revenue and Spending
Each year, the federal government collects trillions of dollars in tax revenue. In the United States, for instance, the Internal Revenue Service (IRS) collects approximately $3 trillion annually, which is used to fund a variety of programs and services. According to the latest data, this revenue is allocated as follows:
Benefits: Approximately $4.5 trillion is spent on Social Security, Welfare, and defense programs. Bureaucracy: The remainder is used to pay government employees and support the operations of various public services.At the state level, the picture is somewhat different. State tax revenue is not used to fund specific projects but is instead recorded in a consolidated account, netted against state expenditure. In the United Kingdom, for example, local authorities receive funding from the government, which is decided upon by a committee rather than being raised through local taxation.
The Role of State and Banks in Tax Revenue Utilization
Most states derive their income from two primary sources: state revenue and bank credit creation. Banks, licensed by the state, have the ability to create money out of thin air through the process of bank credit creation. This is accomplished by simply recording a deposit in a customer’s account, even if the bank does not have the funds to back it up at the moment the transaction is made. This process is often referred to as ldquo;fractional reserve banking.rdquo;
While certain banks are limited to deposit-taking and cannot create money, the majority of banks can create a significant amount of money, essentially printing it and allocating it to borrowers. This process is essential for injecting money into the economy to meet government responsibilities and liabilities. However, it also poses risks of inflation. To manage the money supply, governments tax the excess money out of existence, a process known as money destruction.
Private Financial Cartels and Government Control
The ability of private financial cartels to create and control money has significant implications for government spending and fiscal policy. Reginald McKenna, a director of the Bank of England in the 20th century, famously stated, ldquo;I am afraid the ordinary citizen will not like to be told that the banks can and do create money and that they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people.rdquo; This statement highlights the profound impact of private banking on governmental and societal policies.
Similarly, Sir Basil Blackett, another director of the Bank of England in the 20th century, expressed his concern over the influence of private financial cartels. He noted that these entities have the power to hold governments and individuals hostage, manipulating economic conditions and policy decisions to serve their own interests.
Implications and Solutions
The control and allocation of tax money are closely intertwined with the functioning of financial systems. Understanding these systems is crucial for effectively managing government spending and addressing economic challenges. Some possible solutions include:
Implementing more transparent and democratic financial systems to ensure better public oversight. Regulating the creation and distribution of new money to prevent inflation. Encouraging public debate and education about the role of banks and financial cartels in government spending.By shedding light on these issues, we can work towards a more equitable and accountable financial system that serves the best interests of the public.