THE NORMALIZED LAFFER CURVEAND

PROOF OF CONTINUING ECONOMIC COLLAPSE 5/30/2012

Ronald D. Bennett

THE NORMALIZED LAFFER CURVE Rolle’s Theorem states: if a curve crosses the abscissa twice then there must be a point between the crossings where the tangent to the curve is parallel to the axis. (first derivative = 0). The function describing the curve between the points must be continuous and the first derivative must exist. The Laffer curve is an equation relating tax revenue as a function of tax rate. The Laffer curve is y = E * xE is the economic activity or tax base and is a function of tax rate. E=f(x) x = tax rate in the range of 0 to 1 (0% to 100%)y = Tax revenue y’ = derivative of tax revenue = dy/dx

Laffer CurveTax Revenue = Tax Base * Tax Rate

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Chart 1 Normalized Laffer curve

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Economic activity is also a function of tax rate. A normalized Laffer curve is defined here as one in which the Tax revenue is actually normalized tax revenue compared to a theoretical utopian government with 0 taxes. The first zero crossing is when the tax base is multiplied by a tax rate of zero. The second zero crossing is located at a tax rate of one or 100%. The return from supplying labor services is zero at a tax rate of 100%. The consequence will be that all economic engines will stall and withdraw from the market. No engine (business) is 100% efficient. All require some overhead to keep running if taxed at 100% then all business must fail. This explains the two zero crossings along the abscissa. The Laffer curve for tax revenue has one maximum located at y’ = 0. Figure 1 shows the function y = x * cos(x*п/2) which could easily be interpreted as a Laffer curve if x is the tax rate and y is the tax revenues, and E = cos(x*п/2).

Normalized tax revenue:Tax revenue in the Laffer curve is actually normalized tax revenue compared to a theoretical government with 0 taxes. I envision this utopian government with 0 taxes as an Arcadian Constitutional based Government that is incorruptible and irenical. This Government is small protected utopian, peaceful, conciliatory, and incapable of being morally corrupted. The court systems in this government are fair and just and also not required because of the extreme moral capital and honesty of the citizens. (Heaven on Earth) In this society businesses cooperate together to co-create the required infrastructure in the most competitive and efficient manner. In this society if you lost your wallet on the street containing $100K, it would be returned with the $100K. Of coarse you would give a 10% finders fee because it is a perfect society. No good deed goes unrewarded. Of coarse this government with 0 taxes has never existed. The government at the peak of the curve is the Revenue Maximizing Leviathan which was postulated by Buchanan. A revenue maximizing Leviathan is intelligent enough to know when the marginal tax revenue is negative and disciplined enough to lower the tax rate when this occurs in order to increase tax revenue. The marginal tax revenue (y’= dy/dx) is the change in tax revenue which will result in a small increase in tax rate. To the left of the peak the marginal tax revenue is positive. To the right of the peak the Marginal tax revenue is negative.If x equal 0 is heaven on earth, then x equal 1 is Hell on Earth. The government at x equal 1 is a Tax Rate Maximizing Leviathan which could be envisioned as a multi-headed clever Dragon. Each head is competing for a bigger share of the shrinking tax revenue by inventing new taxes. The new taxes are concealed from the public and the other heads by cleverly disguising them as reforms and improvements, and using the tax due to inflation. At 100% tax rate there is 100% unemployment (excluding government and military employees) no private enterprise, no private property, no constitution, no rights. The infrastructure has collapsed. Crime is rampant. Everyone is a slave to the government which has complete control over who lives and who dies. The court system is the executioner for the government. DERIVATIVE OR SLOPE OF THE ECONOMIC FUNCTION CAN NEVER BE POSITIVE:The first derivative or slop of the normalized economic function can never be positive. The maximum slope is located at the origin. Since a positive slope would

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be an improvement over the normalized utopian economy which is impossible. E’ has a maximum value of zero located at x = 0. Some models of economic activity have been proposed with a positive slope at 0. The reason given for this is that government provided infrastructure causes an increase in productivity which is not available without the government and taxes. This implies that a monopoly is more efficient than a competitive system. Yes, infrastructure does increase the productivity of business. For example roads and railways increase the efficiency at which products may be delivered to market. However businesses are capable of working together to fund this same infrastructure in a competitive environment. So a government tax based infrastructure can at best approach that of a competitive business model. The government by implementing a competitive bidding system and offering incentives for innovation and lower cost can approach the efficiency of a free market system which inherently does these things. If there is no incentive then there is no innovation. GOVERNMENT INEFFICIENCY and BOUNDS FOR THE LAFFER CURVE:The productive government is a perfectly efficient government which for every dollar taken out of the economy as taxes, one dollar is added to the economy. Economic activity is not reduced at all by taxes. This government is operating at the same efficiency as the perfectly competitive system located at x = 0. This is a theoretical upper limit and is not achievable in reality because government must have some amount of overhead.The counter productive government is one whose rules and regulations cause damage to the economy. For every dollar taken out of the economy as taxes, economic activity is reduced by more than 1 dollar. This happens because addition rules and regulations require more cost and labor to meet government requirements. Some rules and regulations may be so costly as to force business to shut down or move offshore. The neutral government is one in which the counter productive and productive government components are equal and opposite and cancel each other. The neutral government is perfectly parasitic without causing damage. For each dollar taken out of the economy in taxes one dollar is lost or Economic activity is reduced by one dollar. The government does not provide any net goods or services and only extracts money form the economy. One sign of a neutral government is a collapsing infrastructure. The neutral government and the Laffer Curve:In the case of the neutral government the slope of the economic function is constant and equal to -1. One dollar extracted by taxes and the economy is reduced by one dollar. The economic function is therefore:E’ = -1 and E = 1 | x = 0 E = 1-x. y = tax revenue = x (1-x) = x-x2

y’ = 1-2xif y’ = 0 then x =1/2 and y = 0.25 and E = .5The Upper bound of the Laffer Curve:The best the government can do or the upper bound of the Laffer curve can be determined by taking the neutral government and adding all the tax revenue back.

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In this government all the tax revenue is cycled back into the economy and nothing is lost. This is the productive government operating at 100% efficiency.The upper bound of the economic function is ThereforeNeutral government + tax revenueE = [1-x ] + [ x(1-x) ] = 1-x2

y = Tax revenue = x(1-x2) = x-x3

y’ = 1-3x2

if y’ = 0 the x = sqrt(1/3) = 5.77 and y = 0.385 and E = 0.666E’ is never positive and has a maximum value at 0 of 0.

Theory:The Normalized Laffer curve has an upper limit and is bounded by the following equation for a perfectly efficient government.

Perfectly Efficient government: E = 1-x2

y = x-x3

Chart 3 shows the Laffer Curves for productive, counter productive and neutral governments. The Economic function and Laffer curve for the counter productive government is given by the following relationship where a < 1. E = 1-xa

Maximizing tax revenue results in an economy which is operating some where between .3 and .55 of theoretical maximum. A non-corrupt (above neutral) government would never maximize tax revenue. It would maximize prosperity or economic activity, by minimizing taxes. A corrupt (neutral and below) government will not stop at maximizing tax revenue but will continue increasing tax rates until the economy collapses and seize all property enslaving its citizens.If the government is operating above a tax rate of 50% then the government is not minimizing taxes and is corrupt. The equation for an efficient government would not apply in this case. Unfortunately there is no lower bound for the Laffer curve. It is like archery a perfect score is perfect and can not be improved, but there is no limit on how far you miss the mark.

Chart 2

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Laffer CurveProductive, Neutral, and Counter Productive Governments

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E = 1-x Neutral Gov. E = 1-x^2 Productive Gov. E = 1-x^.5 counter productiov gov.

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Government Efficiency:Just as a perpetual motion machine with 100% efficiency has never been found. It is unrealistic to expect that any government operate at 100% efficiency as in the productive government. One would expect government efficiency to start at 100% when government size is zero and decrease as the size of government grows. The cosine function for economic activity has just such an efficiency curve. The cosine function also has the required derivative maximum value of 0 at x = 0 and never goes positive. The natural efficient government is defined here as the maximum possible efficiency of any real government. Theory: The economic function for the natural efficient government is the Cosine function. E = cos(x*π/2)The cosine tax revenue peaks at a tax rate of .548% and a government efficiency of 93.16%. That is a loss of only 6.84% of tax revenue over a perfectly competitive system. See Chart 1 for a plot of the Cosine function versus efficiency and the productive government. The Cos economic function has the highest efficiency of all possible governments. As the efficiency of government decreases so does peak of the Laffer curve. It is not possible for any government to have a peak higher than 0.548%.Theory: The marginal tax revenue is negative if the tax rate is above 0.548%. This is true for all valid governments and economic functions.

Chart 3

Natural Efficient Government E = cos(x*π/2)

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Productive Gov. x(productive gov.) natural efficient gov. x(natural efficient gov.) difference Efficiency

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The reason the cosine function was picked is that its efficiency and derivative are the best fit to the required data. Many fundamental laws of physics and chemistry can be formulated as differential equations. In biology and economics differential equations are used to model the behavior of complex systems. The most general solution to a linear differential equation is an exponentially damped cosine function. Differential equations have a built in or natural efficiency. This is the maximum efficiency occurring in nature. Euler's formula shows the cosine as the real part of the complex exponential function. PROOF IF CONTINUING ECONOMIC COLLAPSE:The Laffer curve will be used to present a Proof that the economy will continue its collapse, followed by supporting data.

1. Tax revenue is decreasing.from economic data. (see record tax revenue declines)

dy/dt < 0

2. The government is increasing the Tax rate.from economic data (see tax rate is increasing exponentially)

dx/dt > 0

3. The marginal Tax revenue is negative.dy/dt < 0 dx/dt > 0

Marginal Tax revenue = y’ = dy/dx < 0

4. The tax rate maximizing Leviathan is not able to reduce the tax rate. As Tax rates increase towards a maximum of 1. The Tax revenue will continue to decrease to 0. At that point all business will fail and the government will own all resources.

y = 0 when x = 1

5. The decrease in Tax revenue is accelerating.The Laffer curve is concave so the second derivative (acceleration) is negative.

dy2/dt < 0

Record tax revenue declines:Tax receipts for first quarter of 2009 are down 30% compared to 2007 and 2008. For the first time since 1983, the U.S. government posted a deficit in April. Personal tax collections in April historically result in a big surplus — on average about $68-billion. Tax receipts are on pace to drop 18 percent this year. Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever. The last time the government's revenues were this bleak, the year was 1932 in the midst of the

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Depression.

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Tax rate is increasing exponentially:The Federal government is raising the tax rate mostly by increasing the hidden tax due to inflation and inventing cleverly disguised new hidden taxes. The hidden tax due to inflation tracks the money supply. By increasing the money supply with government deficits and bailouts the hidden tax due to inflation is automatically increased. The local governments are also raising property tax rates, utility fees, and local taxes as much as possible without having to call an election. New taxes always increase the tax rate because the government in not lowering or eliminating existing taxes. Tax rates will increase exponentially, but not tax revenues.

Chart 4

Revenue vs SpendingU.S. Federal Government

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Chart 4 shows spending accelerating exponentially as Tax revenue decreases. Since tax rates are expected to follow spending, the above chart is a graphic picture of negative marginal tax revenue. Delta tax rate is positive and delta tax revenue is negative. Deficit spending increases the tax rate by increasing the tax due to inflation.Marginal tax revenue is negative:The above Economic data shows that Marginal tax revenue is negative. This will be verified by showing that the current tax rate is past the peak of the Laffer curve. The peak of the neutral government is located at a tax rate of 50%, and 55% for the natural efficient government. The current government is at best a neutral government. Business are closing and moving offshore which is a sign of a non productive government. The peak for the non productive government is less than 50%. The infrastructure has been collapsing for Decades which is a sign of a neutral government. Even with government revenue and deficits at record levels infrastructure is being neglected. Bridges are collapsing, levees breaking due to lack of maintenance. Existing roads and bridges are being sold to private

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corporations to be converted to Toll so the government does not have to fund maintenance. The U.S. Department of Transportation reports that nearly 25 percent of bridges in the U.S. - over 152,000 bridges - are "structurally deficient or functionally obsolete." The American Society of Civil Engineers found more than 150 levees to be at high risk of failing due to poor maintenance. Over a quarter of the dams overseen by the Corps of Engineers have exceeded the lifespan for which they were designed and need major repairs to ensure their safety. Almost every state has reported record breakdowns in water infrastructure2. Even with all of the above evidence pointing to a neutral or below government, it is impossible to prove this. This is where the upper bound of the Laffer curve comes in. Even if the government was operating at the maximum possible efficiency (the natural efficient government) the peak is located at 55%. Therefore if the tax rate is over 55% then marginal tax revenue is absolutely without a shadow of a doubt negative. The tax rate is estimated to be 62.8% in the last section of this document confirming that Marginal tax revenue is negative.THE MISSING KEY TO THE ECONOMIC COLLAPSE – HIDDEN TAXES:Hidden tax due to InflationThis tax is hidden in plain view because most people are aware of it but few people are aware of its magnitude. The Federal Reserve has a monopoly to issue banknotes and lend the government all the money it needs. The Government spends the money and eventually pays it back. The government pays the loan off with inflated dollars. The dollars used to pay back the loan are not equal to the original loan value. The rest of the loan value was paid by the fact that the value of every dollar decreased. This money came from your 401k, your house, your farm, your business, from the total assets which make up our nation. This is the hidden tax caused by inflation. The government admits that it prefers to pay back loans with inflated dollars as an open policy. Most of the money from this tax does not even go to the government. The Fractional Federal Reserve System creates multiple loans on the same money. These loans may go to private and even foreign governments and corporations. The U.S. Government pays much more than the banks which pay only 0.25% or even 0. To ignore this tax is to ignore what has evolved into the major funding mechanism of our government. The revenue generated by this tax in 2007 is estimated to be 1.6 times the total Income tax revenue in 2007. This is the spending or distribution side of the equation. The amount gained when the loan is paid with inflated dollars is Inflation minus one.Tax received = (inflation adjusted gain)* (Inflation-1) Inflation adjusted gain = principle*rate of return/InflationThe supply side of the equation is when the money is extracted from our accounts using the hidden tax of inflation. Tax paid = Gain without inflation – Gain adjusted for inflationTax paid = Asset*rate of return – Asset *rate of return/InflationTax paid = Asset*rate of return/Inflation * (Inflation -1)Tax paid = (inflation adjusted gain) * (Inflation -1)Notice that if Asset equals principle and the inflation and rate of return are equal, thenThe tax received and tax paid is equal. Supply side equals source side.The Hidden Tax due to inflation calculation:

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At 3.99% annual rate of return an investment will double in 17.72 years. At 3.99% inflation money will loose ½ of its value in 17.72 years. This is the tip of the iceberg. The money that you earn on your investment also looses ½ of its value so the more you earn the more you loose. A simple approximation of the tax due to inflation is to calculate how many years it would take for the tax to equal 100 percent of the original value of your 401K account. Without inflation and earning 3.99% APR averaged over a period of 17.72 years, the investment will double. (Gain = 100%) This same account will break even over the same period if inflation is 3.99% (Gain = 0). The hidden tax due to 3.99% inflation is (100 - 0 = 100%) of the initial account value every 17.72 years. A healthy small business will achieve a return on investment of 15% per year. If you own a small business and invest 1million dollars and receive a ROI of 15% per year your hidden tax due to 3.99% inflation on your 1 million dollar investment is 6 million dollars over a period of 18 years. The gain without inflation over 18 years is 12 million and inflation takes ½ of that or 6 million. At 15% ROI the tax is equal to 100% of your initial investment in only 9 years. At 25% ROI the tax is equal to 100% of your initial investment in only 6.6 years. After 100 years at 25% ROI your tax is 4.8 billion times the original investment. (The tax on one dollar invested 100 years ago at 25% APR is 4.8 billion dollars) The longer you invest and the more you earn the higher the tax due to inflation. The tax due to inflation is a tax on the rich. If you don’t have money you don’t have to pay the tax. If you have money or earn money the tax extracts it. Table 1 Shows the Tax due to inflation as a function of account earnings (APR) and time invested in years.

Table 1  Tax due to 3.99% Inflation versus Time and Earnings

Years APR 3% APR 3.99% APR 5% APR 6% APR 7% APR 7.27% APR 8% APR 9% APR 10%5 0.21 0.22 0.23 0.24 0.25 0.25 0.26 0.27 0.2910 0.44 0.48 0.53 0.58 0.64 0.65 0.70 0.77 0.8415 0.69 0.80 0.92 1.06 1.22 1.27 1.41 1.62 1.85

17.718 0.84 1.00 1.19 1.40 1.66 1.73 1.96 2.30 2.7120 0.98 1.19 1.44 1.74 2.10 2.21 2.53 3.04 3.6525 1.31 1.66 2.11 2.68 3.39 3.61 4.27 5.38 6.7630 1.68 2.23 2.99 3.97 5.26 5.68 6.95 9.16 12.0535 2.10 2.93 4.11 5.73 7.96 8.71 11.03 15.22 20.9640 2.58 3.78 5.57 8.13 11.84 13.12 17.18 24.84 35.7945 3.13 4.81 7.44 11.40 17.39 19.51 26.43 40.02 60.450 3.76 6.07 9.85 15.82 25.29 28.73 40.27 63.8 100.855 4.49 7.60 12.93 21.78 36.51 42.01 60.9 101.1 167.160 5.33 9.46 16.89 29.83 52.40 61.08 91.6 159.2 275.465 6.29 11.72 21.97 40.67 74.88 88.4 137.1 249.5 451.870 7.41 14.46 28.46 55.26 106.62 127.5 204.5 389.8 73975 8.69 17.80 36.77 74.85 151.37 183.3 304.1 607.1 120480 10.18 21.87 47.39 101.17 214.4 263.0 451.3 943 195985 11.89 26.81 60.98 136.49 303.2 376.7 668.5 1463 318090 13.88 32.81 78.34 183.86 428.1 538.6 989 2266 515695 16.17 40.12 100.53 247.4 603.6 769.3 1461 3506 8349100 18.83 49.00 128.87 332.5 850.4 1098 2156 5418 13505

THE MAGIC OF COMPOUND INTEREST AS A HIDDEN TAX MACHINE:

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The Federal Reserve was created in 1913. It is exactly 100 years from the beginning of 1913 to the end of 2012. The price of gold per ounce today ($1000.00) is 50 times the cost of gold in 1913 ($20.00). This corresponds to an average inflation rate over the past 100 years of 3.99%. The value of the gold did not change the value of the dollar has decreased by 0.02. The dollar today is worth 2% of its 1913 value. The DOW is not at 10,000 it is at 200 in 1913 dollars. The tax on a 401k account earning 3.99% over the last 100 years is (49-0) = 49 times the initial investment. The tax on the money supply in 1913 earning 7.27% from 1913 to 2009 (95 Years) is 769 times the initial investment of 14.9 Billion. The TAX due to inflation is equal to the Gain without inflation minus the Gain adjusted for inflation. The tax on the M3 money supply is M3 minus M3 adjusted for inflation. The Federal Reserve stopped publishing M3 statistics in March 2006. The M3 is estimated to be 14.9 trillion dollars in 2009. I estimate the money supply to be 23.7 trillion dollars in 2012. This 23.7 Trillion includes:• $6.8 trillion from the Federal Reserve • $2.3 trillion from the FDIC • $7.4 trillion from Treasury • $7.2 trillion in other government programs This is the current amount of the bailout assuming no new bailouts or deficits occur between now and 2012. This is an unrealistic assumption but very conservative. Also the inflation rate 3.99% is the average inflation from 1913 to 2009 and does not include the expected increase in gold prices from 2009 to 2012.M3 is increasing on average at a 7.25% APR. This includes 3.99% inflation and 3.13% APR real gain. Chart 5 shows the M3 money supply, M3 adjusted for inflation and the Tax due to inflation on M3. Table 2 shows the values of the last 12 years.

Chart 5

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Total Hidden Tax due to 3.99% inflation on M3 money supplyM3 average APR IS 7.25%

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Table 2TAX on M3 money supply with 3.99% Inflation

Time   TOTAL TAX TAX PER YEAR TAX PER dollars / yearyears year TRILLIONS TRILLIONS YEAR % Each Taxpayer

88 2000 7.028 0.617 7.02% 4,37689 2001 7.838 0.810 9.21% 5,74590 2002 8.348 0.509 5.79% 3,61091 2003 8.677 0.329 3.74% 2,33592 2004 9.220 0.543 6.17% 3,84793 2005 9.953 0.733 8.34% 5,19994 2006 10.920 0.967 10.98% 6,85195 2007 12.701 1.782 20.25% 12,63096 2008 13.966 1.264 14.37% 8,96197 2009 14.467 0.502 5.70% 3,55698 2010 15.931 1.464 16.64% 10,37899 2011 18.850 2.918 33.17% 20,688

100 2012 23.226 4.376 49.74% 31,022The total tax due to 3.99% inflation on the M3 money supply is 12.7 trillion in 2007 and will be at least 23.2 trillion in 2012. The tax increase per year is 1.8 trillion in 2007 and will be at least 4.3 trillion in 2012. It is important to know that no new taxes, bailouts, or deficits are necessary to reach this level. 23.7 trillion is the current size of the Bailout plus TARP. This will add 20.25% to the 44% base tax rate in 2007 and 49.74% to the 44% base tax rate in 2012. This shatters the illusion that we have the right to accumulate wealth. We do not have the right to accumulate wealth or the right to own property. There is a peak in the tax due to inflation in 2007 which precipitated the current economic crisis. A dip in 2009 will allow for a temporary jobless recovery. The crisis will resume in 2010, for the final plunge. The financial 911 which started with the bailout in September of 2008 is complete. No new taxes or bailouts are necessary to reach a tax rate of 90% in 2012.

The fractional Federal Reserve banking system is a ponsi scheme. The Federal Reserve is no more federal than Federal Express. The Federal Reserve is a private banking cartel. When the Ponsi scheme runs out of money it will collapse. It will run out of money when the tax rate reaches 100%. This will occur when the debt reaches approximately 24 Trillion dollars.

THE ESTIMATED 2007 U.S. TAX RATE IS 62.8% A summary of 2007 income tax data is shown in table 3. The income tax on average in 2007 was 12.68%. Next, all of the obvious taxes are added in table 4 to the income tax for a total of 44%. Sales tax is calculated as 8% of disposable income which is 56%. The property tax is calculated using .01875% and the value of the home being 2.5 times income. Other taxes are estimated to be 6.9% as shown in table 5. The other taxes shown in table 6 were not included in the estimate in order to save time. Adding the hidden tax due to inflation brings the total up to 62.8%.

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Table 3  2007 Income Tax Data

141,070,971 No of Tax returns with positive AGI in 2007$8,798,500 Adjusted Gross Income millions$1,115,504 Income Tax millions

12.68% Income Tax RateTable 4

Tax Rate of Obvious TaxesPercentage $ millions Tax

12.68% $1,115,504 Income Tax12.40% $1,091,014 Social Security Tax2.90% $255,157 FICA4.48% $394,173 sales Tax 8% of 56%4.69% $412,430 Property Tax 2.5 * income * .018756.90% $607,436 other tax (see list of taxes)

44.05% $3,875,713 total taxes56% $4,922,787 AMOUNT WE GET TO KEEP

Table 5

Percentage millions OTHER TAXES4.495% $395,536 Corporate Income Tax0.669% $58,900 Fuel Taxes0.330% $29,000 Other Excise Taxes and “Sin” Taxes0.150% $13,200 Workers’ Compensation Taxes0.321% $28,200 Unemployment Taxes0.213% $18,700 Import Taxes0.076% $6,700 Hotel-Room Taxes0.045% $4,000 Airline Taxes0.182% $16,000 State/Local Utility Taxes0.125% $11,000 Implicit Telecommunications and Electricity Taxes0.052% $4,600 Severance Taxes0.102% $9,000 Insurance Premium Taxes

0.143% $12,600 Licenses (Occupation, Corporate, Utility, Alcohol, and Amusement)

6.90% $607,436 Total other taxes

Table 6

2007 Total Tax Rate including hidden tax due to 3.9% Inflation on M3Percentage $ millions Tax

12.68% $1,115,504 Income Tax12.40% $1,091,014 Social Security Tax2.90% $255,157 FICA2.98% $261,843 sales Tax 8% of 37.2%4.69% $412,430 Property Tax 2.5 * income * .018756.90% $607,436 other tax (see list of taxes)

20.25% $1,781,728 tax due to 3.9% inflation on M3 money supply in 200762.80% $5,525,111 total taxes37.2% $3,273,389 AMOUNT WE GET TO KEEP

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Table 7

TAXES NOT INCLUDED IN OTHER TAX ESTIMATEAccounts Receivable Tax Interest expense School TaxAirline Tax Inventory Tax Septic permit TaxAutomobile Registration Tax IRS interest charges Service charge TaxesBuilding Permit Tax IRS penalties Employer Share of Payroll TaxesCapital Gains Tax Liquor Tax Social Security TaxCDL license Tax Local income Tax State Income TaxCourt Fines indirect Tax Luxury Taxes State Unemployment Tax (SUTA)Dividend Tax Marriage license Tax Toll Bridge TaxesDog License Tax Medicare Tax Toll Tunnel TaxesEstate Tax Occupation License Tax Traffic finesExport Tax Parking meters Trailer registration TaxFishing license Tax Payroll Tax Vehicle License Registration TaxFood license Tax Property Tax Vehicle Sales TaxFuel permit Tax Real Estate Tax Watercraft registration TaxHotel-Room Tax Recreational vehicle Tax Well Permit TaxHunting license Tax Road toll booth Taxes Workers Compensation TaxInheritance Tax Road usage Taxes  

WHAT WOULD IT TAKE TO GET TO 100% TAX RATE?Just by doing nothing we can approach a total tax rate of 90% in 2012 as shown.

Table 82012 Total Tax Rate including hidden tax due to 3.9% Inflation on M3

Percentage $ millions Tax12.68% $1,115,504 Income Tax12.40% $1,091,014 Social Security Tax2.90% $255,157 FICA0.79% $69,684 sales Tax 8% of 9.9%4.69% $412,430 Property Tax 2.5 * income * .018756.90% $607,436 other tax (see list of taxes)

49.74% $4,376,360 tax due to 3.9% inflation on M3 money supply in 201290.10% $7,927,584 total taxes

9.9% $870,916 disposable income

Everything is in place for the complete collapse of the economy. It is not necessary to reach 100% in the tax rate to crash the economy. There are 26% in new taxes being planned. Only 10% more is required to reach a 100% Tax Rate.

Table 9

Potential new taxesPercentage $ millions Tax

8.52% $750,000 Health-care Reform4.16% $366,000 Carbon Tax1.02% $90,000 Cap and trade

12.50% $1,100,000 Federal Sales Tax26% $2,306,000 Total potential new taxes

Summary:The Laffer curve represents tax revenue as a function of tax rate. Tax revenue is

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tax rate multiplied by economic activity or tax base. Tax revenue in the normalized Laffer curve is actually normalized tax revenue compared to a theoretical utopian government with 0 taxes. The curve has one peak located at y’ = 0. Marginal tax revenue is positive to the left of the peak and negative to the right of the peak. The neutral government is perfectly parasitic without causing damage. For each dollar taken out of the economy in taxes one dollar is lost or Economic activity is reduced by one dollar. The economic function for the neutral government is E = 1-x. The normalized Laffer curve has an upper boundary defined by the economic equation for the perfectly efficient government. (E = 1-x2) The natural efficient government is the maximum possible efficiency of any real government. The economic function for the natural efficient government is the Cosine function. (E = cos(x*π/2) The Laffer curve for the natural efficient government peaks as 0.548%. The marginal tax revenue is always negative if the tax rate is above 0.548%. This is true for all types of governments and all real economic functions. Summing all of the obvious taxes the U.S. tax rate is estimated to be 44%. The Biggest Tax is the tax due to inflation which is calculated to be 1.78 trillion dollars in 2007. This will add 18.75% to the current tax rate, making the current tax rate is at least 62.8%. The current level of the bailout will cause a tax due to inflation of 4.4 trillion dollars in 2012. This will add 46% to the tax rate bringing the total tax rat to 90% in 2012. This is well past the peak of a neutral government located at 50%, and marginal tax revenue is negative. This is verified by economic data which shows the marginal tax revenue as negative. The government is increasing spending and the tax rate exponentially. Therefore economic activity and tax revenue will continue to accelerate to zero. If no corrective action is taken then the tax rate will be 90% by 2012. No new deficits, bailouts or taxes are required to reach a tax rate of 90%. However there is 26% in new taxes planned to be enacted. If inflation continues to increase and new taxes are enacted, then the tax rate will approach 100% over the next two yearsAt 100% tax the government will own all property. The derivates bubble has reached 1.5 Quadrillion dollars, and is over 100 times GDP. Total U.S. GAAP based obligations is 4.6 times GDP. The U.S. GAAP based deficit is 5.1 Trillion dollars or 36% of GDP1. Once you see that a debt this large can never be paid, it is easy to understand that whoever owns this debt owns us. The government already owns all property. The rent paid to the government on property is called the property tax. A Property tax of 2% is equal to the total value of your property every 50 years. At 100% tax all business will fail and the only jobs will be for the Military Government Complex. X-Employment is defined here to be Unemployment plus Government and Military employees. The current unemployment estimate is between 10 and 20%. The current X-Employment is estimated to be between 25% and 50%. When X-Employment reaches 100% unemployment could be as high as 64%.

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Table 10Current Unemployment and X-Employment Estimate

100.00% MAX. MIN. Total workforce63.77% 20.60%1 10.03% un-employed34.45% 28.71% 14.39% Government employees1.77% 1.48% 0.93% Military

100.00% 50.79% 25.35% X-Employment

I am predicting a total collapse of the U.S economy by showing that everything is already in place to engineer this collapse. I am not the first person to predict a catastrophic event by the year 2012. If we wait until the presidential election in 2012 to take corrective action, it will be too late.Just as energy can not be created or destroyed and only changes from one form to another. The Laffer curve can be thought of a Transition from one form of government to another. The wealth and property are transferred from one class to another. In the case of the United States the transition is form capitalism to fascism, and the wealth is moving from the middle class to the ruling class. The Laffer curve shows only half of the picture. The Laffer discussed in this article shows the wealth leaving the capitalist society, but it does not show the new government. A second Laffer curve is required to show the money entering the Fascist or communist society.

The fractional Federal Reserve banking system is a ponsi scheme. The Federal Reserve is no more federal than Federal Express. The Federal Reserve is a private banking cartel. When the Ponsi scheme runs out of money it will collapse. It will run out of money when the tax rate reaches 100%. This will occur when the debt reaches approximately 24 Trillion dollars.

Reference:1. John Williams - http://www.shadowstats.com/2. Truthout - http://www.truthout.org/article/collapsing-bridges-sinking-levees

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