Californians’ $8 trillion in tax surpluses: What to ask your state, local representatives
By Carl Herman, 06/08/12
Source: Washington’s Blog
Trillions in tax surpluses are revealed in government Comprehensive Annual Financial Reports (CAFRs). This applies to every state; California’s various government CAFRs reveal $8 trillion in a sampled study, and the state CAFR alone shows $600 billion (explore here to see how to document other states).
I edited this to a 250 word editorial for my local papers, that you are also welcome to use. This 10-minute radio excerpt of CAFR pioneer Walter Burien’s explanation might help to understand the extent of malfeasance for failure to clearly disclose these funds to the 99% (households earning less than $400,000/year).
The following request for answers and action from government representatives can also be adapted for your use. I will contact my two state representatives’ offices and publish their responses and actions.
Dear California representative with legal fiduciary responsibility to factually report and represent the public’s interests:
We request you affirm or refute each of the following seven points, and encourage your comments for public consideration. We promise to make your response public. We promise to judge you by your acts more than your words, and will follow-up and publicly report as we see appropriate. If you decline to respond to $8 trillion in documented tax surpluses from public financial reports, we will make that response public knowledge, and will do so repeatedly.
- California’s Comprehensive Annual Financial Report (CAFR) shows a tax surplus of $600 billion in cash and investments. So-called “designated funds” are only designated as long as you say so, and it a liethat a $16 billion budget deficit leave “no choice” but austerity. This is similar to government claiming a checkbook shortage requires devastating cuts to our children’s education while lying in silent omission about a savings account with over 35 times the claimed shortage.
- “Investments” in other government debt securities is Orwellian: a net loss to taxpayers because it transfers interest from one group of taxpayers to another minus the cost of debt-creation and management. On page 83 of the 2011 CAFR, Californians own $92 billion in various government debt securities, and on page 107 we have $164 billion in our own state’s debt. Clearly, a $600 billion investment portfolio makes debt and their net taxpayer losses unnecessary, and demands independent and professional cost-benefit analyses for us to understand our options.
- “Investments” in corporate boardroom table scraps of dividends is clearly not required to fund retirement accounts, and a tremendous subsidization of stock-exchange traded companies who receive our tax money. The current $457 billion value of this portfolio (page 83) is a tax surplus belonging to the people of California, and not the “only option” to fund retirement benefit payouts. Rather than overtaxing Californians by $600 billion, retirement could obviously be funded as “pay as you go.” Page 235 of the CAFR reports the fund grew by $68 billion since 2010, while we’re being told we must accept austerity from a $16 billion budget deficit! At the very least, this data demands professional and independent cost-benefit analyses for Californians to know the full facts and options of our investment portfolio. The harsh truth is that this comprehensive data reveals criminal economic fraud to keep Californians in the dark about their money and options.
- If this $600 billion were returned to California’s 12 million households, each would receive $50,000. Or, if you prefer the money returned per average household income of $50,000 since this sum represents an overtax, each household could receive a proportional amount (if your household earns $150,000/year, you would receive $150,000).
- But hold onto your accounting books: the total estimated amount of tax surplus in California is$8 trillion based on sampling of the ~14,000 various government CAFRs. If this figure is accurate, and it’s probably conservative, then each California household has been overtaxed by a present-day value of over half a million dollars ($500,000). And if we take our example of $150,000/year income, well, you’ll be happy to understand you’re owed a credit of ~$1.5 million as your share of this overtax ($1,500,000). Of course, these colossal investments should be considered by multiple and independent cost-benefit analyses to discover our options; we can’t simply all cash them in.
- The understandable need for “rainy day” accounts would not be needed if California had a state-owned bank like North Dakota to extend at-cost credit for temporary budget deficits (North Dakota is the only state with its own bank and the only state with increasing budget surpluses). The state doesn’t need Wall Street to fund budget deficits, it can create it’s own credit. Indeed, if the state offered mortgages at 2%, the revenue from interest payments would more than cover our state tax burden. This demands independent cost-benefit analyses for public consideration.
- At the national level, we could create debt-free money to directly pay for public goods and services. Here are three simple points to explain:
- The US does not have a money supply; we have its Orwellian opposite as a debt supply. This is because the US leading banks won legal right through passage of the 1913 Federal Reserve Act to have private banks and the Fed create debt for what we use as money, and then charge the 99% for its use.
- The policy choice of a debt supply compounded with interest causes ever-increasing aggregate debt that can never be repaid. It can’t be repaid because this is what we use for money. The US national debt now pushing $16 trillion has a gross annual interest payment over $400 billion a year; ~$4,000 per US family of $50,000 annual income (if your household earns $100,000, then your gross annual interest payment is ~$8,000 every year).
- Monetary reform creates debt-free money that extinguishes the debt (details here), and allows government to become employer of last resort for infrastructure investment (hard and soft). This creates full-employment, optimal infrastructure, and falling prices because infrastructure historically creates more value to the economy than cost.
The Claremont Colleges held a conference to explore monetary and credit reform in April 2012. For those who want to review the papers and filmed talks meant for the general public to understand as clearly as I hope I’ve written here, explore this link.
And for even better news, consider resource-based economics as a predictable future beyond monetary and credit reform.
Finally, you might wonder about the six US corporate media giants with literally massive investment in these government investments funds buying their stock, and their prima facie conflict of interest to report what you’re reading here. It’s not as if these are new ideas; Benjamin Franklin is among America’s brightest minds who wrote on credit and monetary reform.
We’ve wondered about corporate media’s commitment to factual reporting too, but that’s an issue for another day.
Please consider your future in forming your public response, public representative. We encourage your betting your future upon the success of 100% of Earth’s inhabitants, and not with those who would hide trillions from we the “99%” while forcing our austerity.
We are informed, and will inform the 99% of your public words and acts, representative. We are no longer willing to kiss our own assets goodbye.
We are willing to help your informed actions at your request.
- Reid To Offer $2.5 Trillion In Deficit Reductions And No Tax Increases
- Banks face $3.6 Trillion Slouching Towards An Abyss
- David Stockman: Treasury Market “Roach Motel”, Endorses A Tobin Tax
- Recession/Depression Is Just A State Of An Actuarian’s Mind
- Michael Hudson: Financial & Tax Reform: First Get Rid of Geithner, Holder, and Similar Obama Appointees