Guest Post: Do The Parasitic Elite Pay Any Taxes?

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

Do the Parasitic Elite Pay Any Taxes?

The parasitic financial Elite don't do any "work" in the sense of something beneficial for society, as no voluntary payment for their services exists.

If a parasite's entire income is leeched from the productive, then isn't their entire income a tax on those creating value? In this sense, the share of the parasite's income which is carved off by the Central State as tax revenues is a secondary tax: the parasite's entire income is a tax on the economy.

This distinction between legitimate wealth derived from value creation (think Steve Jobs/computer industry) and parasitic wealth skimmed from the productive (think Mitt Romney/investment banker) is the heart of Correspondent James B.'s insightful inquiry into the question: can the parasitic Elite be said to pay taxes at all, given that their income is itself a tax on legitimate wealth creation?

I'd like to add something to your recent essay Income Tax Solution: Apply Social Security Taxes to the Super-Wealthy. (June 1, 2012)


I'm a former banking executive and I've had the opportunity to figure things out from the inside. (Emphasis added: CHS)


In the article it mentions the disparity between what the rich pay in terms of percentage of earnings for income tax compared to the middle class.


However, a substantial portion of the rich earn their income by co-opting the income of the middle class via money-printing / income suppression. They can do this by being in the loop for the "money printing" machine as the Fed manages the economy to benefit the connected Elite.


I think it's underappreciated that the banking system and the financial system has been perpetually bailed out on a moment-by-moment basis by printing money to cover duration mismatch while the Fed has replaced transaction balances with credit - thus enforcing a spread for the benefit of the connected financial Elite, corporate CEOs, etc. This has been going on for decades with periodic accelerations of the bailout process due to mismatched duration excess (i.e. the Austrian Economics Business Cycle).


The middle class (the workers) put value into the currency by producing, while the money-printers take that value out (by dilution, and by lobbying with the value they've stolen). It is an organized, structured system of theft, and that includes VISA, etc. which are cash substitutes because cash has been replaced with credit transactions. No amount of taxes are ever "paid" by those rich, as all their income is stolen.


For example, quite a number of top banker CEOs have not paid any taxes in the economic sense, they are not productive (they are destructive), and that is true even if their 1040 says they pay "60%". Someone else (a producer) paid their taxes ... Money really is a "veil" in this case. It diverts from the truth.


Unfortunately, the legitimate rich are really hurt by this process, as they impart tremendous value and have that value taxed away. They are, in a sense, the justification for hitting the lower and middle classes, and they suffer particularly for it.


In my view, we should make all cuts and adjustments from the top down, starting with those institutions that destroy value (pretty easy, just let the market work and let the organizations fail), as that is where the problem lies, and there can be no recovery as the poor simply do not impart enough impact in this parasitic process to make the difference. In fact, many poor simply want a job, and jobs are hard to find as the impediments to working rise higher and higher with the necessity of rationing the spoils in a crony capitalist system.


A recent Levy research article noted the total support by the Fed for the banking system was 29 trillion dollars. While that is not direct cash infusion (with FNMA / FHLMC / FHA, and other back door programs) - there is simply no group in the U.S. with as much influence and welfare.


In other words, the connected insider Elite pay nothing at all in taxes - and in fact they don't do any "work" in the sense of something beneficial for society as no voluntary payment for their services exists.

Thank you, James. That last line is profound: investment bankers like Mitt Romney don't solicit voluntary payments for buying companies and reshuffling the assets to skim their parasitic siphoning of the wealth created by others.

If we understand the difference between parasitic wealth and real value/wealth creation, we can properly align the tax structure to reality: the tax on authentic wealth creation should be low, to encourage wealth creation and the employment (broad-based wealth creation) generated by legitimate value creation.

We must also understand that the Central State now protects and enables parasitic skimming as the primary function of the nation's financial system. Thus the entire financial system is parasitic on the wealth of the nation.

Financial parasitic incomes should be taxed at 99%. If Mitt Romney reshuffles assets created by others and skims $100 million, 99% of that parasitic wealth should be returned to the nation via taxes. The parasite still gets to keep $1 million, more than enough to live well but not enough to buy the presidency, the Congress and the regulatory machinery of the Central State.

All those who claim the Mitt Romney/investment bankers are "creating wealth" are either terribly confused about value creation and capitalism, or they are lackeys/ apologists of the parasitic Elite.

If we cannot grasp the difference between parasitic wealth and legitimate value/wealth creation, then we are well and truly lost.

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long-shorty's picture

You mean you don't trust Congress and Obama to fairly assign "parasite" status to certain income for great benefit of glorious motherland? You not patriot.

Manthong's picture

Time to hoist them on their own petard and force them to justify their existence

BKbroiler's picture

How did this make it to ZH?? oh, guest post.   Remember, taxing the rich is socialism

BKbroiler's picture

You mean you don't trust Congress and Obama to fairly assign "parasite" status to certain income for great benefit of glorious motherland? You not patriot.

That's a pretty good tactic.  Take a perfectly logical point about those who providing nothing to society while receiving millions and shit on it by saying that it would be the president "assigning status", scaring all the tea party monkeys into agreeing with you.  Wave that yellow flag high while Jamie Dimon drinks your milkshake!!!   I just lost 40% of my wealth, go free market!


Doubleguns's picture

First and foremost one must assign "parasite" statue to congress and Obama. How much money has been wasted on all of them. NOT in salary but in benefits, vacations (first family too), junkets, election travel, Nancys plane, and the list goes on and on.

Michael's picture

This is the only difference between the D's and the R's, which group gets to spend the taxpayer loot, on what projects, and lining their own pockets with taxpayer money.

That's why I'm voting for Barack Obama, he doesn't have as much money as Romney yet.

And this is why I just thank God each and every day for the complete and total economic collapse of the USA, so the beast is starved to death with no money.

New_Meat's picture

Mikey, it took Poland ~40 years to overcome their "vote" for their "Obama."

- Ned

granolageek's picture

Since when is being invaded by the Red Army a "vote"? Sheesh.

New_Meat's picture

"vote", in "quotes" don't cha' know.

Harbanger's picture

Churches, right.  Oh no. It's bankers and progressive foundations.

Dr Benway's picture

Excellent post!!


And its a very very important distinction: between those that acquire wealth through creating value and those who acquire wealth through stealing it.


Its the difference between an inventor entrepreneur and an old mafia boss (or banker or politician).

squeal's picture

Your conflation of Obama with socialist or communist leaders past or present hereby disqualifies you from serious consideration by any rational, informed person.

Obamney 2012!

Harbanger's picture

Thanking God for something you wish for is not a good idea.  And a little ungrateful.

Michael's picture

It's not something I wish for, it's a 100% mathematical certainty.

And it will go a long way in solving most of our problems.

Ar-Pharazôn's picture

do you really think that Obama is there to solve americans problems? looks like he's doing the exactly opposite....

RockyRacoon's picture

Michael, sorry to see that only the bold text was read by those who rated your comment.  The depth of thinkers at ZH hasn't changed over the years.   Makes me sad.

Dr. Sandi's picture

Mr. Coon, sir. I must respectfully disagree with your assertion, to wit: "The depth of thinkers at ZH hasn't changed over the years."

It most certainly has. Most of the best commenters have gradually gotten the hell out of here. And many of the rest, such as yourself, have noticably curtailed their dangling of pearls before the ever increasing swineishness of the place.

And THAT makes ME sad.

Buckaroo Banzai's picture

No, income taxes are socialism. By definition. IT'S FUCKING REDISTRIBUTION OF WEALTH YOU FUCK.

BKbroiler's picture

quit screaming, pussy.  CAPS LOCKS MAKES YOU LOOK ANGRY AND DUMB.   All taxes is redistributing wealth.  Having a family is redistributing wealth, as is hiring an employee.  Idiots like you are the reason this country has been gladly handed to the banksters, you're too brainwashed to see you're being fleeced.  The middle class lost 40% of their wealth while the top 10% gained.  Is it getting through to you at all??

Dumpster Fire's picture

 Having a family is redistributing wealth, as is hiring an employee.


Not sure where I am on this but those two are at least voluntary.

Troll Magnet's picture

also, you don't go to jail if you don't "redistribute" your wealth to your own family members and you certainly don't go to jail for not hiring.  

Doubleguns's picture

"All taxes is redistributing wealth."

Disagree. Only if you are taking wealth from one and giving to another one without them having to perform work for it.  Not to fix roads, bridges, build schools, pay the military or buy munitions. These are payments for goods and services hardly a "redistribution" of wealth.

BKbroiler's picture

fix roads, bridges, build schools, pay the military or buy munitions.  These are payments for goods and services hardly a "redistribution" of wealth.

So the government taking your tax dolars and using them to build schools your child does not attend in not redistributing wealth?  Now I am confused, and your co-horts may disagree.

If performing work is the grounds for it not being redistribution, who is to say Jaime Dimon is not working for his "cut" of the government cheese.  He sure does.  You seem reasonable, but the argument sucks.


FeralSerf's picture

It can be argued that increasing the level of knowledge and skills in a society increases the wealth of everyone so even those without children in school benefit.

OTOH, it can also be argued that the schools are a necessary evil whose purpose is to brain-wash and condition the easily moulded young minds into being profitable and non-problematical members of the elites' herds of livestock.  Revolutions are expensive and wasteful of resources.

BKbroiler's picture

I think both are true, the first is the intent and the second the result.  good post.

Ident 7777 economy's picture


BKbroiler :

" fix roads, bridges, build schools, pay the military or buy munitions. These are payments for goods and services hardly a "redistribution" of wealth.

So the government taking your tax dolars and using them to build schools your child does not attend in not redistributing wealth? "


Building actual schools which educate as opposed to indoctrination compounds are two separate things, as are 'schools' which simply act as 'day-detention centers' for otherwise unsupervised 'yutes' ...


RockyRacoon's picture

All "schooling" ought to be a local endeavor.  The subjects taught and the expenses for same should be the obligation of local authority.   If you don't like what is being taught, home school.  That, too, should be legal and encouraged.  NO education should rise higher than at the State level.... period.

LetThemEatRand's picture

It would be much simpler if Buckaroo and his ilk would just be honest and say that they want all the benefits of living in a society but they do not want to contribute anything to it.  Instead, they create a complex narrative about a mythical free market that would magically exist without any societal infrastructure if we just stopped having elected government and taxes.

Buckaroo Banzai's picture

Holy shit are you fucked in the head. Please, please go back to DailyKos.

malek's picture

And it would be even simpler if you would be honest and say that you want to be the person who decides which benefits everybody "wants" and therefore must pay for.

TheGardener's picture

I get confused, are you publicly speaking out for the crime of paying taxes in all seriousness ? You know, even considering that the best of your avoidance tactics is just to get along with the state means that you are a collaborator of the worst sort, passive , not even active ?

It takes a weak mind and soul to work for or live off the state, I guess they don`t have any mirrors in their tiny flats from where they envy all other more productive folks.

But taxpayers truly finance state terrorism .

BKbroiler's picture

Jesus, I don't even know where to start, you should let your more educated friends post instead of you.

It takes a weak mind and soul to not know that without some taxation any state collapses.   If you can point out any state in the history of time that has maintained itself without any taxes, I'd love to hear it.  Maybe you just wandered here from drudge.  Maybe Glenn Beck sent you, but this is grad school, not kindergarden.   I pay 25% of my income in taxes and do so happily because I made good money after starting with absolutely fucking nothing and I feel I owe some of that money back to the country that made it happen.  Go read a book.

AnAnonymous's picture

Better than that: US citizens took pride in crushing stateless societies thanks to the mighty power of their US citizen state apparatus, that they described as an evidence of their superior humanity.

TheGardener's picture

"It takes a weak mind and soul to not know that without some taxation any state collapses."

Glad you got at least a glimpse of what I tried to put across.

To get rid of this state of affairs stop paying taxes.

Your kind of meekly minded soulless socialists will just starve with your anemic state, good riddance !

Hobbleknee's picture

There was no personal federal income tax in the US until 1913.

RiverRoad's picture

Jesus?  He had a little problem too, I hear, with some folks who were doing some "skimming" around the temple.

Don Keot's picture

I have recently become aware that as generations in families on welfare are common it is also true that generations of public workers are also very common.  I know a person locally that was as county worker and their two children are public workers as are their spouses.  While on child birth leave they even accrue sick leave and vacation time, just as if they were working.  Today it is very difficult to eat at the public trough if you do not have connections.

t0mmyBerg's picture

If you are not angry at the perverse waste of all resources that get sucked into the great government maw then you are dumb.  It is in fact time for more anger.  And yes, a good amount of that should be directed at bankers who pay themselves well if that money is earned by borrowing at or close to 0 with a guarantee that it will be so for an "extended period" while lending back to the great money sucking black hole that is the federal and state governments at some tens or hundreds of basis points higher for a slightly longer term.

Anything that deprives the beast of the revenue it needs to feed is to be applauded and anything that feeds it denigrated.  BKBroiler, that puts you in the latter camp.  OBVIOUSLY (there is that caps thing again) there needs to be some level of taxes to support the basic services contemplated for a government of limited powers but the point when the apparatus could be trusted to do anything even remotely well has long since past.

BKbroiler's picture

BKBroiler, that puts you in the latter camp

There's your leak, friend.  I have my own camp.  I support guns, gold, the environment, and a womans right to choose.  that last one saved my ass a few times :)  That makes me a shitty republican or democrat, but those are sheep tags anyway.  You can lump me in with whoever you want, but without taxes the world stops in its tracks.

Papasmurf's picture

"and a womans right to choose.  that last one saved my ass a few times :) "

After the first mistake, it just makes you a stupid inconsiderate jerk.


edit:  I left out selfish.

BKbroiler's picture

it just makes you a stupid inconsiderate jerk

That's because you don't get laid enough, or you would sympathise.

Maybe Smurfette is on the rag, or fucking Grendel Smurf behind your back.  Get tested.

BKbroiler's picture

oh get a sense of humor.   killing babies is only a little funny.

Dr. Sandi's picture

Just don't waste the ones you kill.

Baby Back Ribs anyone? Mmmmmm!

kekekekekekeke's picture

as a woman... how? 


oh right all women have baby rabies and are just dying to spawn with whatever penis they can sink their claws into.  I bet they felt relief

BKbroiler's picture


you're absolutely right, they did.