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JasonM
09-25-2007, 02:03 PM
http://docs.law.gwu.edu/facweb/jsiegel/Personal/taxes/debt.htm

Some people claim that 100% of the money the government gets from income tax goes to pay interest on the national debt.

Not true. In fact, not even close.

This myth is easily debunked by just looking up the numbers involved. Unfortunately, looking things up is a skill many tax protestors lack.

Let's look at the Budget of the United States.

The amount collected from income tax greatly exceeds the amount spent on interest on the national debt every year. For example, in 2006, the individual income tax raised $1.04 trillion (click this link and see page 30 of the historical tables). The government’s net interest expense in 2006 was $226 billion (see page 54 of the tables). That’s about 20% of individual income tax revenues, not 100%.

Twenty percent of all income taxes is a lot of money. Interest on the national debt is a big amount and the national debt is a legitimate concern. But it’s not remotely true to say that all income taxes go to pay interest. Net interest is only about 1/5 of annual income tax revenue. (And that’s not even counting $353 billion in corporate income tax revenue.)

(By the way, the “net interest” figure is used because quite a bit of the interest goes to government trust funds. The interest paid to the trust funds essentially amounts to the government paying interest to itself (by just moving money from one government account to another), so it makes sense to disregard that interest in calculating the amount of interest the government pays. But even if you look at the “gross interest,” that was $406 billion in 2006. That is, again, a big amount, but still only about 40% of income tax revenues, not 100%. See page 72 of the tables.)

So the claim that 100% of income taxes pay interest on the national debt is completely not true, as anyone can see by just looking up the figures.

(continued in link)



If this is true, that means Ron Paul made an erroneous statement a while back.

fletcher
09-25-2007, 02:06 PM
What did Ron say about it? I've never believed that to be true.

erowe1
09-25-2007, 02:09 PM
I recall that a claim similar to this was made in Aaron Russo's movie, From Freedom to Fascism. But I forget exactly how the argument went and what precisely was being claimed.

Kregener
09-25-2007, 02:10 PM
http://www.federalbudget.com/chart.gif

Chester Copperpot
09-25-2007, 02:10 PM
Maybe it is better to clarify it in this way. The money collected from the personal income tax goes for not government infrastructure. It simply goes to debt payments and transfer of wealth payments. The main job though is to definitely finance the federal reserve.. They were made for each other. heh

Chester Copperpot
09-25-2007, 02:12 PM
http://www.federalbudget.com/chart.gif

Health and Human services cots over $600 Billion a year?? jeezus.. I know theyve got 67,000 employeses.. but what the fuck to they DO!>?

hard@work
09-25-2007, 02:21 PM
Health and Human services cots over $600 Billion a year?? jeezus.. I know theyve got 67,000 employeses.. but what the fuck to they DO!>?

Paperwork, duh. Someone has to.

noxagol
09-25-2007, 02:25 PM
They are part of the welfare system. Most of that is money that they give out to people.

Elwar
09-25-2007, 02:25 PM
Being a Libertarian and having heard about ending the Income Tax and complaints about the debt for over a decade I've never heard anyone claim that it's happening now, only that we're moving to the point where all of the Income Tax will eventually be going toward just paying the interest on our debt.

That's not that big of a stretch...especially if it's at 20% right now.

Chester Copperpot
09-25-2007, 02:30 PM
Heres a link.... Its very informative and this information is from the days of Reagan

http://www.devvy.com/notax.html

john_anderson_ii
09-25-2007, 02:36 PM
That statement you are contesting may become true this year. What's the interest on 9 trillion nowadays?

I think the income tax goes to not only pay the interest on the debt, but the principle as well. If the principle wasn't being paid, the interest would increase exponentially as more and more was borrowed. Of course the government isn't going to give back any of the money over its interest + principle payment.

pdavis
09-25-2007, 02:38 PM
The statement that 100% of the federal income tax only goes toward paying the interest of the national debt comes from the Grace Commission Report (http://www.uhuh.com/taxstuff/gracecom.htm), which was authorized by Ronald Reagan.


Resistance to additional income taxes would be even more widespread if people were aware that:

* One-third of all their taxes is consumed by waste and inefficiency in the Federal Government as we identified in our survey.
* Another one-third of all their taxes escapes collection from others as the underground economy blossoms in direct proportion to tax increases and places even more pressure on law abiding taxpayers, promoting still more underground economy-a vicious cycle that must be broken.
* With two-thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.

Chester Copperpot
09-25-2007, 02:40 PM
The statement that 100% of the federal income tax only goes toward paying the interest of the national debt comes from the Grace Commission Report (http://www.uhuh.com/taxstuff/gracecom.htm), which was authorized by Ronald Reagan.

I would believe the grace commission's report to Reagan over the govt's official figures.. no doubt the govt has been cooking the books for years.. They lie about inflation telling everybody its 2% when they know its 7, 8, or 9% just using the older indices from back in the day... real inflation is probably 10-15%

Broadlighter
09-25-2007, 02:43 PM
I'm no government funding expert, but where does the money initially come from?

I hazard to guess that the government doesn't wait around for everyone to pay their taxes first and then fund its budgets. The money is first created out of thin air when the government issues Treasury Notes, which are bought up by the Fed. Hence all money that the government spends, is debt money that has to be repaid to the Fed and the income tax is the mechanism through which it gathers up the money to pay the debt service. The Fed giving a portion of the interest back to the government is its own business.

All money represents debt that's owed to the Fed. Hence, the Fed owns all the money that circulates in the U.S. Whether or not the income tax pays only the interest on the national debt doesn't negate this fact. Were the entire debt to be retired there would be no money to circulate in the economy.