Chapter 1

Federal Government Revenue

According to Adam Smith, there are three Government Duties which
require some sort of revenue to sustain those three duties:

   1. Military Defense
   2. Legal system (Judicial)
   3. Public Works & Public Institutions
      a. Commerce
      b. Instruction
         1) Youth
         2) All ages

We are told by the federal government that income taxes are
needed to provide services to United States Citizens, like
building roads and bridges, and sending checks to those who
are on social security, and giving money, food stamps and
medical care to those who are on welfare.  If that is true,
and we are lead to believe that income taxes pay for those
services exclusively, then why does the federal government
borrow $2 trillion a year to run the federal government?
And why does the federal government demand that your employer
withhold those income taxes and social security taxes from your
paycheck?  Income taxes are not needed by the federal government
at all. But, the federal government's IRS collected $919 billion
in income taxes in 1996 that will never pay off the national debt
in full because the federal government cannot afford to pay all
of the principal and interest on the $5.5 trillion national debt
all at once.  In fact, the IRS in Fiscal Year 1996, collected
approximately $1.5 trillion, processed more than 200 million tax
returns, handled approximately 2 billion documents and assisted
more than 118 million taxpayers. 

If you are an employee, you earn wages.  The IRS has told your
employer to withhold income taxes from your paycheck. Your employer
sends your hard-earned money directly to one of the 12 Federal
Reserve Banks (FRB), (which are PRIVATE corporations and sometimes
called the FED), 4 times a year.  The IRS also deposits YOUR money
into the FRB.  The FRB is NOT a federal agency.  In 1996, the Federal
Reserve Bank of New York processed an average of nearly $1.6 trillion
a day in funds and securities transfers.  Aggregated to include all
twelve Federal Reserve banks for the entire year, the Fed transferred
approximately $418 trillion worth of funds and securities of which
the Federal Reserve Bank of New York's portion was $279 trillion.

                              The income of the FRB is derived primarily from the interest on U.S. government securities, fees
                              for check clearing, fees for funds transfers, and fees for automated clearinghouse operations.
                              After it pays its expenses, the FRB takes its 5% cut of the $418 trillion in funds and securities
                              transfers, and deposits the remaining 95% into the U.S. Treasury. Why does the IRS deposit
                              YOUR money directly into the FRB? Isn't the IRS one of the eleven components of the
                              Department of the Treasury, just as the BPD is? YES. Our income taxes pay the INTEREST
                              COSTS !!!!! 

                              The increasing interest costs of $355.7 billion overshadows the declining deficit of $22 billion by
                              a margin of almost 11 to 1. Even if there was no deficit, the dollar amount of the gross debt of
                              $5.5 trillion must be reduced to create a surplus to reduce the national debt, but that may not be
                              possible because the interest costs are increasing. Interest costs will eventually be equal to the
                              national receipts of $1.5 trillion in a few years. Interest costs MUST be curtailed by controlling
                              federal spending, borrowing less and financing business startups with non-foreign money. 

                              15 cents out of every federal budget dollar spent is used to pay interest on the debt rather than
                              to finance other public priorities. 

                              The following report is the Financial Management Service's (FMS) "1997 Financial Report to the
                              Citizens". Receipts, Spending and Annual Budget Deficit 


                              TOTAL SPENDING, 1997: $1.601 TRILLION

                              Major Spending by Category

                                                                 Billion     %

                              Social Security                     $365.3   22.8
                              Other expenses                       300.6   18.8
                              National defense                     270.5   16.9
                              Interest*                            244.0   15.2
                              Medicare                             190.0   11.9
                              Unemployment, disability, and            
                              other income security payments       135.3    8.4
                              Medicaid                              95.6    6.0

                              * Net "Interest" is the gross interest paid on the
                                Public Debt less (1) interest received on
                                investments of government accounts in federal
                                securities, and (2) interest received on loans
                                made by the government.

                              TOTAL RECEIPTS, 1997: 1.579 TRILLION

                              Receipts by Source        Billion      %

                              Individual income taxes    $737.5    46.7
                              Social insurance taxes
                                & contributions           539.4    34.1
                              Corporate income taxes      182.3    11.5
                              Other receipts               62.9     3.9
                              Excise taxes                 56.9     3.6

                              ACTUAL RESULTS COMPARED TO BUDGET
                                                       2/97      1997
                              In billions of dollars  Budget    Actual

                              Total receipts          $1,505    $1,579
                              Total spending           1,631     1,601
                                                       -----     -----
                              Total deficit             $126       $22
                                                        ====      ====

                              The Public Debt and Deficit are Congressional Budget smokescreens promulgated by Congress
                              and the Media to hide the REAL economic culprit -- INTEREST COSTS. 

                              What I want to know is where is $111.7 billion in interest payments going? 


                              1997 Interest per BPD   $355.7 billion
                              1997 Interest per FMS   $244.0 billion
                                                      =============
                                                      $111.7 billion
                                                      Who is this going to?


                              The only way to stop the spiraling interest costs is to Abolish Income Taxes which will result in
                              an increase in a worker's take-home pay which will benefit the economy by increasing revenue. 

                              Who is the IRS collecting for? American taxpayers are not dumb. The IRS should be called the
                              "Foreign Revenue Service". Who is the Federal Reserve Bank really owned by? Take a guess.
                              Now you can see why Corporations control our Congress! Here's another question I have: The
                              BPD borrows $2 trillion, and the IRS collects $1.5 trillion. Where does the remaining $500 billion
                              go?


                              BPD  $2,000,000,000,000
                              IRS  $1,500,000,000,000
                              =======================
                                   $  500,000,000,000

                                   Where is this going to?
                                   My guess is that this money pays
                                   the redemption of securities.


                              Actually, if you really think about it, the federal government is taking in: 


                              BPD  $2,000,000,000,000  Treasury Securities sales
                              IRS  $1,500,000,000,000  IRS tax collections
                              =======================
                                   $3,500,000,000,000  TOTAL federal government income


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