Taxing the Competition
When a U.S. corporation does business in most parts of Europe, it necessarily holds Euros. And when the Euro rises, relative to the U.S. dollar (or the dollar falls relative to the Euro!), those Euro-holding U.S. corporations are required to recognize a gain on their Euro holdings, and pay tax on that gain. The same is true for all non-U.S.-dollar currency held in U.S. corporations around the world.
Let’s assume the U.S. dollar falls in price relative to the Euro (due to the Fed’s expansion of the money supply) from $1.25/Euro to $1.40/Euro. For a U.S. corporation holding €1 million, that’s a $150,000 gain. For a corporation in a 39% marginal tax bracket (this amount of gain puts them at least that high), that’s a tax bill of $41,750, and guarantees that the corporation will pay 39% of all their other income in taxes, as well (without this gain, they may pay as low as 15% on other income). And what did the corporation do to become subject to that tax? Nothing. The Fed managed that gain through the expansion of the U.S. dollar money supply!
A similar situation exists with gold and silver. If the same U.S. corporation were to maintain an inventory of gold coins and sell them at a profit, a tax would be due and payable on the gain. The corporation’s gain would be taxed as ordinary income—a minimum tax rate of 15%.
Furthermore, if an individual were to purchase gold or silver coins (even U.S. gold or silver “legal tender” coins) and sell them later at a higher price than what he/she purchased them, he would have to pay a tax on the difference in prices—a capital gains tax (lower rate than ordinary income, assuming he/she isn’t a dealer required to recognize the gain as ordinary income).
In short, when the Fed increases the U.S. dollar supply, thus raising the U.S. dollar prices of goods, investments, and other currencies, it generates tax revenue for the U.S. Treasury! And because U.S. citizens are required to accept U.S. dollars for all debts, public and private, the Fed and Treasury have every incentive to print more money, raise prices, and collect more tax revenue at the expense of the U.S. dollar’s competition. What a racket!
P.S. Is that what is meant by racketeering?
Robert Jackson Smith