Untaxing-I (Introduction) ch 2:     Risk

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We need for the United States of America, in particular, to stop being inconsistent about Capitalism. Any time that debt is used, the negative consequences of value-suppression is being surreptitiously introduced and economic slavery is being imposed on current and future generations of Americans.

As to the Debt-Equity comparison in Table 1 (chapter one, page 3), no liberty is taken when attaching or associating the economic system of socialism with Debt. Credit, Debt and Interest are suppressive and they do not and cannot produce equity values as does Capitalism (Equity and Risk).

The apparent security of a savings deposit is deceptive. Someone, somewhere along the chain of value creation, takes a risk for the generation of returns from which a $7.70 savings interest is given to the $1,000 depositor at the end of the chain.  If there are no risk-takers and everyone just lends their money (through savings deposits) to banks, returns would grind to a halt with negative consequences. Capitalism rewards the risk-takers, the entrepreneurs, the inventors, the innovators and all shareholders with equity value.

Let’s be clear of exactly what we are looking at in this Debt-Equity comparison. Equity is more powerful than Debt. An uncommonly-high 90% savings interest rate and 20% dividend yield rate for the public company cannot upset the balance of power between Equity ($1,000 ÷ 20% = $5,000) and Debt ($1,000 * 90% = $900). Even in this extreme case, Equity is 456% more powerful than Debt. The economic value of Equity outperforms the economic value of Debt.

No collateral is needed to pay back an equity investment. No collateral means more risk for the investor, but the net effect of risk and equity is positive.

Collateral is needed to pay back a debt loan. Collateral means less risk for the lender, but the net effect of less risk and debt is negative. Less economic value is produced and the process of manifesting new ideas must carry the extra weight of debt-servicing.

It is clear from the Debt-Equity comparison and the shocking 482,601% example (see Table 1 in chapter one) that a Debt-Equity study has not been made public before this white paper. This Debt-Equity study reveals the tremendous power of capitalism (and the public company) that produces hundreds and many thousands of times more economic value than Debt to support an economic system.

This white paper shows how to harness the 482,601% economic superiority of Equity over Debt in order to get more tax revenue for the US Treasury while eliminating the taxes on corporate profits and individual salaries and wages.

Go to (part I) chapter 3: Why Not To Increase Interest Rates