It's no longer possible to rely 100% on ads to keep our organization going. If you believe in why Films For Action exists, we hope you'll become a supporter on Patreon. A monthly donation of $1, $3, $5 or more per month will really help!
Why Are Taxes So High? Because the Profits from Creating New Money Goes to Private Banks
Why Are Taxes So High? Because the Profits from Creating New Money Goes to Private Banks
By Positive Money UK / positivemoney.org
Jan 31, 2014

When banks are allowed to create a nation’s money supply, we all end up paying higher taxes. This is because the profits from creating new money go to the banks rather than the taxpayer, and because taxpayers end up paying the cost of financial crises, which are caused by the banks.

1. The Profit from Creating Money

The Bank of England still prints paper money (e.g. £10 notes). Because it only costs a few pence to print a £10 note, the government makes a profit on every single bank note that it prints. Between 2000 and 2009, this profit on newly-created money added up to £18 billion – enough to pay the salaries of around 90,000 nurses over that time.

But the Bank of England only creates the paper money, and leaves it to banks to create the electronic money that we also use every day. When banks create money, they – not the government or the taxpayer – get the benefits of creating that money.

From 2002 to 2009, banks increased the amount of money in the UK by £1 trillion through lending (with every new loan creating new money). Because this money was created by banks, it’s the banks that get the benefit from it (in this case, the interest received on £1 trillion of additional loans).

If the government had created this money instead of the banks, taxpayers would have been able to pay up to £1 trillion less taxes: approximately £33,000 for every person who pays income tax over just 7 years.[1]

Money creation: 2000 – 2009 inclusive

Money Supply 2000 - 2009

2. Interest on the National Debt

Because the profits from creating money currently go to the banks instead of to the government, the government has to borrow much larger amounts of money to make up for this lost income.

As taxpayers, we have to pay the interest on all this money that the government has borrowed. We currently spend more in interest on the national debt (£51 billion annually) than we spend  on either schools, defence, the police or on transport (including the road system). This interest costs works out at £1,700 per income-tax payer per year.[2]

The more money that is spent on interest on government debt, the less money there is to spend on public services, and the higher taxes will be without getting anything extra in return.

3. Deficit: the Cost of Crises and Recessions

When the financial crisis hit in 2008, hundreds of thousands of people lost their jobs, people stopped spending and businesses’ sales fell. All of this meant that the government collected significantly lower amounts of tax, due to fewer people working, and lower profits by businesses.

At the same time, more people went onto unemployment benefit, which meant that the government’s costs went up significantly. The gap between the money coming in (tax revenue) and the money going out (expenditure) rocketed from £30bn right up to £180bn. This gap is the ‘deficit’, and had to be covered by borrowing money.

Without a banking system that creates money every time it makes a loan, we wouldn’t have these crises and wouldn’t need to use taxpayers’ money to rescue banks.

Sources

1. HMRC states that there were 30 million income tax payers in 2012-2013.

2. Of course, this interest cost will be covered across all taxes, so some of the cost will be incorporated into taxes paid by companies that you shop with, etc.

4.0 ·
1
Related Films
Enough Is Enough (2014)
18 min Enough Is Enough lays out a visionary but realistic alternative to the perpetual pursuit of economic growth-an economy where the goal is enough, not more. “Based on the...
Could These 3 Simple Changes to Banking Fix the Economy?
4 min If someone told you that a mountain of personal debt could be cleared via 3 simple changes to the way that money and banking works, would you like to know how? Would you like...
A Simple Solution to the Debt Crisis: Positive Money
4 min Have you ever wondered why there’s so much debt? Or why the experts and authorities seem completely unable to solve the current debt crisis?
Featured Films
The Staging Post: Courageous People Never Give Up! (2017)
61 min The Staging Post follows two Afghan Hazara refugees, Muzafar and Khadim. Stuck in Indonesia after Australia 'stopped the boats' and facing many years in limbo, they built a community and started the school which inspired a refugee education revolution. A real-life...
Inhabit: A Permaculture Perspective (2015)
92 min Humanity is more than ever threatened by its own actions; we hear a lot about the need to minimize footprints and to reduce our impact. But what if our footprints were beneficial? What if we could meet human needs while increasing the health and well-being of our...
Within Reach (2013)
87 min Within Reach explores one couple's pedal-powered search for a place to call home. Mandy and Ryan gave up their jobs, cars, and traditional houses to 'bike-pack' 6500 miles around the USA seeking sustainable community. Rather than looking in a traditional neighborhood, they...
Schooling the World (2010)
66 min If you wanted to change an ancient culture in a generation, how would you do it? You would change the way it educates its children. The U.S. Government knew this in the 19th century when it forced Native American children into government boarding schools. Today, volunteers...
Fall and Winter (2013)
102 min This stunning film takes you on a hypnotic journey, reaching to the past to understand the origins of the catastrophic environmental transitions we now face. Over two years, director Matt Anderson traveled 16,000 miles to document firsthand our modern industrial world and the...
The Economics of Happiness (2011)
65 min Economic globalization has led to a massive expansion in the scale and power of big business and banking. It has also worsened nearly every problem we face: fundamentalism and ethnic conflict; climate chaos and species extinction; financial instability and unemployment. There...
Trending Today


Love Films For Action? Become a Patron!

Our Patreon campaign is now live! We hope you'll be among the first to support this new direction for Films For Action. The goal is to go 100% ad-free by next year and become 100% member supported. A monthly pledge of just $1 -5 per month x a few thousand awesome people will ensure we can continue our work and grow our impact across the world. Click here to join.

Join us on Facebook
Why Are Taxes So High? Because the Profits from Creating New Money Goes to Private Banks