This was and interesting read sent to me in an e-mail

The Income Tax is on Borrowing


Lindsey Springer here and I try my best to stay out of certain national issues but I cannot sit back without saying what I believe needs to be said regarding borrowing.

Congress has no power to impose a tax on you or I for borrowing anything. This is important for two reasons.

First, though Congress does not impose and cannot impose a tax on you borrowing money from some place or thing, they can guarantee that the proceeds of the money borrowed are for buying something and it is that something that interests Congress. You see, the thing you buy with the money borrowed is why Congress desires you to borrow. The thing you buy generates income tax liability because it is assumed the article purchased, with that which is borrowed, allows the vendor or seller to make a profit whereby income taxes are then claimed.

So, when you borrow lets say 40k on a new SUV, in theory, you owe no taxes on that borrowing. However, because you were able to borrow, the 40k generated taxes on income for Congress from several angles. Marketing, production, sales, insurance, and the list goes on and on. Not to mention the "sales tax" each State generates from the "transaction" of the purchasing the SUV with that which was borrowed. Borrowing brings too much burden with it. So, once the 40k is placed in the economy, Congress immediately gets its hands on as much of the 40k as it can. You nor I can pay back all that which was borrowed. It all no longer exists in circulation. Congress takes it through numerous imposed burdens. When you borrow you are loaning Congress a portion of that amount through their gathering taxes on income and other transactions. If you do not borrow and cannot buy then Congress has nothing. A fitting tidbit of knowledge for someone striving to ascertain how to stop the earth and the moon from colliding.

Second, what happens if you cannot or no longer service the amount you borrowed? Your borrowing in substance is Congress being given an advance on taxing income by your willingness to go into debt. This is so Congress can impose its' will continually through the IRS.

What has happened in the past, and will only get worse, is when you cannot service the debt you borrowed you are forced into bankruptcy. You may discharge the debt, which is actually motivating to Congress because this discharge hides the truth explained in the first part, receiving a 1099 from those you owed but could not pay. This then turns the thing Congress could not tax, the borrowing, into taxable activity Congress then taxes as income even though most of it did not ever exist in the first place.

Not only do they take advantage of you when you borrow, by grabbing at least 40% from the place or places you spent what you borrowed, which would not otherwise have been made available for such taxing, but they also then turn your known inability to ever repay into another income tax activity the following year after you survive bankruptcy.

Knowing you cannot pay because you are beyond dead broke, the IRS piles interest and penalties on top of everything else to insure you never ever do anything but borrow in the future. To add insult to injury, that SUV you borrowed 40k on, it was only worth 30k the moment you drove off the show room floor. You or I begin 10k upside down from the beginning if we do what is explained above. If the vehicle is only worth 30k when you borrowed 40k and Congress takes 40% from the seller because of profit and other imbedded taxes, that equals 26k of the 40k borrowed gone.

If you cannot pay on the 40k for whatever reason and you discharge the debt in bankruptcy, true you will no longer owe the 40k and you do not have any 40k SUV to drive, but when the attorneys get through in bankruptcy breaking you or me, that place that loaned you 40k, after the SUV sold for 15k at forced auction, the law then authorizes them to send you a 1099 for the difference between the 15k they received at the auction and the amount you bankrupted them on. Included in this 1099 may be costs of attorneys in the proceeding itself. If you end up owing 40k and the SUV sold for 15k and after all is said and done, you get a 1099 for 25k, and if you end up in a 30% tax bracket the next year, or even higher because the 25k plus what you normally receive throws you into an even higher tax bracket, you are left to owe the Congress of the United States at least $7,500 or maybe even $ 10k and for what?

This tax debt is because you borrowed something that did not exist before you borrowed it only to allow Congress to benefit off of your borrowing so you could be seen driving an SUV you do not own and they could collect taxes on income they would not otherwise be able to claim if you did not or could not borrow.


Even if you did not file bankruptcy, the loss you sustain when you buy a new car clearly remains as exacting as the example I gave you above. The minute you buy the $40k SUV worth only $30k you have simply just been taxed by Congress $ 10k for doing what? Borrowing.


The next time you think Congress is not placing any tax on you borrowing think again.



July 9,2009