Economic Democracy Act: Monetary and Tax Reforms
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Questions and Answers

Under the Economic Democracy Act, how often is the government estimated to calculate the amount of productive capital to be added to the economy?

  • Annually (correct)
  • Quarterly
  • Bi-annually
  • Semi-annually

    • What is the purpose of dividing the total capital formation increment by the current number of U.S. citizens?

  • To determine the per-citizen allotment of interest-free capital credit (correct)
  • To determine the total capital assets of a single citizen
  • To determine the total capital formation increment
  • To determine the total U.S. population

    • What is the benefit to an enterprise that decides to finance new capital assets by selling newly issued shares to citizens?

  • No corporate income taxes on full-dividend payout shares (correct)
  • No corporate income taxes on all shares
  • Reduced corporate income taxes on full-dividend payout shares
  • Increased corporate income taxes on all shares

    • According to the Federal Reserve Bank of St. Louis, what was the total annual U.S. capital formation increment for 2018?

    <p>$3.955 trillion</p> Signup and view all the answers

    What is the purpose of the Economic Democracy Act?

    <p>To distribute wealth among citizens without taking anything away from current owners</p> Signup and view all the answers

    What is the result of dividing the total annual U.S. capital formation increment by the total U.S. population?

    <p>The per-citizen allotment of interest-free capital credit</p> Signup and view all the answers

    What type of shares can an enterprise sell to citizens to finance new capital assets?

    <p>Full-dividend payout shares</p> Signup and view all the answers

    What is the assumed annual per-citizen capital credit allotment used in the illustration 'Projected Citizen Wealth Accumulations Under the Economic Democracy Act'?

    <p>$10,000</p> Signup and view all the answers

    What is the primary purpose of the feasibility analysis in the Capital Ownership Account process?

    <p>To evaluate the soundness of the enterprise and its management</p> Signup and view all the answers

    What is the outcome of the bank's rediscounting process at the regional Federal Reserve Bank?

    <p>The bank creates new asset-backed money</p> Signup and view all the answers

    What happens to the dividends received by the citizen after the COA loan is fully paid?

    <p>They become a new source of consumption income for the citizen</p> Signup and view all the answers

    What is the purpose of the discounting process by the bank?

    <p>To deduct the capital credit risk insurance premium and service fees</p> Signup and view all the answers

    What is the outcome of the enterprise's profits after the COA loan is fully paid?

    <p>The profits are distributed to the citizen as dividends</p> Signup and view all the answers

    What is the purpose of the Capital Ownership Account?

    <p>To invest in qualified shares of the enterprise</p> Signup and view all the answers

    What is the result of the money creation cycle within the Economic Democracy process?

    <p>The money is cancelled, preventing inflationary effects</p> Signup and view all the answers

    What is the role of the Capital Credit Insurer in the COA loan process?

    <p>To guarantee the loan to the bank</p> Signup and view all the answers

    What is the outcome of the enterprise's acquisition of new capital assets?

    <p>The enterprise increases its production of marketable goods and services</p> Signup and view all the answers

    What happens to the Capital Ownership shares if they remain in the tax-sheltered Capital Ownership Account?

    <p>They are tax-exempt</p> Signup and view all the answers

    What is the primary purpose of the Economic Democracy Act?

    <p>To enable every citizen to acquire shares in new productive capital</p> Signup and view all the answers

    How does the government determine the annual per-citizen capital credit allotment?

    <p>By dividing the total annual capital formation increment by the current number of U.S. citizens</p> Signup and view all the answers

    What is the benefit of selling newly issued shares to citizens for an enterprise under the Economic Democracy Act?

    <p>It allows the enterprise to avoid paying corporate income taxes</p> Signup and view all the answers

    What is the role of the Capital Ownership Account in the Economic Democracy Act?

    <p>It acts as a tax shelter for citizens' capital ownership shares</p> Signup and view all the answers

    What is the outcome of the money creation cycle within the Economic Democracy process?

    <p>Increased economic growth and productivity</p> Signup and view all the answers

    What is the primary purpose of the feasibility analysis in the Capital Ownership Account process?

    <p>To assess the viability of the enterprise's capital asset project</p> Signup and view all the answers

    What is the outcome of the enterprise's acquisition of new capital assets under the Economic Democracy Act?

    <p>Increased productivity and competitiveness</p> Signup and view all the answers

    What is the role of the Capital Credit Insurer in the COA loan process?

    <p>It provides insurance coverage for the COA loan</p> Signup and view all the answers

    What is the primary reason for the feasibility analysis in the Capital Ownership Account process?

    <p>To judge the soundness of the enterprise that needs to purchase the new capital assets</p> Signup and view all the answers

    What happens to the money created in the Economic Democracy process after the COA loan is fully paid?

    <p>It is cancelled to prevent inflationary effects</p> Signup and view all the answers

    What is the purpose of the bank's discounting process in the Capital Ownership Account?

    <p>To deduct a one-time premium for capital credit risk insurance and service fees</p> Signup and view all the answers

    What is the outcome of the enterprise's acquisition of new capital assets?

    <p>It generates profits for the enterprise</p> Signup and view all the answers

    What is the role of the Capital Credit Insurer in the COA loan process?

    <p>To add a risk premium to the principal needed to purchase the shares</p> Signup and view all the answers

    What is the outcome of the enterprise's profits after the COA loan is fully paid?

    <p>The citizen receives additional dividends as consumption income</p> Signup and view all the answers

    What is the primary purpose of the Capital Ownership Account?

    <p>To purchase qualified shares of the enterprise</p> Signup and view all the answers

    What is the outcome of the bank's rediscounting process at the regional Federal Reserve Bank?

    <p>The regional Fed deducts an amount to cover its own actual servicing costs</p> Signup and view all the answers

    What is the tax treatment of future dividends received by the citizen after the COA loan is fully paid?

    <p>They are subject to personal income taxes</p> Signup and view all the answers

    What happens to the Capital Ownership shares if they remain in the tax-sheltered Capital Ownership Account?

    <p>They are tax-exempt as long as they remain in the Capital Ownership Account</p> Signup and view all the answers

    Study Notes

    Economic Democracy Act Overview

    • The Economic Democracy Act is a national program of monetary and tax reforms that enables every citizen to acquire shares in new productive capital added to the economy each year.
    • The act systematically turns non-owners into capital owners without taking anything away from current owners.

    Step 1: Estimating Capital Formation

    • The government estimates the amount of productive capital to be added to the economy annually.
    • The total amount is divided by the current number of U.S. citizens to determine the per-citizen allotment of interest-free capital credit.

    Example Calculation

    • The 2018 US capital formation increment was $3.955 trillion.
    • The 2018 US population was 328.9 million.
    • The annual per-citizen capital credit allotment was 12,023(or12,023 (or 12,023(or10,000 in a slow growth economy).

    Step 2: Financing New Capital

    • An enterprise finances new capital assets by selling newly issued shares to citizens at the current market price.
    • The enterprise can escape paying corporate income taxes on full-dividend payout, voting shares.

    Step 3: Profits and Dividends

    • The enterprise pays annual profits to each citizen's Capital Ownership Account.
    • The initial profits are used to pay off the scheduled COA loans.
    • Dividends above principal payments are subject to personal income taxes.

    Step 4: Loan Approval and Feasibility

    • The family presents "bills of exchange" for the bank's approval and acceptance.
    • The lender, risk insurance company, and other entities determine the feasibility of each loan.
    • Feasibility analysis judges the soundness of the enterprise and its expected profits.

    Step 5: Capital Credit Insurance

    • The bank guarantees to add a risk premium to the principal needed to purchase the shares.
    • The premium and bank service charges are paid out of the COA loan discount.

    Steps 8-10: Rediscounting and Money Creation

    • The bank bundles COA loans and takes them to the regional Federal Reserve Bank for rediscounting.
    • The Fed deducts an amount to cover its servicing costs and issues a promissory note to the local bank.
    • The local bank creates new asset-backed money or demand deposits for the citizen's Capital Ownership Account.

    Steps 13-15: Enterprise Operations and Dividends

    • The enterprise acquires and puts into operation new capital to increase production of marketable goods and services.
    • The enterprise makes scheduled payments of dividends to the citizen's Capital Ownership Account.
    • These dividends are tax-deductible to the enterprise.

    Step 16: Money Creation Cycle

    • The money creation cycle ends with the original money being cancelled to prevent inflationary effects.
    • The cancelled money is not backed by capital assets or marketable goods and services.

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    Description

    Learn how the Economic Democracy Act enables citizens to acquire shares in new productive capital, financing future capital formation and providing businesses with equity investments.

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