Tax Freedom - Why Taxes Are Not Necessary: Introduction to CAFR

Why Taxes Are Not Necessary: Introduction to CAFR  by Walter J. Burien, Jr.

Walter Burien Jr. worked as a Wall Street Commodity Trading Advisor (CTA) for fourteen years, but now resides in Arizona. According to Mr. Burien, every state, county, school district, government run enterprise operation, and major metropolitan city is keeping two sets of books. One set, the Budget report, is commonly available and tracks each governmental entity's tax revenue and where they spend that tax revenue. The Budget is the financial record that's promoted to the public and used by politicians to justify new governmental services and higher taxes.

However, there is a second or far superlative book, called the Comprehensive Annual Financial Report, or CAFR, which is virtually unknown to the public but contains the real record of total governmental gross income.  According to Mr. Burien, although the Budget gives an accurate account of government use of tax revenue, only the CAFR gives an accurate account of government's true gross income.

For example, while a particular state budget might report receiving $20 billion in taxes collected (just barely enough to sustain its $20 billion in expenditures) - the CAFR might reveal the state's real income is in the neighborhood of $60 billion - three times as much as reported on the budget. If these allegations are accurate, with public intervention to restructure a government body, the particular state, county, or city could stop charging all the taxes we are familiar with and, not only survive but, maintain without taxation the amount of reported government services or give every citizen a huge cash rebate.

The implications are mind-boggling. The CAFRs reveal that the world is so different from what we are led to believe, so much more corrupt than suspected, that we are left with three choices, either; 1) government agrees to end the deception and stop taxing us, or 2) the American people agree to accept their status as slaves, or 3) both sides refuse to agree and precipitate a shooting revolution. The issue is that big.

Are Mr. Burien's allegations correct? How could any governmental entity dare to routinely overcharge its citizens by 200%, underreport its income by 2/3rds, and knowingly press for higher taxes based on an inaccurate budget? Worse, how could such a fraudulent system become widespread among all states, counties, cities and the Federal Government?

Due to the money involved! It is that simple.

Those who have made efforts to verify Burien's research indicate that the conclusions drawn by Burien are probably correct. For instance: The State of Alaska and the city of Anchorage both use Budget/CAFR accounting systems that conceal a breathtaking difference in reported revenue. Another researcher in Wyoming claims that a comparison of his state's budget and CAFR also support Mr. Burien's arguments. A retired federal auditor after talking with Mr. Burien put up a website http://CAFRMan.com that lists CAFR surplus reviews of most state governments. In every case, there are two sets of books and the gross income reported on the budget report is millions or billions of dollars less than is reported on the CAFR.

These verifications of Burien's research and findings lend credence to his allegations.

What follows is an amalgam of statements or implications raised by Mr. Burien in various interviews.

Mr. Burien reports first discovering the CAFR report in New Jersey in 1989, when he helped start and incorporated a New Jersey tax protest group called "Hands across New Jersey." While involved with that group, Mr. Burien read in the state's Annual Budget that the total cost of all public services was $17 billion and the "net available" (the money on hand to pay all bills) was $24.6 billion. But then he asked himself the first question the IRS asks in any audit: "What are the gross receipts?" He added the figures from various state government sources and came up with about $44 billion and began to wonder how the state could have $17 billion in expenditures with $24.6 billion in cash on hand shown on the Budget report, and at least $44 billion annual income? The numbers didn't add up, so he began to dig deeper.

Because his father had been the Director of Personnel for the State Treasury for four years, Mr. Burien understood how to get around in the various government departments. The state Director of the Budget Richard Kievey was on vacation, so Mr. Burien called one of his lowest level assistants and said, "I m working on a report for Richard [the vacationing Budget Director] and I need all the figures on the autonomous agency accounts, interest accounts, investment accounts." The assistant said, "Oh, you want the Comprehensive Annual Financial Report (CAFR)." This was the first time Burien had heard of the CAFR but he said, "Yes, I need it" and the assistant mailed it to him.

The 1989 CAFR showed that New Jersey had liquid investment funds (cash equivalent) of $188 billion of which; common stocks worth $70 billion, $10 billion in loans made by the state due from public and private corporations, and $14 billion in insurance company equity participation. The little state of New Jersey, which admitted to less than $17 billion in annual income on its budget, reported $188 billion in cash, stocks, loans and equity participation on its CAFR. According to Mr. Burien, "On that day, I learned the definition of syndicated organized crime." Keep in mind that most of the revenue and investments from the 21 counties, hundreds of cities, municipalities, school districts, state financial authorities, many other local government owned pension funds, and 69 enterprise authorities, all of which put out their own CAFR or Combined Financial Statement are not in most part inclusive with the state's revenue and investments. Totals from all here when looking at composite New Jersey government figures are well in excess of 1.8 Trillion dollars. Divide that figure by the population of New Jersey to see the per capita share of the wealth.

So why are the taxes in New Jersey some of the highest in the country? The answered is; Power corrupts, absolute Power corrupts absolutely. Mr. Burien keeps emphasizing to the public that they, the public, left the VAULT door open, and those sharp little crackers said thank you very much. The problem is that most (99%) of the public responds with, Vault, what vault. With this well entrenched attitude of naivety by the public in place, those sharp little crackers now have even stopped saying thank you very much as they plunder the wealth in their unabated efforts towards the building of their own empires within the corporate structure of Composite Government.

The scam worked something like this: Anything that was a cost or expense for public services (the traditional side of the Annual Service Budget, such as the Department of Transportation, health and welfare, etc.) was reported on the Budget where public taxes primarily paid 100% of the bill for those services. That was $17 billion.

However, any governmental agency that was a profit center (the Port Authority for New Jersey, the New Jersey Turnpike, and investment accounts, etc.) that generated no tax revenue was "restricted by statute from being reported in and benefiting the Annual Budget. Why? Because the state legislature passed laws to prevent reporting the income from investment or venture profit centers on the Budget. Instead, income from these profit centers was disclosed only on the CAFR or other financial reports referenced in the notes of the CAFR.

But that disclosure was not immediately apparent. For example, when Mr. Burien looked for New Jersey's 1989 "gross cash receipts" in the CAFR, he found the figure buried on page 174, under the "Waste Water Treatment Trust Fund." It showed the amount of the total cash receipts (Cash Additions) for 1989 from all state agencies, departments, and sources was $83.799 billion. In other words, New Jersey State Government from all sources was grossing $84 billion to provide $17 billion in taxation applied public services as seen in the openly represented Annual Service Budget. New Jersey citizens were paying $5 for every $1 in services they received, and the state was pocketing (utilizing) the other $4 as "profit" for other purposes.

When breaking down the true revenue income, the most important revelation was that only one third of the states income came from taxes, fines and fees. Two thirds of state government’s income came from Other Sources of investment return and enterprise operations with no direct tie to the publicly known budget. When looking at the openly disclosed Budget, which each year continued to grow at a runaway pace, here ever-expanding taxation primarily covered the expenses.

The 1989 CAFR also reported the state owned $32 billion in common stocks - but this figure was footnoted.  The footnote revealed that the stocks were valued according to their original purchase price, not the current market value. In other words, if the state bought a stock in 1968 at $1.25 a share and it's worth $300 a share now, they still report it on the CAFR as worth $1.25 a share. Burien determined that the true market value for the "$32 billion" in stocks reported on the New Jersey CAFR was actually about $70 billion.

But Mr. Burien goes further - he claims that the dual system of books is definitely not unique to New Jersey, but also common among the in 1989 over 54,000 local government corporate entities operating within all fifty states.   Moreover, he claims the dual accounting system used ten years ago in New Jersey was created in 1946 through an “private” association by the name of GFOA (Government Financial Officers Association) and is the primary local government accounting structure being used today overseen for policy and accounting rules to follow dictated by GASB (Government Accounting Standards Board) another “private” association.

For example, "In 1977 Arizona's annual service budget reported $2.8 billion in “gross” revenues but the state's 1977 CAFR reported total cash receipts of $3.1 billion, a mere $300 million difference."

"However, in 1997, Arizona reported an Annual Service Budget of $5.5 billion while the State's CAFR (printed by the Auditor General's Office) showed total gross receipts of $17 billion. That's a difference of over $11 billion over what was reported on the Budget report. In just twenty years, Arizona had caught up to New Jersey in that both states annual Budget reports showed less than one third of the actual gross income seen in the states CAFRs.

"CAFRs, AFRs (Annual Financial Report), and Combined Financial Statement reports (federal) indicate that the composite totals for all government (Federal, state, county and city) ownership of publicly traded stocks exceeds $32 TRILLION (53% of the total ownership of all listed stocks from ALL exchanges INTERNATIONALLY in 1989), $8 TRILLION in insurance company  equity (should we be surprised by high priced mandatory auto insurance or unaffordable health care?) and $5 TRILLION in Bond Surety Escrow Accounts for future liability of existing or potential debt. Government in fact was using their own investment funds through the back door to fund a large percentage of their own debt promoted to the public at the front door.

Governments use Bond Surety Escrow Accounts to evade that pesky little rule that government should not operate at a "profit." That is, government should not impose more taxes than it actually uses to run the government. By designating tax revenue that exceeds operating costs as “Bond Surety Escrow" for future liability, government avoids calling excess revenue a "profit" and is thereby enabled to continue to substantially enrich itself at public expense.

To illustrate the potential for abusing "future liability payments,” consider the New Jersey plan in the 1950s to build the New Jersey State Turnpike and Garden State Parkway Authorities. The state asked voters to approve a $7.5 billion bond to construct the turnpikes. The state explained that these turnpikes would be operated as toll roads by the bondholders until the $7.5 billion bond was paid off - but the bondholders could not operate the toll roads at a profit. Once the bonds were repaid, the turnpikes would revert back into the state s Annual Budget as a normal cost/revenue item. The public voted yes.

Over the following years, the state sometimes alleged that the toll revenue from operating those turnpikes failed to cover their operating expenses, and so additional bonds were passed to fund the turnpikes. As a result, in 1990, the total bond liability still owed for the turnpike had grown to $14.5 billion. But guess how much was in the Bond Surety Escrow Accounts? $32 Billion! Enough to repay the standing $14.5 billion bonds off twice!

How could that happen? Say the toll road made a $400 million profit for the year and the scheduled payment on the $7.5 billion bond was $100 million. The state made the $100 million payment but payment of the $300 million extra into the Bond Surety Escrow Account that generated substantial annual dividend returns while being designated for future liability payments. Although they kept the $300 million, they did not declare it as an asset but wrote it off as a line item payment. In other years, even though they made a good profit, by depositing more than the profit made they alleged that they lost money and therefore floated more billions in bonds. (Guess who pays?)

The bottom line is that New Jersey and other local government entities are collecting hundreds of billions of virtually unreported dollars from other operations. The motivating factor is not public welfare, but control of those billions.

Mr. Burien not only alleges that the dual accounting system exemplified by CAFR is not only used by all fifty states, but also by all counties, cities and the Federal Government itself. If Mr. Burien's allegations are correct, as they appear they are after verification from many others that have now looked, they comprise the most damning indictment of big government yet seen. In sum, Mr. Burien implies that our government is in fact acting as a criminal enterprise bent on oppressing Americans by extorting several times as much tax revenue then is needed for what it spends on public services and using the majority of those extorted revenues to further enrich, empower and enlarge government at public expense.

Mr. Burien contends that the inner circle of the individuals controlling the top wealth of this structure, have the attitude toward the public of; Keep the Chipmunk (the public) running on the treadmill, confused as possible, as through trickle down economics, just enough revenue is supplied to keep the chipmunk running at optimum efficiency as the top inner circle controlling parties tap off 80% of the energy produced by the treadmill.  The key words here are Optimum Efficiency and by the definition of what the public has allowed to happen as they left the vault door unintentionally open, the true final effect of forced labor, control, and subservience has masterfully and strongly rooted by unrestrained takeover.

According to Mr. Burien, although the public is absolutely ignorant concerning the wealth and gross income shown in the CAFR, the primary cause for that ignorance is not the politicians firmly entrenched for enrichment but the mainstream media. When Mr. Burien first discovered the CAFR reports in New Jersey in 1989, he went on radio 101.5 FM in a live 45-minute interview. Several days later, that radio station was threatened with losing its license on “other” issues and was almost shut down. CAFR had become another example of - "third rail journalism" – since the 60’s any reporter or media outlet that touched the issue would be silenced or driven from journalism. As a result, there's been a total mainstream media blackout on disclosing CAFR reports. For over fifty years the directors and CEOs of the primary syndicated media organizations both print and broadcast, were sent state CAFR reports each and every year, as they maintained a blackout towards the simple mentioning of the report. As the wealth base grew, more hands were firmly entrenched in the pockets of that wealth.

Mr. Burien reports the discovery of the fact that as of 1990, New Jersey State Judges are vested in a personal retirement guarantee of $5,000,000.00, per judge after they serve as a judge for one year (they vested with 100% retirement benefits after 1 year). Federal district court judges did not have a retirement or pension plan do to the fact that they were appointed for life. Being appointed for life they received their full paycheck and benefits for life.  Do you need anyone to spell it out for you? Would a New Jersey State or Federal District Judge allow an attack on the squirreled away $Billions and jeopardize his entry into $Millionaire$ boys retirement club status? The inner circle gets the gold!!

Later, Burien learned that the New Jersey official in charge of discrediting his CAFR discoveries was a former reporter (Harvey Fisher) who d been appointed Assistant State Treasurer - even though he had no former financial background. Burien investigated his background and learned that as a reporter for the Bergen Record he made $35,000 a year. But as Assistant State Treasurer he made $65,000 a year - plus a Carte Blanche tax free expense account of $125,000 !????????

Burien claims this was not an aberration: "I knew there was a state data search department under the Department of Treasure Personnel division which tied all agencies and departments together. In 1990 I called that department and asked for a data search on all key level directorships and supervisory positions for all budgetary or autonomous agencies, and they came up with some 3,400 names currently listed that were placed over several administrations. Almost 1800 of these Directors were former editors or reporters! It is a virtual certainty that many of these appointments were payoffs for the journalist’s previous "cooperation" in spinning or silencing stories to suit government as it took it all over by expansion and investment wealth takeover..

If you conduct a comparable search in other states, you may find a similar symbiotic relationship between government, editors, and reporters. The more money held and generated by an agency, the higher the percentage will be. If so, the media's "liberal, pro-government bias" may run much deeper than anyone has imagined, and the military-industrial complex" described by President Eisenhower in the 1950's may have been replaced by a “media-bureaucracy-banker complex" in the 1990s.

Therefore, Mr. Burien recommends that once you analyze your state's Budget and CAFR reports (and make sure to look at back issues over the decades), you insist that your local news mainstream media (TV, papers, radio) raise the "Public Awareness" by reporting the difference between the composite "total of cash receipts from all agencies, departments, investments, etc." and the "actual total composite revenues held or controlled." Mr. Burien started with national disclosure of the CAFR and the structure behind it on June 8th 1998.  In 1999, GFOA and GASB (Government Accounting Standards Board) changed through successive transmittal letters sent to local governments the accounting requirements for local governments within the Combined Financial Columns of the CAFR from; All revenue, income and investments being shown, To;  All revenue, income and investments being shown that were necessary to meet obligations and liabilities of that local government.  This change in accounting is substantial. The good point here for disclosure is that you can look at a pre 1999 CAFR report, 1997-95-93, etc., and spot modifications made in revenue reporting from pre 1999 reports in comparison with post 1999 CAFR reports. With this being done, you now know to ask and look closely at the note sections for the accounting of those revenue streams taken off the balance columns of the CAFR. Read the notes of the CAFR carefully.

If your local media refuse to publicize your state's CAFR, they may be cooperating with a criminal agreement which has effectively silenced public disclosure of the CAFR reports for over fifty years. However, once Americans know how much money is out there, where it's coming from and where it's going - the government's and the inner circle's game will be over.

Any media that refuses to make “simple” and immediate mention of the CAFR report should be publicly and aggressively exposed for their symbiotic cooperation in silence. Exposure of the complicity of media is the jugular vein of exposing the evil and corruption. TREASON: "Treason doth never prosper; what's the reason? For if it prosper, none dare call it treason." Sir John Harrington, 1561-1612

A video produced started in December of 1999, by Mr. Burien, entitled: "The Biggest Game In Town", is available and is set up for airing on your Public Access or local TV stations. Mr. Burien, in this video introduces a program that could lead to the final elimination of taxation in this country with a possible dividend return to the public by and through the restructuring of the principle of operation of government by public mandate in making the public the direct beneficiary of the wealth. The information on the video is a must see for every American.

POST NOTE: The video was uploaded to Google video on December 25^th 2008 for worldwide viewing of which in a few months after release it has been viewed 2.7 million times breaking “all date records” If you do a Google search for the key words: Government wealth, you will get 55 million hits with the video being the first hit and Mr. Burien’s website CAFR1.com being the second hit. Even in light of this; The silence continues from our political bodies and the main-stream syndicated media. It is apparent the “silence is golden” routine is truly golden for those so well entrenched and intentionally involved..

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