Category Archives: Taxes

California’s governor makes ominous prediction for America, by Simon Black

Is California what America has in store for itself. Let’s hope not. From Simon Black at sovereignman.com:

California’s governor made a rather ominous prediction this weekend when he told an interviewer that “California is America. . . fast forward.”

He was talking specifically about the wildfires that have ravaged his state– a warning that the natural disasters will soon plague the rest of the country too, thanks to climate change.

But his comment should really be taken more broadly… because California really is a snapshot of America in the near future.

Just like America, there are a lot of incredible things about California. It’s home to some of the biggest, most ‘innovative’ tech companies in the world. It has a large, educated, highly skilled population.

Just by itself, the state is the 5th largest economy in the world. It’s a powerhouse. Or, at least, it should be. It has all the promise of America– Hollywood, Silicon Valley, sunshine, Disneyland, and endless possibilities… the place where dreams can come true.

And then there’s reality.

Yes, the state is ablaze and air quality has turned toxic. But that doesn’t even scratch the surface of the problems.

(The wildfires are indicative of a bigger problem, though. It’s not like wildfires are a rare occurrence in California. They happen every year. Yet somehow this government always gets caught with its pants down.)

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Wealth Tax – A Warning to Taxpayers, by Thor Lihaug

Over the last two decades, Western economies have been increasingly driven by debt.  A significant contributor to the 2008 stock market crash was unsustainable debt.  How did we fix the problem? We loaned even more.  Since then Western nations have doubled the national debt levels. The Covid crisis makes it even worse. Governmental rescue programs are on rapid escalation with a huge decline in national fiscal income.  This will have to be financed by either more loans, taxes or a combination thereof. Who or when to pay for it all, is quite unclear, but there will be no escape for taxpayers.  A Wealth Tax (WT) is a recurring hot topic in crises, but a novelty to the UK.

Former US Democrat presidential nominees Elisabeth Warren and Bernie Sanders have already suggested a new Wealth Tax on wealthy Americans.  Joe Biden’s tax proposals are predicted to increase taxes for households at every income level and make the federal tax code more progressive, but he has to my knowledge rejected proposals for a Wealth Tax.  On the other hand, strong forces are pushing him further to the left on the political spectrum and WT is highly supported among left progressives. California Democrats have raised two proposals to raise taxes on the “rich.” Assembly Bill 1253 and 2088 would raise the top tax rates in California – which are already the nation’s highest at 13.3% – even higher with the introduction of a 0,4% Wealth Tax.

In UK the Wealth Tax debate is partially obscured by other political events, as the Brexit debacle.  The WT appears to have eluded the interest of most media outlets however, powerful forces are supporting WT. Many political leaders are already expressing clear support. Member of the OMFIF Advisory Board, Brian Reading (former Economic Adviser to UK Prime Minister Edward Heath) states:

“The pandemic makes the case for a British wealth tax undeniable. A wealth tax helps to reduce inequality. It is an economic and moral necessity. The cost of this outbreak should not be left as a future burden solely on those who work, save and invest to create wealth.” 

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New Jersey Is Becoming The Most Hated State As Households Flee In Record Numbers, by Tyler Durden

New Jersey politicians keep raising taxes as New Jersey residents keeping leaving the state and the politicians profess to see no connection between the two. From Tyler Durden at zerohedge.com:

A new tax on millionaires, a 22.5% gas tax hike  (bringing the total increase to 250% in 4 years), and now a tax on high frequency trades: it is becoming obvious to most – except perhaps the state’s democratic leadership – that New Jersey is now actively trying to drive out its tax-paying population and top businesses with a series of draconian measures to balance its deeply underwater budget, instead of slashing spending. The state-imposed limitations on commerce, mobility and socialization due to the covid pandemic have also not helped. And in case it is still unclear, the trend of New Jersey’s ultra wealthy residents fleeing for more hospitable tax domiciles which started with David Tepper years ago, is now spreading to members of the middle class.

According to the latest data from United Van Lines and compiled by Bloomberg, people have been flooding into Vermont, Idaho, Oregon and South Carolina, eager to flee such financially-challenged, high-tax, protest-swept, Democrat-controlled states as Connecticut, Illinois and New York. But no other state has seen a greater exodus than New Jersey, where out of every 10 moves, 7 have been households leaving the state, or nearly three times as many moved out than moved in.

On the opposite end were bucolic, pastoral states such as Vermont and Idaho, which have seen between 70% and 75% of all inbound moves.

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A critique of modern socialism, by Alasdair Macleod

The welfare-warfare-regulatory-state model of socialism is the next model that will collapse. From Alasdair Macleod at goldmoney.com:

ocialism has moved on from the Marxist version of the state owning the means of production to one whereby production remains in the hands of individuals but are heavily regulated — echoing Mussolini’s fascist-socialist model.

But after nearly nine decades this model faces collapse, much like the Soviet collapse after sixty-seven years. This article explores the modern socialist model, updates the economic calculation problem identified by von Mises in 1920 and explains why it still fails in today’s socialism. And finally we predict the consequences for governments and their state-issued currencies.

Introduction

It is presidential election year in the United States. The choice is between the Republican’s or the Democrat’s socialism, the former being a milder version of the latter. A further difference is President Trump’s administration increasingly pays the government’s bills by socialising money, while great-uncle Joe wants to tax the rich even more (which in practice means not the rich but the middle and lower classes) as well as defoliating  the magic money tree.

In Britain, those of us who rejoiced at a free marketeer becoming Prime Minister with a strong electoral mandate have experienced a greater clampdown on personal freedom than imposed by any British government since post-war rationing. Admittedly, Covid-19 and its lockdowns were not foreseen, but will the British ever regain any of their hitherto restricted freedoms? And those of us with long memories are reflecting that the imposition of taxes — the socialising of our earnings — under the Conservatives is almost always more onerous than under Labour. It was not meant to be like that.

One way or the other, the establishment’s socialisation of our wealth, money and freedom “creeps in this petty pace day to day until the last syllable of recorded time”. Whether we like it or not, we are all socialists now. It is a fact of our lives, if not our inclinations. The destruction of our money and what wealth we have left is claimed to be for the common good, as opposed to capitalism, which the socialists tell us enriches the few and is deeply immoral. They, the socialists, have captured the moral high ground, leading us to their higher plain. They allege it is progress towards a better humanity. Their utopian view sees the end of social inequality as its final goal, and as Man progresses towards it the human race will discard capitalism and the class wars that go with it.

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Once upon a time in Hollywood. . . by Simon Black

Once upon a time Hollywood was a free-wheeling, almost laissez faire place, not a golden goose to be impaled by California’s state and local governments. Now Hollywood is fleeing Hollywood. From Simon Black at sovereignman.com:

When Charlie Chaplin first arrived to Los Angeles in December 1913, the city was still a fairly small oil town… just a fraction of the size of San Francisco.

LA was so underdeveloped that, as Chaplin wrote in his autobiography, wild coyotes frequently roamed around Hollywood and Beverly Hills.

But within a few years the city was booming, and Chaplin had become one of the most famous people in the world.

This is obviously in large part due to the development of the motion picture industry– the most revolutionary technology of its era.

But what’s interesting is that the motion picture industry didn’t actually start in LA. The technology was originally developed in the late 1800s in part by Thomas Edison, who was based in New Jersey.

Edison’s east coast film studio produced over 1,000 movies (including a bizarre snuff film called Electrocuting an Elephant). And he notoriously threatened to sue anyone who attempted to make movies.

In 1902, a US Appeals Court ruled that Edison did NOT invent the motion picture camera… but his lawsuits continued regardless.

This constant threat of legal action was a huge disincentive to entrepreneurs. And so, in the early 1900s, several young studio executives packed up and left the east coast for Southern California where they were much better protected from Edison’s frivolous lawsuits.

This is the primary reason why the motion picture industry grew up in LA; sure, the region’s ample sunshine was a nice benefit, allowing for year-round outdoor production.

But the chief benefit was the city’s free-wheeling, pro-business culture. It was like Hong Kong in its heyday– anything goes– which attracted talented artists and entrepreneurs from all over the world who were free to build their dreams.

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California Set To Pass The Nation’s First Wealth Tax Targeting The Ultra Rich, by Tyler Durden

This is an idea that will catch on like wild fire among cash-strapped governments. From Tyler Durden at zerohedge.com:

It was about about nine years ago when consulting company BCG first suggested that in a time of out of control spending and soaring debt loads, the only fiscally sustainable “solution” was to implement a wealth tax (see “There May Be Only Painful Ways Out Of The Crisis“).

While the idea was well ahead of its time in 2011, and was quickly shut down in the court of public opinion, several years later none other than the IMF resurrected the idea of a wealth tax, which has only gained momentum in recent months, and despite widespread grassroots pushback, the concept of a “wealth tax” has moved front and center and most recently the chairman of Capital Economics, Roger Bootle, said that the world’s wealthiest could be subjected to higher tax rates as governments scramble to fund spending and repair their economies amid the coronavirus crisis.

Fast forward to today when the ultra-liberal state of California is now ready to take this “socialist” idea from concept to the implementation phase, with the SF Chronicle reporting that a group of CA state lawmakers on Thursday proposed a first-in-the-nation state wealth tax that would hit about 30,400 California residents and raise an estimated $7.5 billion for the general fund.

The proposed tax rate would be 0.4% of net worth (most likely ended up far higher), excluding directly held real estate, that exceeds $30 million for single and joint filers and $15 million for married filing separately.

Oakland Democrat Rob Bonta, who is the lead author of the wealth tax proposal AB2008, justified the wealth expropriation by saying that California is facing a big budget deficit because of the health and economic crisis brought on by the coronavirus, and “we can’t simply rely on austerity measures,” to close it. It wasn’t immediately clear why austerity doesn’t work considering that California has never actually tried it, but in any case the Democrat’s proposal was clear: “We must consider revenue generation.”

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New School: Plastic bubbles, 8 year old arrests, and woke math, by Simon Black

Simon Black’s weekly chronicle of the absurd, at sovereignman.com:

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, risks to your prosperity… and on occasion, inspiring poetic justice.

NASA to rename insensitive cosmic objects

You may think NASA’s mission is to take humanity to Mars and beyond.

But remember, we no longer live in a society which prioritizes actual advancement.

Far more important is making sure no one is offended.

So we may not make it to Mars, but at least the Innuit people will not be offended.

NASA announced that it will rename the “Eskimo Nebula” as well as the “Siamese Twins Galaxy” because they include racially insensitive terms, apparently rooted in colonialism.

But what about the constellation Orion– named after a Greek mythological hunter god who is alleged to have raped the Princess Merope.

Or the constellation Gemini– named after Green twins Castor and Pollus, who were part of that Argonaut band of capitalist swine who terrorized ancient civilizations in search of the Golden Fleece. . .

And isn’t the name Mars also offensive– because it celebrates the patriarchal, heteronormative violent God of War?

What about Jupiter– a notorious rapist who slept with his children?

In fact, every planet named after a Roman god should be considered offensive– Rome was the biggest colonizer of its day and routinely enslaved captives and lower class Romans.

Luckily the Visogoths held a ‘peaceful protest’ in Rome in the year 410 which resulted in much more equality– everyone was equally impoverished and defeated.

Click here to read the full story.

California to raise income taxes RETROACTIVELY

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Escape From New York: Wealthy Residents Flee In Droves As The City Degenerates Into A Hellhole, by Michael Snyder

New York is the most prominent, but many people, especially highly productive people, are leaving urban areas that have been misruled by Democrats for decades. From Michael Snyder at themostimportantnews.com:

Hundreds of thousands of wealthy residents have already left New York City, and more are leaving every day as America’s biggest city rapidly degenerates into a hellhole.  This is incredibly sad to watch, because in many ways New York had been an incredible success story over the past several decades.  The 1970s and 1980s were nightmarish times for the city, but over the past several decades it was transformed into a virtual paradise for the wealthy and famous.  Crime rates absolutely plummeted, the city was given a dramatic facelift and a booming financial community brought an unprecedented amount of wealth into New York.  But now many of the old problems are starting to come back again, and a lot of wealthy New Yorkers have decided that it is time to look for greener pastures.

Of course the COVID-19 pandemic has been the primary motivation for a lot of the wealthy individuals that have been fleeing the city.  According to the New York Times, there was a mass exodus of 420,000 New Yorkers between March 1st and May 1st…

Roughly 5 percent of residents — or about 420,000 people — left the city between March 1 and May 1. In the city’s very wealthiest blocks, in neighborhoods like the Upper East Side, the West Village, SoHo and Brooklyn Heights, residential population decreased by 40 percent or more, while the rest of the city saw comparably modest changes.

Can you imagine 40 percent of your neighborhood leaving in just two months?

Wealthy people can often pick up and move a lot more easily than the rest of us, because many of them are not tied to traditional jobs and a lot of them already own second homes.  And it is definitely understandable that a lot of them would have wanted to leave during the peak of the pandemic in the New York area, but now that infection rates are a lot lower they still aren’t coming back and this has become a hot political issue for New York politicians.

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Jubilee, by Robert Gore

The debt dam is crumbling as central bankers and government officials frantically refill the escaping lake with eye droppers.

As background to this article, it would be helpful to read an article I wrote in 2015, “Real Money.”

The foundation of the world financial system is debt. Every currency in the world is debt whose value is not tethered to any real value. In a rare display of official truth-in-packaging, right there on the instrument itself a US dollar bill tells you it’s debt: Federal Reserve Note. A note is a debt. What do holders of Federal Reserve Notes, officially creditors of the Federal Reserve, get for repayment of the debt they hold?

Federal Reserve Notes have no maturity date, pay no interest, and can never be redeemed. If you go to a Federal Reserve branch and try to redeem one, they will either not accept it or they will exchange it for an identical Federal Reserve Note. Why would anyone accept this peculiar instrument? Because you cannot refuse it. Also right there on the dollar bill it says: THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE. For American transactions, it’s reject the dollar, go to jail. The American government even levies punitive measures on foreign governments that just say no.

Because central banks and governments can repay their debt with more of their own debt, they have been unconstrained in the amounts they produce. You and I would do the same thing if we were so empowered. Governments, central banks, and debt are a ménage à trois from hell. The US ménage has debased the currency’s value against real goods and services at least 95 percent since the establishment of the central bank in 1913. The ménage’s ill-gotten gains are someone else’s loss—gullible savers and creditors who believe promises by politicians and central bankers that they will not engage in the debasement they have every incentive to promote.

Amazon Paperback Link

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The Dirty Secrets Of ‘Clean’ Electric Vehicles, by Tilak Doshi

Clean and green is nowhere near as clean and green as they’re cracked up to be. From Tilak Doshi at forbes.com:

The widespread view that fossil fuels are “dirty” and renewables such as wind and solar energy and electric vehicles are “clean” has become a fixture of mainstream media and policy assumptions across the political spectrum in developed countries, perhaps with the exception of the Trump-led US administration. Indeed the ultimate question we are led to believe is how quickly can enlightened Western governments, led by an alleged scientific consensus, “decarbonize” with clean energy in a race to save the world from impending climate catastrophe. The ‘net zero by 2050’ mantra, calling for carbon emissions to be completely mitigated within three decades, is now the clarion call by governments and intergovernmental agencies around the developed world, ranging from several EU member states and the UK, to the International Energy Agency and the International Monetary Fund.

Mining out of sight, out of mind

Let’s start with Elon Musk’s Tesla. In an astonishing achievement for a company that has now posted four consecutive quarters of profits, Tesla is now the world’s most valuable automotive company. Demand for EVs is set to soar, as government policies subsidize the purchase of EVs to replace the internal combustion engine of gasoline and diesel-driven cars and as owning a “clean” and “green” car becomes a moral testament to many a virtue-signaling customer.

Yet, if one looks under the hood of “clean energy” battery-driven EVs, the dirt found would surprise most. The most important component in the EV is the lithium-ion rechargeable battery which relies on critical mineral commodities such as cobalt, graphite, lithium, and manganese. Tracing the source of these minerals, in what is called “full-cycle economics”, it becomes apparent that EVs create a trail of dirt from the mining and processing of minerals upstream.

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