Category Archives: Taxes

Welcome to Hotel California: Lawmakers Move to Tax People Who Have Left the State, by Jonathan Turley

Posted on January 25, 2023 | Leave a comment

Never underestimate the stupidity and rapacity of governments. From Jonathan Turley at jonathanturley.org:

California lawmakers appear intent on making the Eagles song Hotel California a reality … at least when it comes to taxes for those who try to flee the state. At the Hotel California, “you can check-out any time you like, but you can never leave!” With soaring costs and a massive $24 billion deficit, the state is also facing an exodus of people leaving the state. The solution? Convert the state into a tax Venus flytrap: not only impose a wealth tax on those caught in the state but tax those who try to leave.

The new bill introduced by Democratic Assemblyman Alex Lee would impose an extra annual 1.5% tax on those with a “worldwide net worth” above $1 billion, starting as early as January 2024.

The law has a cynical bait-and-switch provision. The billionaire tax is just meant for the initial packaging and passage. It can therefore be sold as a “billionaire’s tax.” However, in two years, the threshold drops to a worldwide net worth exceeding $50 million. While billionaires would stay at 1.5%, those in the lower tax bracket would be hit by a 1% added rate on worldwide assets.

It also includes the taxation on those who left the state . . . many due to the high taxes. California already has the highest tax burden in the nation. It relies on its top 1% of taxpayers for roughly half of its individual income tax revenue, but continually treats those taxpayers like game in a canned hunt. The result, not surprisingly, is that they are leaving for states like Texas and Florida.

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Normalizing Servitude, by TL Davis

Posted on January 13, 2023 | Leave a comment

Involuntary servitude can always be normalized, but it can never be moral. From TL Davis at tldavis.substack.com:

For all of the speculation about Brunson v Adams, we knew the Supreme Court would never take the case. Didn’t we? There is no end to the humiliation and degradation of those who believe we still live in a constitutional republic. We do not. The sooner folks understand that the United States of America of their youth is gone, consumed by the voracious appetite for power and control of the communists a long time ago, the better. The average American believes that this is not a communist country, because they don’t understand that a permit to build is asking permission from the government to do something with one’s own property. They don’t understand the whole part of “property” which precludes the need to ask anyone anything about it.

I once was talking to a candidate for county commissioner and I asked him the difference between owning something and not owning something. He didn’t understand what I was trying to get at. He said, “well, when you buy something, you own it.” “Like land?” I asked. “I guess,” he replied. “Like this cup off coffee?” I asked, holding up my paper cup. “Yes.” “You don’t see the difference?” “Not really,” he said. “The difference is when I own something, like this cup, no one will ever ask me for another cent, no matter what I do with it, even if I turn it into some sort of dwelling. But land, I don’t own that, because every year I have to pay for it again, to the government, in order to keep it.”

The very concept of property taxes is communist and anyone who benefits from it, or helps to collect it is also a communist. Now think of how embedded the idea of property taxes is in our society and think about how long these communist notions have been festering in a “free” nation.

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Will You Beat Uncle Sam’s Relentless Pursuit of Your Wealth? By MN Gordon

Posted on January 13, 2023 | Leave a comment

If you think the U.S. government is rapacious now, this is small change to what they’re going to be when economic and financial calamity really hit. From MN Gordon at economic prism.com:

The United States is lurching towards an epic financial catastrophe.  This isn’t a novel insight.  The great tragedy has been in the works for decades.  Anyone with a mild inkling of curiosity knows what’s going on.

According to the U.S. Census Bureau’s population clock, the U.S. population is over 334 million.  This, no doubt, is a lot of mouths to feed and people to clothe and shelter.  But that’s not all.

Many of these people also need some sort of medical care throughout the year.  Some may break their arm.  Others may have their appendix burst or suffer cardiac arrest.  There are also serious medical emergencies from car accidents or other hazards.

In an economy characterized by limited government and individual liberty people are self-supporting.  They provide the means to pay for these needs through the fruits of their own labors.  Minors are supported by their families until they can provide for themselves.  The elderly may fall back on their kids if they didn’t squirrel away enough nuts during their working years.

In an economy characterized by central planning this is not the case.  Large segments of the population are dependent on government programs for their daily bread.  They also look to the benevolent hand of government to pay for their drugs and other medical needs.

The U.S., over the last 100 years, has transformed from a nation of self-supporting individuals to a nation of collective dependents.  In fact, the U.S., at this very moment, is closing in on a significant milestone.

Several days before the Ides of March, 100 million people – or approximately 30 percent of the total population – will be on Medicaid.  Can you believe it?

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Trump’s Tax Returns Show Evil of the Income Tax, by Ron Paul

Posted on January 9, 2023 | 1 comment

The evils of the income tax—robbing people of the fruits of their honest labor—are understood and mostly ignored. From Ron Paul at ronpaulinstitue.org:

The final act of the Democrat majority on the House Ways and Means Committee was to make public several years of Donald Trump’s tax returns, which the Committee obtained after a prolonged legal battle. The tax returns confirmed that, despite being one of the richest people in America, Donald Trump paid very little in federal income tax. In fact, in at least one year he paid under a thousand dollars.

Trump’s success in minimizing his tax liability without ever being audited is surprising only to those who think IRS audits are mainly used to catch rich “tax cheats.” According to data released by the Syracuse University Transactional Records Clearinghouse, in 2022 lower-income taxpayers were five and half times more likely than millionaires and billionaires to be audited! This is because low-income taxpayers cannot afford to hire top-notch tax attorneys and accountants to help fight the IRS, so they are more likely to give in to the agency’s demands.

Despite claims of the Biden Administration and its Congressional allies, the $80 million in additional funds provided to the agency as a part of the misnamed “Inflation Reduction Act” will likely increase the tax agency’s targeting of low- and middle-income Americans.

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The benefits of a saving culture, by Alasdair Macleod

Posted on January 6, 2023 | Leave a comment

The foundation of true economic progress will always be saving. From Alasdair Macleod at goldmoney.com:

Savings are a vital component of any successful economy, and the foolishness behind the paradox of thrift is exposed in this article. It has been a huge error for Keynesian policy makers to discourage savings in the interests of temporary boosts to consumerism.

It is probably too late now but encouraging people to save by removing all taxation from savings makes an enormous contribution to reducing price inflation and trade deficits, while enhancing national wealth. This is evidenced empirically and demonstrated by reasoned theory. 

Furthermore, there is an error in assuming that there is no alternative to Triffin’s dilemma, which posited that for a nation to produce a meaningful level of reserve currency for external circulation it must run trade deficits. Triffin was describing the problems the United States gave itself under the Bretton Woods agreement, leading to the failure of the London gold pool in the late sixties. It still informs US policy makers today, and wrongly leads American commentators to believe that the dollar cannot be toppled from its pre-eminent position.

But Triffin’s dilemma assumes that central banks must accumulate currency reserves. Unless a government has foolishly indebted itself in a foreign currency, there is no need for them to do so. Currency reserves add nothing to a domestic currency’s stability. Gold fulfilled this role successfully, and likely to do so again in future.

It is a savings ratio of 45% which is at the root of China’s power. The lack of savings in America and its western alliance is their Achilles heel.

Empirical evidence

If there was one taxation policy which would reduce consumer price inflation, stabilise a fiat currency, encourage capital allocation for productive purposes, and improve government finances for the longer-term, what would it be?

Remove all taxes from savings.

This is the lesson from past-war West Germany and Japan, both of which suffered absolute defeat and economic destruction in the Second World War. Their currencies were worthless. But they recovered to become economic powerhouses in Europe and Asia respectively in little more than two decades. Both implemented savings-friendly taxation policies, which made capital available at stable interest rates for new industries to invest in production. Germany developed its Mittelstand, and Japan built on her vertically integrated Zaibatsu.

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Your Government Hates You, by MN Gordon

Posted on December 27, 2022 | Leave a comment

The government steals your hard-earned money, has plunged the country into debt, and has spent trillions on programs and wars of no discernible benefit to most of the American people. These are not the acts of an institution that loves you. From MN Gordon at economicprism.com:

“Fate is nothing but the deeds committed in a prior state of existence.” – Ralph Waldo Emerson

Capital Consuming Gluttony

Did you know that in fiscal year 2022, federal tax receipts as a share of gross domestic product (GDP) hit a near record high of 19.6 percent?

According to the U.S. Treasury, in FY 2022, total federal tax receipts and additional federal government revenue topped $4.90 trillion.  Yet, over this time, Congress spent $6.27 trillion.  The difference, the 2022 deficit, was $1.37 trillion.

The difference, of course, was made up with debt.  And year after year, decade after decade, these deficits have stacked up into a mega pile of debt.  Presently, the U.S. national debt is over $31.4 trillion.  As a reference point, in December 2000, the national debt was $5.6 trillion.

In other words, over the last 22 years the U.S. national debt has increased 460 percent.  U.S. GDP over this same time, however, has increased just 157 percent, from about $10 trillion to 25.7 trillion.

You’d think with all that cash coming in from near record tax receipts as a percent of GDP Washington could balance the budget.  Maybe it could even run a surplus and pay down some of the national debt.

President Andrew Jackson, for example, paid off the entire national debt in 1835 after just six years in office.  He then took the federal government surplus and divided it among indebted states.

Alas, that’s not how the U.S. government works in the 21st century, where near record tax receipts will never be enough.  Washington’s capital consuming gluttony is well beyond the reach of a human solution.  Nature will have to take its course.

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The Economic Superbowl: 1920-1921 versus 1930-1931, by George F. Smith

Posted on December 13, 2022 | Leave a comment

How to stop a depression in it’s tracks, and how to prolong one. From George F. Smith at lewrockwell.com:

It’s been said there’s no such thing as a controlled experiment in the social sciences, including economics.  But we had something close to a laboratory experiment back in 1920-1921 and 1930-1931.

In each of these periods there was a depression.  Unemployment was high – for awhile — it was higher in the 1920s than in the 1930s.  Prices were falling in both periods.

In the 1920-21 depression, the Federal Reserve Bank of New York crashed the monetary base, thereby reducing the money stock, and jacked interest rates to record highs.

In the 1930-1931 depression, the federal reserve gradually increased the monetary base and lowered the interest rate.

In the 1920-21 period the government slashed spending and allowed nominal wages to fall.

In the 1930-31 depression the government increased spending and deficits while pressuring industrial leaders to maintain wage rates.

Tax Policies

Coming out of World War I the highest marginal income tax rate was 77%.  First Harding, then Coolidge (following Treasury secretary Andrew Mellon’s advice) lowered tax rates steadily in the early 1920s.  By 1925 the highest tax rate was around 25%.  Tax receipts began to climb, as people stopped playing defense and looked for ways to grow their income.  As incomes increased, so did tax revenue in spite of the lower rates.

In 1932, Hoover pushed through one of the highest peacetime tax increases in U.S. history.  A person making above a million dollars in 1931 could keep 75 cents on the dollar; a year later the amount plunged to 37 cents.  In the lowest bracket, rates more than doubled.  Along with this were countless taxes on items that had never been taxed.  From 1931 – 1933, revenue from the individual income tax dropped by more than half.  By 1933, the economy was at the depth of the Depression.

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Reefer Madness: Demand for Illegal Pot Soars in California Due to High Taxes, by Jonathan Turley

Posted on November 26, 2022 | Leave a comment

California is killing the cannabis goose that might have laid many golden eggs. From Jonathan Turley at jonathanturley.org:

It appears that illegal pot growers are giving thanks this holiday for California lawmakers who legalized pot only to fuel demand for illegal cannabis due to massive taxes. It is the same problem that I wrote about in New York’s program in an earlier Wall Street Journal column. Politicians continue to pile on taxes as if they have no impact on pricing and demand. It just seems like free money if you ignore every economic metric and principle.  Even with a recent recognition that they have killed their own market, California lawmakers are being criticized for offering too little too late in terms of tax relief.

Sgt. James Roy of the Riverside County Sheriff’s Department is quoted in Fox News as saying that “The illegal industry is competing with the legal industry and essentially putting them out of business.”

Why? As with bathtub gin after Prohibition, few people would prefer bootlegged products rather than the safer lawful alternatives. The only reason is economics — and the refusal of the California lawmakers to recognize basic rules of supply and demand. Not only is pot cheaper due to the massive taxes imposed on lawful businesses, but it is also being sent to the East Coast where similar price differentials are also fueling the illegal trade.

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Are You Ready for the Coming U.S. Government Default? By MN Gordon

Posted on November 4, 2022 | Leave a comment

Legally, when a debtor unilaterally changes the term of the contract, for instance by missing a payment, it is a default. The U.S. government will in fact default on its debt, it just won’t call it a default. From MN Gordon at economicprism.com:

The vast herd of investors are a deluded crowd.  Following the Federal Reserve’s much anticipated 75 basis point rate hike on Wednesday the major stock market indexes jumped upward.

Optimistic investors keyed in on the Federal Open Market Committee (FOMC) statement and, in particular, the remark that the Fed, “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation and economic and financial developments.”

Somehow this was perceived as being the precursor to a policy pivot.  Yet during the post-FOMC statement press conference, Powell clarified that, “It’s very premature to be thinking about pausing.”

Stocks then fell off a cliff.  The Dow Jones Industrial Average (DJIA) closing out the day with a loss of 505 points.

Will there be a pivot, pause, or no pivot?  This is the wrong question to be asking.  The reality is the major stock market indexes have much farther to fall before the bear market is over, regardless of if the Fed pivots anytime soon.

If you recall, the Fed began cutting interest rates in September of 2007.  Yet the stock market didn’t bottom out until March of 2009.  Similarly, the Fed began cutting interest rates in January of 2001.  Still, the stock market didn’t bottom out until October of 2002.

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A Frank Letter to the Homeless Man Under the Bridge, by Paul Rosenberg

Posted on October 31, 2022 | Leave a comment

There may be no more cursed position in American business than having to hire employees. From Paul Rosenberg at freemansperspective.com:

This is a re-post from eight years ago. I still feel the same.

I see you standing here, asking for help, about once a week. You are always polite, and I respect that. I’d like to do something for you… something that would matter long-term. Giving you a few notes or coins now and then may be fine, but I’d really like to improve your situation more permanently.

In other words, I’d like to give you a job.

I used to hire people, and I especially liked hiring people who had been denied breaks. I did that whenever I could. If you and I could be transported back in time, I’d hire you. And I’d feel good about it, because I think having a job would do you a lot of good.

That fact is, however, that I can’t hire you, and I’d like you to know why.

I used to run my own contracting firm. I enjoyed the work and I liked being able to drive past a building and say, “I made that.” Having employees, however, was torture. I liked having them in some ways, of course – I liked the guys and it made me happy to see them take care of their families with paychecks that I signed. That was very gratifying. But it wasn’t enough, and there are three reasons why:

#1: Making Payroll

My first problem was simply cash flow. I was solely responsible for having enough money in the bank every week, and that could be nerve-wracking, especially when customers weren’t paying their bills on time. It’s not fun to think that a family won’t be able to buy groceries if you can’t collect your invoices.

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