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Economic Reality of a Wealth Tax

Economics / Taxes Sep 10, 2014 - 05:24 PM GMT

By: BATR

Economics

Proponents of big government, from both the left and right, share one important trait; namely, both spend their waking hours dreaming up new schemes to tax wealth. Only a blind, deaf and dumb observer of economic imbalance would deny that the massive accumulation of worldly assets into the hands of the smallest number of robber barons in all of history is at the core of most social unrest and global instability. However, adopting a Marxist outlook on the evils of the bourgeoisie simply confuses the nature of the financial magnates, while blaming the hard pressed merchant class for conducting beneficial business. Creation of tangible wealth is the greatest achievement in the uplifting and improvement of the human condition, when that stream of riches flows between and among entrepreneurs and business proprietors.


A viable middle class only exists, when the velocity of money grows, as expectation of future prosperity becomes the cornerstone of economic development. Wealth is not the problem. Only the crony capitalists, who game the political system and fix the financial markets, present the fundamental reason why sharing of wealth has become an intangible for most people.

The bighearted collectivists have a champion for their cause. Sen. Sanders calls for wealth tax at AFL-CIO convention, and presents a time tested onslaught on the opulent.
"Sen. Bernie Sanders, a self-described socialist, called for a progressive estate tax on multi-millionaires and billionaires during a speech on Saturday.

"A nation will not survive morally or economically when so few have so much while so many have so little," Mr. Sanders said at the Vermont AFL-CIO annual convention.

"We need a tax system which asks the billionaire class to pay its fair share of taxes and which reduces the obscene degree of wealth inequality in America," said Mr. Sanders, an independent who caucuses with the Democrats.According to Mr. Sanders, taxing the top .25 percent of wealthiest Americans is the fairest way to reduce wealth inequality, lower the $17 trillion national debt and pay for investments in infrastructure,
education and other neglected national priorities.

Mr. Sanders‘ proposal would not raise taxes for the remaining 99.75 percent of Americans."

If you are disturbed by such an assault on those nasty rich, the "so called" right wing refuses to be outdone or out maneuvered.

Stanford University published Ronald McKinnon argument, The Conservative Case for a Wealth Tax. "In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the federal income tax."

Mr. McKinnon goes on to propose that:

"With a large exemption of say $6 million that effectively excludes more than 95 percent of the population, a moderate flat tax, say 3 percent, on wealth so defined could then be imposed . . . The new wealth tax would be levied on the global personal domestic and foreign wealth of American residents."

Note the apparent common ground in both positions. The income tax remains and a new revenue enhancement, levied on the assessed value of all wealth and possessions, becomes law. Guess Sanders’ confiscation looks like a bargain, compared to the approach taken by the "so called" fiscal conservatives.

Completely absent from these trial balloons is political and economic reality. Can anyone imagine a circumstance whereby a George Soros or a Sheldon Adelson would volunteer to surrender any additional portion of their wealth, when much of their fortunes are devoted to the manipulation of social causes and political king making?

Do you really believe that the Warren Buffet and Bill Gates ‘Giving Pledge’ along with the 115 Billionaires sign to give away more than half of their fortunes are for real? Even, Mr. McKinnon acknowledges two sacrosanct loopholes in the current code, "charitable or philanthropic contributions to be deducted, and not to tax the imputed rental value of owner-occupied homes while allowing full deductions for mortgage interest rates."

A wealth tax assessed, while you are living, will alter tax planning often and significantly, as opposed to the estate tax that usually is prepared for well in advance.

The Rates of Wealth Tax in France serves as an example to keep in mind.

Fraction Taxable Rate of Tax
€0 - €800,000 0%
€800,000 - €1,300,000 0.50%
€1,300,000 - €2,570,000 0.70%
€2,570,000 - €5,000,000 1%
€5,000,000 - €10,000,000 1.25%
€10,000,000+ 1.50%

When such a tax rate is, half or less in France from that proposed by Mr. McKinnon, you know we are in trouble.

The underlying objective in these fake wealth tax schemes has nothing to do with closing the gap between Sanders’ .25 percent of wealthiest Americans, and the working class. In essence, the goal is simply to raise more revenue for big government.

The only true and factual way to stop the insatiable greed of the crony political alliance that underpins the state/capitalist establishment is to break up the financial despotism of the banksters Federal Reserve fiat money swindle.

Taxes are forced expropriation of funds. A blueblood aristocracy once ruled society. Today the market insiders, counterfeit their ill-gotten gains, using super computer algorithmic trading systems. Just because much of this theft originates from a nouveau riche breed of jackals, it does not exempt their predecessor generations from the horrendous crimes of the 19th and 20th century feudal lords of the monetary system.

Until society comprehends that, the wealth disparity can only be narrowed through the dismantling of the fraudulent favoritism of political special treatment, which includes the claw back of stolen wealth, will the ordinary man regain an opportunity to reap the rewards of his own labor and risk taking.

Instead of swelling the coffers of the state treasury, recompense the architects, managers and visionaries of small business, who create the real jobs in useful and productive endeavors. They deserve access to the confiscated wealth of the elite criminal class, not government.

Let actual free enterprise compete by encouraging a culture of rewarding hard work and honest commerce. Decades of social engineering, by technocratic regulation, only favored the 1/4 of the 1%. This is the literal path to social and economic justice.

James Hall – September 10, 2014

Source: http://batr.org/negotium/091014.html

Discuss or comment about this essay on the BATR Forum

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

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