As the media has reported on numerous occasions, people like Bernie Sanders and Elizabeth Warren are calling for a wealth tax. Let’s review a tid-bit of history before doing an evaluation. Until 1913, there was no income tax (direct taxes being forbidden in the Constitution) in America, and America and Americans were prospering dramatically. Then a group of thugs known as central bankers instituted into law, by deception, the Federal Reserve bank, and the accompanying I.R.S. (Internal Revenue Service) in order to invade people’s privacy and control their lives. They sold an income tax to the American people on the basis that it would only apply to the wealthiest 1% earning $70,000 a year or more (equivalent to at least $7 million a year today). Who out there today has no fear of the I.R.S.? Well, people who have little to nothing to lose have no fear, but for the rest of us, it is a concern we face at least every April 15th if not more often than that. Income tax is a tax on income, but after you pay that tax, you can keep what’s left over. Of course if it goes up in value, and you sell it, you have to pay a “capital gains tax” on the increase. Sadly for the government, that leaves a very big gap for wealth that is held and not sold.
So, what are a few examples of wealth that is held and not sold. The most common would be a savings account. No problem, the government can just print a lot of money, and devalue your savings account down to nothing. Of course in doing so, they drive up the value (price) of things like real estate, art, antiques, buildings, precious metals and jewels etc. You see, when people see their money being devalued, they will buy real things that will hold their value. Here’s an interesting story (true or not it’s still interesting). In the Weimar Republic of NAZI Germany in the early 1920’s, a man took a wheel barrow full of money to the hardware store. He parked the wheel barrow in front of the store and went in to see how much money he needed to shovel in to buy what he wanted. He came out a minute later to get the money, and the money had been dumped on the sidewalk, and the wheel barrow had been stolen. Case in point; tangible things are worth more than paper money which historically has always gone to “0” ultimately. Bankers cannot be trusted, and neither can governments. One additional statistic that should be of interest is that 1 oz. of gold in 1919 Germany cost 170 Marks (the German currency – not to be confused with “real” money). By 1923, that same ounce of gold cost 87 trillion Marks. What changed? Did the paper change, or did the gold change? Gold is money, and paper is not; unless it is backed with gold – the Constitution defines money.
So, now that a wealth tax is being proposed, it is going to be for those with assets of $50 million dollars or more. Oh, that’s o.k., because only about 100,000 Americans have that kind of wealth. It won’t affect the little guy whose wealth is just, on average maybe $600K. Ah, but have we forgotten inflation? Income tax was to affect only those earning more than $70K a year when it was passed. Now, $70K a year in earnings is very common, at least for a working couple, and for a lot of single people as well. The average American may well find him/herself worth over $50 million in the not too distant future. This wealth tax would wipe out the middle and upper middle classes entirely
Let’s examine what a “wealth tax” would entail. It would be levied on your real estate, savings, automobiles, motorcycles, bicycles, furniture, art, pots and pans, dishware, beds, sofas, carpeting, rugs, clothing, shoes, mirrors, lamps, sculptures, toilets, fixtures, landscaping, TV’s, stereos. silverware, appliances (washer, dryer, dishwasher, refrigerator, freezer, microwave etc. How would all of this be evaluated? How often would it be evaluated? Would wear and tear and depreciation be taken into account? How would the evaluation be confirmed? How would you appeal the evaluation if you did not agree with it? Would you have to sell something in order to pay the tax? If that happens, then certainly, your evaluation would go down. A wealth tax is as Communist as it gets. This writer lives in a city that once had a personal property tax (not all that different from a wealth tax). The city ultimately discontinued it because it was not popular nor viable.
What if you have stocks or real estate? Stocks and real estate go up and down, dramatically sometimes, in value. Do you evaluate them at their peak, their valley or average out the value and if so, over what period of time? There have been times when assets could not be sold because there were no buyers. In that case, would the government just confiscate whatever they thought appropriate of your wealth? If you have to sell them to pay your wealth tax, will you have to pay any capital gains on the sale of the assets in order to pay the other tax? The bottom line is that a wealth tax will force people whose income is less than ideal to have to sell assets to pay the wealth tax. Ultimately they will be reduced to having a wealth of less than $50 million. Hey, and what happens if after the wealth tax is instituted the Congress decides to reduce the top figure from $50 million to $5 million, or $1 million. Too late then, you’re stuck and Communism wins again. Remember, Communism is for the rich and the powerful – not for you and yours. People who are worth tens or hundreds of billions of dollars will be able to buy your assets for pennies on the dollar only making themselves that much richer.
The net result of a wealth tax will be the desire and concerted effort for people to hide their wealth. How do you do that? First, you have to hold it in a private way. How do you do that? Gold, silver, and art are probably the three most common and effective ways.
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