Prepare for the Great Wealth Destruction and Asset Extraction

By: Tom Chatham – Author of Rebuilding The Republic

Every liberal I see on TV keeps yelling tax the rich more. I don’t think they really understand how that will work so lets look at it. Most rich people get a majority of their income through capital gains so raising the income tax rate will do little. For someone that is mega rich , they don’t need to make any money during the year. They already have enough to live on the rest of their lives, several times over. That being the case, they have no need to make any money from capital gains either.

The rich are currently selling off their paper assets and putting this money into hard assets to preserve it for later. If you have a vault full of gold, you won’t pay any taxes on the gains until you sell it so it can go up in price multiple times without the owner having to pay any annual taxes on it. They can sell off small amounts as they need it and pay only minor taxes every year.

George Lucas recently sold the Star Wars franchise to Disney for mega millions. He sold it now so he could save many millions of dollars in taxes that will take effect next year. Sotheby’s has been selling record amounts of art, jewelry and other tangibles as the owners take advantage of this last opportunity to save on higher taxes. The buyers are buying to lock in their asset values for future use. This is exactly what I mentioned in The American Dream Lost. Between the new taxes and monetary devaluation, the rich will increasingly convert their wealth into hard assets to preserve it. Those that stay in paper assets will have it taxed and devalued away until nothing remains.

This wealth preservation is lost on those who think taxing more will get the money from the rich. When the tax revenues fall, as they always do when something like this is done, the government will have to do something else to appease their base. The only way to get money from someone that has plenty and pays no taxes is to create a new tax. The only tax that accomplishes this is a wealth tax. If you tax someone on their net worth, it makes no difference when or how they got it. This is a tax that would seriously hurt the super rich and is why I think they would not allow it. All of those good liberal millionaires and billionaires that talk of not being taxed enough would change their tune very fast if this type of tax were proposed.

If the rich do not pay then someone must. Even if they did pay, it would not be enough to keep up with government spending. The advent of new taxes such as the VAT or Carbon tax would hit everyone at every level and those in power would see this as preferable to giving up their wealth for redistribution. Keep in mind that half of the elected officials in D.C. are millionaires or multi millionaires.

These taxes are only the beginning. You can also expect them to come after your savings and retirement plans as well. As the government coffers empty they will need more fixes to keep the mill running. The current government will begin to resemble something like the Ottoman Empire where such things as each tree was taxed so most were cut down by the owners to avoid the tax. This type of environment is what causes the massive wealth destruction that impoverishes nations as people destroy assets and capital to avoid the horrendous taxes they cannot afford.

In the end the government will own everything that has not been destroyed. This is the creation of the socialist state where the people rely on government for everyday needs. This is a process that can take years or even decades to complete. It can be done so slowly that most cannot identify the reasons they are becoming impoverished. The ones who fail to see the reasons are the same ones who ignore the warnings of others who see clearly and avoid the losses.

Many now see the writing on the wall and some have even petitioned the White House for session. Many liberals have launched counter petitions to have the secessionists stripped of their citizenship and be deported. I find humor in this train of thought. If you secede you revoke your citizenship and self deport, and you do so while taking the land with you.

The coming years will be difficult and nothing like anyone could ever imagine. As the government becomes more desperate it will take measures that seem illogical and unproductive but it will do so as a means of self preservation. If the people sit idly by and allow the destruction of their economy and private property and do nothing, they deserve what they end up with. That may be nothing more than a hole in the ground, which they will be taxed on.

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Posted on November 27, 2012, in Economics and tagged , . Bookmark the permalink. 1 Comment.

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