Proposed Wealth Tax Is Government's Last
Gasp
Romain Hatchuel, managing partner of a New York-based asset management
firm, wrote an interesting piece in the Wall Street Journal today. His topic was
on the looming "wealth tax".
Because world governments have no backbone to stop spending more than they
take in, national debts are skyrocketing. Instead of doing the obvious and
limiting their expenses, the governments are seeking an easy way to raise
revenues. The clarion call to increase taxes on the wealthy is being led by the
International Monetary Fund (IMF).
Hatchuel notes, "Households from the United States to Europe to Japan may
soon face fiscal shocks worse than any market crash."
In a recent report, the IMF reasoned that increased taxes on the wealthy
would provide "significant revenue potential at relatively low efficiency
costs." As for America, the IMF projected the revenue-maximizing rate is 56-71%"
which is considerably higher than the present 45% top rate the three tiers of
taxation (county, state and federal) impose.
The reason this idea is important, is because of the way Hatchuel connects
dots previously missed. "The IMF's idea is for a one-off tax on private wealth.
That makes weapons of mass wealth (MWD) reduction likelier by the day." Hatchuel
compares the MWD to past and future events. He claims MWDs could come in the
form of the IMF's proposed capital levy, a global Cyprus bank deposit
confiscation or just plain sovereign default.
The Rant connected the Cypriot situation to a test mode example floating
around the U.S. government and the recent rule changes that effectively remove
any barriers from a bank holiday in which all wealth held by banks could be
given a haircut by the government but missed the proposed capital levy. Either
way, however, the current Administration and its new stated powers from the
formation of the Consumer Financial Protection Agency to the language of
Dodd-Frank put all American wealth at risk.
In fact the Obama Administration began pushing anew on "wealth inequality"
just this week. Current inequality in America is more likely caused by the
government's unrelenting support of the stock markets which rewards those with
the capital resources to risk rather than any other inertia force of the market.
The decline in full-time jobs in favor of part-time jobs will effectively reduce
the "wealth inequality" due to earned income.
This is where the jobs reports and its numerous analysts have missed the
boat. To market analyzers, a job is a job is a job. But, just as in the housing
market, the jobs that went away are not being replaced by jobs of equal value.
If part-time work does indeed replace full-time jobs as the norm, as has
happened in Europe, Americans will all be sharing the misery equally.
Publicly, Obama "wants to restore the American Dream." But his every
deed belies his words. He wants everyone to share the misery of a bloated,
statist government. One sure way to obtain that goal is to remove wealth, and
its attendant liberty inspirations, from the populace. Then they will be more
reliant on government handouts than ever before.
He, along with most Progressives, sees nothing wrong with 90% tax rates if
necessary to "level the playing field." Then it is up to government to pick the
winners and losers with their handouts.
The wealth tax is being tested in the Eurozone but the early returns there
are as murky as winding one's way through the Affordable Health Care Act's
website. The only certainty is the tax will crush initiative.
The wealth tax proposal might work one time in reducing the debt of
government. But government will not stop spending. Then the tax will have to be
imposed again. That could prove to be the final breaking point for any reason
for the civil partnership between a citizen and his government.
"I have sworn on the altar of God eternal hostility
to every form of tyranny over the mind of man."--Thomas
Jefferson
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