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Posts Tagged ‘IRS’

“Be Willing To Use Deadly Force”: IRS Sparks Uproar Over Job Posting

Posted by M. C. on August 12, 2022

“Major duties” of the job include “Carry a firearm and be willing to use deadly force, if necessary,” and “Be willing and able to participate in arrests, execution of search warrants, and other dangerous assignments.”

Part of the $trillion bill that is supposed to reduce inflation and help you

https://www.zerohedge.com/markets/be-willing-use-deadly-force-irs-sparks-uproar-over-job-posting

Tyler Durden's Photo

BY TYLER DURDEN

Only two things in life are certain – death and taxes, and the IRS can take care of both.

As the agency prepares to add 87,000 new positions over 10 years, pending the passage of the Inflation Reduction Act that will give the agency $80 billion (half of which will be earmarked to help crack down on tax evasion), an online job posting for “Criminal Investigation Special Agents” has sparked outrage over a “key requirement” that applicants be “legally allowed to carry a firearm.”

“Major duties” of the job include “Carry a firearm and be willing to use deadly force, if necessary,” and “Be willing and able to participate in arrests, execution of search warrants, and other dangerous assignments.”

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Watch “Police State? Armed Feds Raid Trump House” on YouTube

Posted by M. C. on August 11, 2022

Armed Federal agents busted into former President Trump’s Florida house last night, ostensibly to seek classified documents that were to be turned in to the National Archives. What’s behind this unprecedented move? Also today: Biden sends Ukraine $4 billion…to help with their budget! And finally: media races to claim Biden chalking up victories. Why?

https://youtu.be/0zWHF-UOWlc

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That Grinding Sound

Posted by M. C. on August 10, 2022

How does printing a $billion for yet another government program and making government bigger going to reduce inflation. Right! It won’t.

How will doubling the size of the IRS be of benefit to you? Right! It won’t.

Deciding that the proletariat are all honest taxpayers, giving the IRS nothing to do, ain’t gonna happen. Just as a district attorney’s job is to get convictions and will lose his/hers/it’s job if “they” don’t put people in jail…the IRS person won’t get promoted nor get to keep their job if they don’t put the hurt on a lot of people and collect a lot of fines. The bigger the fines the better. The more big time headlines of “offenders” handcuffed and entering the big house the better. “Look at us doing our job.”

I’ll bet they will have their own SWAT teams.

That grinding sound you hear is your, family’s and your friends names being engraved on the headsman’s ax.

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The Consumption Tax: A Critique

Posted by M. C. on June 27, 2022

The Alleged Superiority of the Income Tax

Murray N. Rothbard

tax burden

We were assured by one and all, at the time, that this new withholding tax was strictly limited to the wartime emergency, and would disappear at the arrival of peace. The rest, alas, is history. But the point is that no one can seriously maintain that an income tax deprived of withholding power could be collected at its present high levels.

The consumption tax, on the other hand, can only be regarded as a payment for permission-to-live. It implies that a man will not be allowed to advance or even sustain his own life unless he pays, off the top, a fee to the State for permission to do so. The consumption tax does not strike me, in its philosophical implications, as one whit more noble, or less presumptuous, than the income tax.

https://mises.org/library/consumption-tax-critique

Orthodox neoclassical economics has long maintained that, from the point of view of the taxed themselves, an income tax is “better than” an excise tax on a particular form of consumption, since, in addition to the total revenue extracted, which is assumed to be the same in both cases, the excise tax weights the levy heavily against a particular consumer good. In addition to the total amount levied, therefore, an excise tax skews and distorts spending and resources away from the consumers’ preferred consumption patterns. Indifference curves are trotted out with a flourish to lend the scientific patina of geometry to this demonstration.

As in many other cases when economists rush to judge various courses of action as “good,” “superior,” or “optimal,” however, the ceteris paribus assumptions underlying such judgments—in this case, for example, that total revenue remains the same—do not always hold up in real life. Thus, it is certainly possible, for political or other reasons, that one particular form of tax is not likely to result in the same total revenue as another. The nature of a particular tax might lead to less or more revenue than another tax. Suppose, for example, that all present taxes are abolished and that the same total is to be raised from a new capitation, or head, tax, which requires that every inhabitant of the United States pay an equal amount to the support of federal, state, and local government. This would mean that the existing total government revenue of the United States, which we estimate at $1.38 trillion—and here exact figures are not important—would have to be divided between an approximate total of 243 million people. Which would mean that every man, woman, and child in America would be required to pay to government each and every year, $5,680. Somehow, I don’t believe that anything like this large a sum could be collectible by the authorities, no matter how many enforcement powers are granted the IRS. A clear example where the ceteris paribus assumption flagrantly breaks down.

But a more important, if less dramatic, example is nearer at hand. Before World War II, Internal Revenue collected the full amount, in one lump sum, from every taxpayer, on March 15 of each year. (A month’s extension was later granted to the long-suffering taxpayers.) During World War II, in order to permit an easier and far-smoother collection of the far-higher tax rates for financing the war effort, the federal government instituted a plan conceived by the ubiquitous Beardsley Ruml of R.H. Macy & Co., and technically implemented by a bright young economist at the Treasury Department, Milton Friedman. This plan, as all of us know only too well, coerced every employer into the unpaid labor of withholding the tax each month from the employee’s paycheck and delivering it to the Treasury. As a result, there was no longer a need for the taxpayer to cough up the total amount in a lump sum each year. We were assured by one and all, at the time, that this new withholding tax was strictly limited to the wartime emergency, and would disappear at the arrival of peace. The rest, alas, is history. But the point is that no one can seriously maintain that an income tax deprived of withholding power could be collected at its present high levels.

One reason, therefore, that an economist cannot claim that the income tax, or any other tax, is better from the point of view of the taxed person, is that total revenue collected is often a function of the type of tax imposed. And it would seem that, from the point of view of the taxed person, the less extracted from him the better. Even indifference-curve analysis would have to confirm that conclusion. If someone wishes to claim that a taxed person is disappointed at how little tax he is asked to pay, that person is always free to make up the alleged deficiency by making a voluntary gift to the bewildered but happy taxing authorities.1

A second insuperable problem with an economist’s recommending any form of tax from the alleged point of view of the taxee, is that the taxpayer may well have particular subjective evaluations of the form of tax, apart from the total amount levied. Even if the total revenue extracted from him is the same for tax A and tax B, he may have very different subjective evaluations of the two taxing processes. Let us return, for example, to our case of the income as compared to an excise tax. Income taxes are collected in the course of a coercive and even brutal examination of virtually every aspect of every taxpayer’s life by the all-seeing, all-powerful Internal Revenue Service. Each taxpayer, furthermore, is obliged by law to keep accurate records of his income and deductions, and then, painstakingly and truthfully, to fill out and submit the very forms that will tend to incriminate him into tax liability. An excise tax, say on whiskey or on movie admissions, will intrude directly on no one’s life and income, but only into the sales of the movie theater or liquor store. I venture to judge that, in evaluating the “superiority” or “inferiority” of different modes of taxation, even the most determined imbiber or moviegoer would cheerfully pay far higher prices for whiskey or movies than neoclassical economists contemplate, in order to avoid the long arm of the IRS.2

The Forms of Consumption Tax

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The Madness of Taxing Unrealized Capital Gains | Mises Wire

Posted by M. C. on November 6, 2021

Even more important is the question of what to do with capital losses. Billionaires do not just make money by exploiting the poor, but are rich because they take on business opportunities that sometimes turn out to be losers. Similarly, stocks and other securities can decline in value. Would billionaires receive tax refund checks in those years? For example, what would happen if the stock market had a sharp selloff in December? Would billionaires receive massive tax write-offs on unrealized losses in their portfolio, leading the IRS to send tax refund checks to Jeff Bezos, Bill Gates, and Warren Buffett?

Keep in mind the original income tax law was sold on the premise it was only to tax the rich.

https://mises.org/wire/madness-taxing-unrealized-capital-gains

Georg Grassmueck

President Biden’s proposal to require roughly seven hundred US billionaires to pay taxes annually on unrealized capital gains has garnered wide support from Democrats as another step to make the rich pay for the uncontrolled spending by the federal government. House of Representatives speaker Nancy Pelosi says Democrats hope the plan will raise as much as $250 billion to help pay for expanding the social safety net and tackling climate change. The current tax system is already too complicated and adding another layer will not make the system any fairer or make rich people pay more in taxes. More importantly, the proposal is another scheme by the government that defies the reality and raises again questions of government overreach.

The proposal would reinvent how the government taxes investments not for everyone but just for the few hundred richest people. Under the current plan under discussion, capital gains on stocks and other traded assets would be taxed only for US taxpayers with over $1 billion in assets or $100 million in income for three consecutive years. What this amounts to is a different interpretation of the tax code for rich people. When an investor buys an asset, stock, real estate, or even a business, the asset hopefully becomes more valuable over time. Currently, the tax code requires the investor to pay a capital gains tax only when the investor sells the asset. However, under the new proposal the capital gain does not have to be realized in order to be taxed. Lawmakers are aiming to effectively increase the taxes rich people pay by rewriting the rules. Often investors hold on to their investments over many years while their assets increase in value, thus avoiding paying a capital gains tax until many years down the road, except for paying income taxes on the dividends and other cash distributions from the investment. In theory, a person could accrue capital gains indefinitely while never owing any taxes. In the proposal under consideration, the simple increase in the value in a portfolio will be taxed.

While the idea to get billionaires to pay more of their fair share in taxes seems to get lots of support from the public, lawmakers miss a key point in their excitement about having the rich pay more in taxes, the reality of the current tax system. The rhetoric of the super wealthy getting richer during the pandemic without having to pay taxes on the increases in wealth while regular taxpayers have to pay taxes on their income every year sounds very good to the tax-the-rich crowd. Surely, George Soros and other billionaires will comply and hand over their money without resisting. Actually George Soros applauds and supports this proposal while at the same time, according to the ProPublica report from June, Soros has not paid federal income tax for three years in a row. Similarly, Jeff Bezos and Elon Musk have not paid federal income taxes in some years.

The proposal defies reality as not all assets are as easy to value as publicly traded stocks. For example, a rare but valuable item like a precious painting or music album like the Wu-Tang Clan’s “Once Upon a Time in Shaolin”  would be even more difficult to tax which raises the question on how do you assess the value of less liquid assets. Billionaires are the type of investor with the means to purchase less liquid investments like rare pieces of art. More importantly, as the wealth of people increases, they have a bigger incentive to hire high priced tax accountants and tax lawyers to fight the internal revenue service every step of the way. Ultimately, the government would have to be prepared to fight long and complicated legal battles with billionaires to establish what constitutes a capital gain.

Even more important is the question of what to do with capital losses. Billionaires do not just make money by exploiting the poor, but are rich because they take on business opportunities that sometimes turn out to be losers. Similarly, stocks and other securities can decline in value. Would billionaires receive tax refund checks in those years? For example, what would happen if the stock market had a sharp selloff in December? Would billionaires receive massive tax write-offs on unrealized losses in their portfolio, leading the IRS to send tax refund checks to Jeff Bezos, Bill Gates, and Warren Buffett? Ultimately, this will lead to the question when of valuations for unrealized gain taxes would be determined. Lawmakers forget that just because something increases in value does not mean the owner has the cash to pay taxes. The current rationale of taxing capital gains once the asset is sold avoids two fundamental problems with the proposal. First, the market alone should determine the fair market value of an asset, not the IRS according to some complicated formula defying reality. Secondly, even billionaires may not have the cash to pay taxes on unrealized gains. A tax on realized capital gains avoids those two problems: once an asset is sold, the true value is determined and the seller will have money from the sale to pay the tax bill.

While the current proposal will be supported by a large swath of the public, as the rhetoric is simply too appealing, taxpayers should be alarmed by this proposal. Once lawmakers have the power to tax unrealized gains, it will be just a matter of time before lawmakers running out of tax revenue will take aim at one of the largest sources of wealth hiding from the IRS, unrealized gains in real estate and mutual funds that the public holds. For example, CNBC reported that homeowners with mortgages saw their equity jump by 20 percent from a year earlier in the first quarter, which represents a collective cash gain of close to $2 trillion, or an average gain of $33,400 per borrower. Would it not be nice for the government to tax the increase in value in your house every year?

This proposal is dangerous and should be declared unconstitutional. As Ludwig von Mises explained, “‘Taxing the Rich’ Doesn’t Make Us Better Off,” and new taxes are always a danger to every productive citizen. Author:

Georg Grassmueck

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Erie Times E-Edition Article-What’s a ‘wealth tax’ and how would it work?

Posted by M. C. on October 27, 2021

Biden has vowed his programs will not add a penny to the deficit,

House Speaker Nancy Pelosi estimated Sunday on CNN the tax would raise $200billion to $250billion. This is a meaningful sum, but it’s well shy of the nearly $2trillion in proposed additional spending over 10 years being negotiated right now. This means additional levies such as the global minimum tax and increased enforcement dollars for the IRS would still be needed to help close the gap.

Global minimum tax, IRS…scary. I am guessing the definition of “wealthy” will change dramatically in the not too distant future.

https://erietimes-pa-app.newsmemory.com/?publink=2fe8dc74b_1345f77

Josh Boak ASSOCIATED PRESS To help pay for his big economic and social agenda, President Joe Biden is looking to go where the big money is: billionaires.

Biden never endorsed an outright ‘wealth tax’ when campaigning last year. But his more conventional proposed rate hikes on the income of large corporations and the wealthiest Americans have hit a roadblock.

That leaves a special tax on the assets, not the income, of billionaires being proposed by a Senate Democrat as a possible vehicle to help pay for child care, universal pre-kindergarten, child tax credits, family leave and environmental initiatives.

Biden has vowed his programs will not add a penny to the deficit, which means selling to Congress and voters a tax on the wealthiest .0005% of Americans. Some details on the proposed billionaires tax:

How would it work? Essentially, billionaires earn the bulk of their money off their wealth. This might be from the stock market. It could include, once sold, beachfront mansions or the ownership of rare art and antiquities. A triceratops skeleton.

This new tax would apply solely to people with at least $1billion in assets or $100million in income for three straight years. These standards mean that just 700 taxpayers would face the additional tax on increases to their wealth, according to a description obtained by The Associated Press of the proposal of Senate Finance Committee Chairman Ron Wyden of Oregon.

On tradeable items such as stocks, billionaires would still pay a tax even if they held on to the asset. They would be taxed on any increases in value and take deductions on losses. Under current law, those assets get taxed only when they’re sold.

Billionaires would also face an additional tax on non-tradeable assets such as real estate and business interests once those assets are sold. During the first year of the proposed tax, the billionaires would also owe taxes on any built-in gains that predate the tax.

How much money would it raise? House Speaker Nancy Pelosi estimated Sunday on CNN the tax would raise $200billion to $250billion. This is a meaningful sum, but it’s well shy of the nearly $2trillion in proposed additional spending over 10 years being negotiated right now. This means additional levies such as the global minimum tax and increased enforcement dollars for the IRS would still be needed to help close the gap.

And the forecasts for revenue from the wealth tax are highly debatable.

‘It’s just impossible to implement,’ said Allison Schrager, a senior fellow at the conservative Manhattan Institute. ‘There’s a lot of evidence that these things don’t work, and I’ve never heard an explanation of how this could be workable.’

Why would Biden go this route? The president would rather raise corporate tax rates and rates on wealthy individuals. That was his initial proposal, but he’s got to appease West Virginia Sen. Joe Manchin and Arizona Sen. Kyrsten Sinema. Those are the two make-or-break Democratic votes in the evenly split Senate. Sinema objected to higher rates, which brought the wealth tax into play as an alternative.

The idea gained steam after the publication of French economist Thomas Piketty’s book ‘Capital in the Twenty-First Century.’ Massachusetts Sen. Elizabeth Warren made a 2% wealth tax a trademark policy in the 2020 Democratic presidential primaries, and fellow candidate Bernie Sanders, the senator from Vermont, proposed his own wealth tax.

Biden never jumped on that bandwagon. But he did make higher taxes on the wealthy a key promise, saying no one earning less than $400,000 would pay more.

Are billionaires really that rich? Seems that way.

There is a legitimate debate about the optimal forms of taxation. Is it better for the economy for the wealthy to keep their assets invested in new businesses? Or, is it better for some of their money to go to the government to help fund programs like child care, universal pre-K and shifts to renewable energy?

What is clear is the wealthy do have money to tax, should the government wish to do it.

America’s billionaires have seen their collected wealth surge 70% since the start of the pandemic to over $5trillion, according to an analysis by the pro-wealth-tax Americans for Tax Fairness and the Institute for Policy Studies Program on Inequality. That gain from March18, 2020, to this past month is equal in size to Biden’s spending plans over 10 years.

‘Right now, billionaires are not paying a dime in taxes on their fabulous income gains from their stock holdings during the pandemic,’ said Frank Clemente, executive director of Americans for Tax Fairness. ‘The billionaires income tax would tax the increase in the value of those assets each year just like workers’ wages are taxed.’

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The Future of Direct Taxation – Doug Casey’s International Man

Posted by M. C. on October 12, 2021

“The Free World,” notably the EU, U.S., and Canada, have passed “bail-in” legislation; that is, legislation that allows banks to confiscate deposits, should the banks decide that an “emergency” exists. The depositor would have no rights, no recourse. The bank right now can simply rob you of your deposits, with the full approval of the government.

To this is added a bank policy that’s been popping up all over the world – restrictions on the size of transactions that you’re allowed to make with your own money. The higher the transaction amount, the more “suspect” you are of being involved in criminal and/or terrorist acts, which is to be reported to the authorities.

https://internationalman.com/articles/the-future-of-direct-taxation/

by Jeff Thomas

The image above may be considered by some as unfair, as it suggests that taxation is a form of robbery. Well, let’s check the dictionary for a definition:

“Robbery is defined as taking away of goods or property by force or intimidation.”

Well, that certainly fits the bill. Of course, Inland Revenue (or the IRS, CRA, etc., depending upon where you’re from) would say that it’s not robbery if it’s lawful. As I see it, the fact that a law has been passed to allow robbery does not change it from being robbery. It’s merely institutionalised robbery.

Academics might say that we elect representatives to run the central government and those representatives are then entrusted to pass the laws, which we must then meekly follow. Again, this argument doesn’t hold water for me, as these individuals may have been elected, but they most certainly do not “represent” me if they pass a law that says it’s okay to rob me. No government has ever asked me for permission to take my money simply because they want it, and I have never given it.

If there’s any question as to whether the above definition is correct, I’d be happy to see it put to the test: The internet makes possible individualised referendum. If we were to all be questioned as to whether we wish to be taxed, we could easily decide on an individual basis. I’m guessing that I wouldn’t be alone if I were to say, “No, thank you.”

But, to be fair, I do approve of taxation, but only indirect taxation – taxation based on consumption. (This is lawful in my own country, the Cayman Islands, and I receive good value for money.)

Many would say that it would be impossible to operate any government without direct taxation, yet this is not so. In the U.K., income tax was initiated in 1799 to pay for the Napoleonic Wars, and the tax never went away. In Canada, income tax was initiated in 1917 to pay for World War One, and the tax never went away. In the U.S., income tax was initiated in 1913 as a means to compensate for lost revenue due to recently decreased tariffs (clever), and the tax never went away.

In most of the world, taxation is regarded as an imposition and it’s considered understandable that no one really wants to pay tax. The U.S. government promotes a rather different view – that the payment of tax is a patriotic duty. In the U.S., a tax amount can be demanded and the onus of proof is on the citizen as to whether the IRS demand is correct. (In other words, guilty until proven innocent.)

But in almost all countries, payment of tax is described by governments as voluntary, as citizens file their tax forms, pay their income tax, and then hope for the best. The governments don’t actually break down your door and take what they have decided is the “right amount.” (In the U.S. today, through civil forfeiture, billions of dollars in money and goods have been taken from citizens without even necessarily charging the citizen with a crime, but, still, at present, tax collection is handled, “voluntarily”).

But is income tax essential to keep a government alive? Or is it possibly only essential for those countries that conduct wars? Well, a part of the answer comes in the fact that income tax is so commonly justified as repayment of war debt. Presumably, if the political leaders had not engaged in war, they never would have had to introduce income tax to pay for the war. Certainly, Canada and the U.S. went through their greatest historical expansion periods (the last half of the 19th century) and the industrial revolution, without direct taxation.

By contrast, my own country, in its 500-year history, has never declared war on another country. And it has never had direct taxation of any kind.

Let’s repeat that. It has never had income tax, corporate tax, capital gains tax, inheritance tax, or even VAT, property tax, or sales tax in all of its history. Most of our tax revenue comes from company fees and consumption tax. Of course, this means that our government is limited in how big and powerful it can become, but this is something we look upon as a highly positive by-product. Indeed, the lack of direct taxation is regarded as an insurance policy against the creation of an overly powerful government.

So, it’s entirely possible for a country to have no direct taxation. In fact, few of the world’s existing countries began their life with direct taxation (although in recent times, new countries have often regarded direct taxation as a given.)

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It’s Time to Abolish the Capital Gains Tax | Mises Wire

Posted by M. C. on August 12, 2021

The great explains in Economics in One Lesson (order your free copy) that when investors realize

they lose the whole dollar when they lose, but can keep only a fraction of it when they win, they decide it is foolish to take risks with their capital. In addition, the capital available for risk-taking itself shrinks enormously. It is being taxed away before it can be accumulated. In brief, capital to provide new private jobs is first prevented from coming into existence, and the part that does come into existence is then discouraged from starting new enterprises.

https://mises.org/wire/its-time-abolish-capital-gains-tax

McCoy Dorr

President Biden’s ridiculously high spending proposals require equally ridiculous tax proposals. Among the craziest proposals is a massive increase in the capital gains tax rate. According to the Tax Foundation, Biden’s proposal would raise the top federal rate on capital gains tax to 43.4 percent. When accounting for state and local rates, the average top rate would be 48 percent, up from the current 29 percent. This is about nineteen steps in the wrong direction. Progressives, the largest proponents of the tax on capital gains, believe that this tax is a necessary and just tool used to rein in the greed of the rich and ensure that the selfless government can implement righteous social programs to help the needy. This belief could not be further detached from reality. The existence of taxes on capital gains significantly distorts the natural flow of investment in markets, which harms the social welfare of all Americans, and it is past time to abolish the capital gains tax.

The capital gains tax is imposed on the profits gained from the sale of an asset. This increases the costs involved in realizing the profits of an investment, therefore altering individuals and businesses’ cost-benefit analysis and decision process when evaluating investment opportunities. This has a substantial impact on the reallocation of capital and the availability of capital, because investors have to take the capital gains tax into account when weighing if a new investment is worthy. Investors are forced to decide if the new investment has a profit potential that outweighs the impact of the capital gains tax and the future profit potential of whatever asset they may currently be invested in. Many investors decide it is not. This creates the “lock-in effect.” The capital gains tax creates the incentive for investors to retain their current subpar-performing investments even when more profitable investment opportunities are present. This keeps capital locked into inefficient and underperforming assets as opposed to more efficient and profitable assets. Therefore, these inefficient assets have an inflated value and worth compared to what a free market, undistorted by the capital gains tax, would have allocated to them. As capital is a scarce and limited resource, these distortions inhibit the growth of other industries and assets that are more worthy of investment and consequently harm the social welfare of all Americans, as these industries with a deflated worth are unable to provide the goods, services, and jobs the market would have otherwise provided. This is why an unaltered flow of capital and investment is integral to the health of a free economy. The great Henry Hazlitt explains in Economics in One Lesson (order your free copy) that when investors realize

they lose the whole dollar when they lose, but can keep only a fraction of it when they win, they decide it is foolish to take risks with their capital. In addition, the capital available for risk-taking itself shrinks enormously. It is being taxed away before it can be accumulated. In brief, capital to provide new private jobs is first prevented from coming into existence, and the part that does come into existence is then discouraged from starting new enterprises.

These new enterprises that are blocked from coming into existence would have otherwise created better and cheaper goods. In the end, not only is the investor harmed but so are the consumers and producers that are deprived of an improved standard of living. It is nearly impossible to dissect and weigh all of the societal harms that have occurred due to the implementation of the capital gains tax, because we have been robbed of a reality we could use as a control. The industries and companies that have been deprived of growth due to the capital gains tax are invisible.

However, we can examine the effects previous changes in the capital gains tax rate have had on investments. The clearest metric we can use to examine the flow of capital into new enterprises is seed-capital funding. Seed-capital funding is funding provided by investors to the creators of a new start-up venture in exchange for equity. This seed-capital funding is linked to the capital gains tax, because investors likely have to divest their capital from another firm or asset, a taxable event, to then invest in a new company in exchange for equity, which would then be taxed again if ever sold. In an examination of past changes in the tax rate of capital gains and the volume of new seed-capital funding, an article published by National Review  found that when the capital gains tax rate was cut in 1977 from 49 percent to 20 percent, there was an increase in seed-capital funding from $68 million to $5.1 billion, a 700 percent increase. A later increase of the rate to 28 percent in 1986 resulted in a 60 percent decrease in seed-capital funding. This shows that funding for new ventures is intrinsically linked to the free flow of capital, which is instead obstructed by the capital gains tax. Investors are deprived of healthy returns on investment, producers are denied economic opportunity, and consumers are impoverished.

Examining just a few studies on the effects of the capital gains tax demonstrates the effects an abolition would have in boosting the quality of life for the lower and middle classes. First, economists from the Tax Foundation examined IRS data and found “that more than 80 percent of taxpayers who claim dividend income earn less than $100,000 and 76.4 percent of those who claim capital gains earn less than $100,000.” This shows that the burden of the capital gains tax falls on the middle class. This burden can be alleviated by removing the capital gains tax. Furthermore, the Cato Institute discovered that a capital gains tax reduction is a way to attract investment funds to capital-starved areas and minority groups. In the ’80s, when the capital gains tax was slashed, the number of black-owned businesses increased by one-third. And later when it was cut again, that number increased by an additional 38 percent. While the precise results that the elimination of the capital gains tax would have are incalculable due to the stubborn fact that we lack omniscience, an elimination would unequivocally lead to the creation of a large number of jobs and economic growth, which would bring an improvement to the quality of life of poverty-stricken communities by encouraging a culture of private ownership and entrepreneurship.

Eliminating the capital gains tax would free up an unprecedented amount of capital, create countless new jobs, and result in the formation of new enterprises dedicated to providing cheaper and improved goods and services. The abolition of the capital gains tax would create an economically productive and stable society, yet the fallacy persists that the capital gains tax is beneficial. The failure of progressives to see beyond the increased government revenues is the reason we are shackled with the capital gains tax today. Progressives are failing Hazlitt’s one lesson (not that anyone has ever accused progressives of being economically literate). As Hazlitt states at the end of his magnum opus, economics “is a science of recognizing secondary consequences. It’s also a science of seeing general consequences. It is the science of tracing the effects of some proposed or existing policy not only on some special interest in the short run, but on the general interest in the long run.” Progressives look at the immediate effects, increase in government revenue and funding for their social programs, and are blind to the havoc they have wrought in the market. This failure to comprehend the impacts of distorting the flow of capital results in the average American consumer being deprived of an indecipherable higher standard of living. Author:

McCoy Dorr

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The Ron Paul Institute for Peace and Prosperity : True Civil Libertarians Must Oppose the IRS

Posted by M. C. on July 13, 2021

Another frightening proposal is for the government to impose a “mileage tax” to fund highway construction. A mileage tax would require government to keep track of how many miles every American drives. Some claim that a mileage tax can be implemented without creating a massive new system of government surveillance. Even If this were true, anyone who expects the government not to use this new power for nefarious purposes needs to Google Edward Snowden.

http://ronpaulinstitute.org/archives/featured-articles/2021/july/12/true-civil-libertarians-must-oppose-the-irs/

Written by Ron Paul Monday July 12, 2021
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Progressives who work to end individual rights violations committed by the NSA, FBI, DEA, CIA, and other federal agencies usually overlook, or even support, the routine violations of Americans’ rights by the IRS.

For example, progressives rarely, if ever, speak out against the IRS’s targeting of the opponents of those in power. When liberal Democrats control the White House, the IRS targets advocates of free markets. When hawkish Republicans are in power, the IRS targets antiwar activists.

The Democrats’ election reform legislation would require political organizations to divulge their top donors. Such donor disclosure requirements can be, and have been, used to intimidate donors from supporting “controversial” causes. Yet the requirements are supported by many progressives in the name of getting big money out of politics.

In order to “pay for” their massive spending schemes, President Biden and his congressional allies are planning a huge increase in the IRS budget. The declared purpose is to enable the tax agency to bring in to the government much more money by ramping up efforts to identify and punish those not paying the “proper” amount of taxes.

The tax code’s complexity guarantees many innocent Americans will be caught in the IRS’s expanded net. Yet progressives will support this because they favor the new social programs the new revenue will finance, and because they believe the IRS will only target billionaires and big corporations.

The truth is that most of the new revenue will be collected from middle-and-working-class Americans. These Americans will be targeted because, unlike billionaires and big corporations, middle-and-working-class Americans cannot afford legions of tax lawyers and accountants to level the playing field between them and the tax agency. They are more likely to simply give in to the IRS’s demands.

Waiters and waitresses may even be subjected to audits to ensure they are paying taxes on their tips.

Another frightening proposal is for the government to impose a “mileage tax” to fund highway construction. A mileage tax would require government to keep track of how many miles every American drives. Some claim that a mileage tax can be implemented without creating a massive new system of government surveillance. Even If this were true, anyone who expects the government not to use this new power for nefarious purposes needs to Google Edward Snowden.

Progressives’ blind spot toward IRS abuses of liberty is rooted in their belief that one can separate “economic” liberties from “civil” liberties. This allows them to support an abusive tax system to fund a welfare state (and, for an increasing number of progressives, a warfare state) while opposing other infringements on liberty. These progressives are the mirror image of conservatives who defend economic liberty while supporting government infringements on personal lifestyle choices. One of the most urgent tasks of those who wish to restore a free society in all areas is to end the artificial distinction between economic and civil liberties. By defending all liberty — no matter if it is classified as economic liberty or civil liberty — we can best protect against violations of any liberties.


Copyright © 2021 by RonPaul Institute. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given.
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The Real Tax Scandal – LewRockwell

Posted by M. C. on June 30, 2021

No, the real scandal is this: federal income taxes are almost entirely about control and not revenue. The byzantine rules and selective enforcement are perfectly designed to keep ordinary people with limited means in mortal fear of the IRS. A tax audit, like cancer, can come out of nowhere and ruin your life.

Federal income taxes have always been a tool for compliance. The IRS has always been a tool for presidents to go after rivals—or for rivals to go after presidents. Why would we expect otherwise?

https://www.lewrockwell.com/2021/06/jeff-deist/the-real-tax-scandal/

By Jeff Deist

Mises.org

The self-styled investigative journalism outlet ProPublica recently published private IRS tax information—presumably embarrassing private tax information—for a host of ultrawealthy and famous Americans. I say “self-styled” because the organization claims a pretty lofty and self-important mission to use the “moral force” of journalism on behalf of the public interest against abuses of power. But does this apply to state power, such as when a federal agency employee illegally leaks sensitive material to media? And why is it presumed to be in the public’s interest to have rich billionaires pay more in taxes? Maybe we’d rather have them investing in their companies, or at least buying megayachts and Gulfstream jets, rather than sending more resources to the black hole of DC? Why is the public interest always defined as “things progressives like”?

ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. The data provides an unprecedented look inside the financial lives of America’s titans, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. It shows not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits.

And as an aside, it’s worthwhile to recall the tremendous whopper of a lie President Franklin Delano Roosevelt told back in 1935—namely that no one other than the program’s administrators would ever know your private Social Security number. Today, of course, Social Security numbers are the absolute linchpin of one’s entire financial identity, and known by everyone from the IRS to your local credit union.

Yet the real scandal here is not the IRS leak, which was no doubt internal and designed to gin up public support for Biden’s proposed tax increases while advancing a progressive inequality narrative. Political capture of federal agencies is nothing new or shocking; that’s what presidents do (or have done to them). Nor is it particularly scandalous that the wealthiest people sometime pay little in federal income tax, at least relative to their income. After all, elites by definition tend to wield power rather than fear it, especially when it comes to state power. And they have lobbyists and accountants to make sure taxes remain something the little people pay.

No, the real scandal is this: federal income taxes are almost entirely about control and not revenue. The byzantine rules and selective enforcement are perfectly designed to keep ordinary people with limited means in mortal fear of the IRS. A tax audit, like cancer, can come out of nowhere and ruin your life. In some cases it can land you in jail. Tax enforcement is the ultimate check on the public’s behavior; after all, who takes up the cause of a tax cheat? For middle-class Americans the IRS is an existential threat, but for Jeff Bezos it is another business expense to be minimized.

And as for revenue, consider that Uncle Sam borrowed nearly half of the dollars spent by Congress in fiscal 2020. With covid shutdowns, federal income taxes amounted to about $3.42 trillion, while spending was $6.55 trillion. If the federal government can finance 50 percent of its annual spending through deficits, why not 80 percent or 100 percent? Why do we need the IRS terror regime at all?

Again, this is about control. Progressives will never give up the income tax for this very reason. Proponents of modern monetary theory, for example, are almost uniformly left progressive in political outlook. These are the people cheering Biden’s >$1 trillion infrastructure spending bill because of their fervent belief that deficits don’t matter.

MMT rests on two central assertions.1 First, sovereign governments with their own currencies can print as much money as needed to fund operations without fear of insolvency or bankruptcy—unless a purely political decision is made to go broke. Government deficits per se do not matter, because the only real constraint in any economy is the amount of real resources available rather than the amount of money. In fact, MMT views government debt as private financial wealth—money inserted into the economy by the central state but not taxed back.

Second, sovereign governments with their own currencies can require tax payments to be made in that currency. Therefore any overheating in the economy in the form of inflation resulting from too much money can be fixed by pulling some money back to the Treasury via tax increases. This is the ostensible reason MMTers are not quite ready to give up on taxes altogether.

Yet I’ve never heard an MMTer express support for even a one-year moratorium on taxes to stimulate a bad economy (after a shock such as a worldwide covid pandemic). Why is this? If inflation really is so low, with the economy struggling in postcovid recovery mode, why pull any money back into federal coffers? Just damn the torpedoes! The bigger the deficit, the more “private wealth” we all have! Perhaps there is a political element to all the MMT jargon after all, one which relies on taxes both for control over people and to advance an advantageous but hollow trope about taxing the rich.

Federal income taxes have always been a tool for compliance. The IRS has always been a tool for presidents to go after rivals—or for rivals to go after presidents. Why would we expect otherwise?

1.See Dr. Robert P. Murphy’s definitive critique of MMT and Professor Stephanie Kelton’s book here.

Jeff Deist [send him mail] is president of the Mises Institute, a tax attorney, and a former staffer for Ron Paul.

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