“Avoid investing in those countries with a high level of socialist or government regulation of business. Business growth depends on a strong free-enterprise system.” — Sir John Templeton (“Maxims of Wall Street,” p. 150)
I met John Templeton, the founder of the Templeton Growth Fund when I lived in the Bahamas in the 1980s. He made a fortune investing in Japanese stocks after World War II.
When he made his statement above, he was referring to foreign countries. His famous Templeton Growth Fund was the first successful mutual fund to invest overseas, and he was so successful that he became a billionaire.
The fund is now owned by Franklin Templeton Group; most foreign markets have performed poorly since he sold it. The Templeton magic is gone.
I fear the same could happen to the U.S. markets. For over 100 years, Wall Street has outperformed all other international stock markets.
Why? Because America has led the world in entrepreneurship and productivity. The top innovative companies are U.S.-based: Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB), Netflix (NASDAQ:NFLX), Visa (NYSE:V) and Walmart (NYSE:WMT).
Taxation is Not Just Theft — It Could Kill the Golden Goose
But I fear that could all change with the stroke of a pen — President Joe Biden’s pen.
After taking office in January, Biden has proven to be no moderate. It’s as if his Vice President Kamala Harris is running the show. He himself boasts that he has “issued more executive fiats than anyone in such a short period of time, ever, more than Obama, more than Trump, more than anyone.” And it’s not even emergency wartime. Biden has issued 60 executive orders so far, 23 reversing his predecessor’s.
He wants to do more — achieve “net-zero” carbon emissions by 2050, even though pollution is no longer a problem in the United States.
Biden’s Confiscatory Tax Plan Will Destroy Entrepreneurship in America
The biggest bombshell is his tax policy, which, if enacted could kill off America’s entrepreneurial spirit. Imagine having to pay 44-60% on the profits you make on a breakthrough technology when you sell stock in your revolutionary company. But that’s exactly what the Biden administration is proposing.
He wants to eliminate the long-term capital gain exemption for anyone making $1 million or more. Currently, the rate is 23.9% (even then too high), and he wants to raise it to 43.9%, on top of the state tax rates. Creative entrepreneurs could end up paying nearly 60% in taxes for their breakthrough inventions.
The Biden administration also wants to eliminate the “stepped up” basis in estate planning, so that when you pass on your property and assets to your heirs, they will be forced to pay taxes on the original cost basis of stocks, real estate and other assets when they sell. This could cost American taxpayers billions.
Wall Street brushed off the news, but the fact that the President of the United States is so ignorant of sound tax policy is disturbing. He says he will use the new tax revenues to universalize pre-kindergarten “education” and paid leave for workers — totally unrelated to the capital markets.
Hopefully, investors are right, and Biden’s tax-and-spending agenda won’t make it through Congress. Even his so-called “infrastructure” bill is in trouble since only 5% of the proposed bill is related to infrastructure.
For decades, investment advisors like myself have worked tirelessly to lower the tax burden on investors.
Saving, capital investment and technology are the ingredients for the secret formula to achieve economic growth and a higher standard of living. “Capital” is the key to vibrant capitalism. Even Karl Marx recognized the vital role of capital when he named free enterprise “capitalism.”
High taxes on interest, dividends, capital gains and corporate profits reduce economic growth and deprive entrepreneurs of the capital necessary to expand and create new products.
Myriad of Ways to Tax Capital and Destroy Capitalism
A tax on interest is a tax on capital.
A tax on dividends is a tax on capital.
A tax on selling assets (capital gains) is a tax on capital.
A progressive income tax is a tax on capital (since higher-income taxpayers save more).
A tax on savings is a tax on capital.
A tax on estates and inheritance is a tax on capital.
The one major country that has the best tax policy is Hong Kong. For over 60 years, it has not had a tax on interest, dividends or capital gains. It also has a 16.5% flat tax on income.
Meanwhile, Western countries like the United States change their tax policy every other year. It makes it difficult to make investment decisions.
We need to impose a moratorium on tax legislation!
Where to Learn Sound Tax Policy
Joe Biden and the Democrats need to study my chapter on the sound principles of taxation in my book “Economic Logic,” now in its 5th edition.
Click here to see the dozens of ways my textbook is different than any other.
It is the first economics textbook to integrate gross output (GO), the “top line” in national income accounting.
Students love my book because it starts with the profit-and-loss income statement, before supply and demand. Students get it. You will too.
At the Association of Private Enterprise Education (APEE) meetings, April 11-13, I talked with Michael Curry, who used “Economic Logic” to teach at Northwood University in Michigan. He says students love it because it’s practical and based on real-world experiences, not economic jargon.
As one student wrote on Amazon.com: “My college econ classes, filled with perplexing theories like the paradox of thrift, GDP and Keynesian fiscal policy, were completely refuted by this excellent free-market textbook. Students, if your professors don’t use this text, get it for yourself so you can really understand the concepts of sound economics.”
The publisher normally charges $49 for “Economic Logic,” but you pay only $35 postpaid from www.skousenbooks.com.
Ben Franklin Returns!
As long-time subscribers know, I occasionally dress up as Ben Franklin and appear before investment and patriotic audiences to talk about our great country and threats to our liberties. (See photo below.)
I’ll be making two appearances. One will be this Saturday, May Day, from 2-5 p.m. local time at the Liberty United Festival being held at the Grove Park in Vineyard, Utah (near Orem). I understand that “Abraham Lincoln” will also be making an appearance. This is a free event. To know more, watch this short video.
My second appearance will be to welcome everyone to FreedomFest on July 21 at the Rushmore Civic Center in Rapid City, South Dakota, given that the theme is one of Franklin’s favorite mottoes: “Healthy, Wealthy and Wise.” I will be joined by Governor Kristi Noem, who is considered to be a top presidential or vice-presidential candidate in 2024.
I talked to John Mackey this past weekend, and he is excited to debate Yaron Brook (chairman of the Ayn Rand Institute). John is firmly convinced that there’s much more to business than just profits and increasing shareholder value. We have over a dozen debates and more than 200 speakers planned at this year’s show.
Plus, a major movie star will be making his appearance. His identity will be announced soon.
Over 2,100 people have signed up for this year’s conference, including 250 subscribers. Our private meeting will be a most memorable reunion. You’ll receive a 2021 silver dollar and an autographed copy of “The Maxims of Wall Street” to prove it. And, we’ll be taking a trek to Mount Rushmore and the Crazy Horse Memorial. Meet with top investment gurus: Jim Woods, Hilary Kramer, Alex Green, Adrian Day, Rob Arnott and many more.
Our biggest challenge is hotel space, but I have good news! We have arranged for a new block of rooms in several hotels in Rapid City, and we will provide shuttle service to and from the conference every half hour. For more information, go to www.freedomfest.com and scroll down to “Hotels and Excursions.” Or, call Hayley at 1-855-850-3733, extension 202 and use the code EAGLE50.
P.S. I am inviting you to listen to my teleconference, How to Get Home Run Profits From Biden’s Policy Errors, on Wednesday, May 5, at 1 p.m. EST. For details about how to sign up, click here.
Good investing, AEIOU,
You Blew It!
Utah Bailed out for $1.5 Billion, Yet the State Has a $1.5 Billion Budget Surplus
Adam Andrzejewski, president of the watchdog “Open the Books,” will be a keynote speaker at FreedomFest. He’s the William Proxmire (famous for his Golden Fleece awards for government waste) of today.
This week, he reported that Utah, which has a $1.5 billion budget surplus, received $1.5 billion in taxpayers’ money from the $1.9 trillion American Rescue Act.
This is the legislation that no Republican voted for in Congress.
And now it is taking the money, no questions asked. In fact, in order to keep the money, it has to maintain that it is in a state of emergency. Even though the pandemic is now at its end in the United States, states like Utah continue to extend their emergency powers.
Click here for more information on this classic case of government waste.
Adam will speak at www.freedomfest.com on “Dumb and Dumber: The Top Ten Taxpayer Fleece Awards for 2021,” followed by a breakout session on what you can do about it.