“The wealthiest private owners must return part of what they own to the community every year [via] a progressive tax on wealth.” — Thomas Piketty, Capital and Ideology (2020)
Lost in the pandemic crisis is the hidden agenda of the New Socialists: The growing push to adopt a sharply higher progressive tax on your income and a new tax on wealth.
Joe Biden Wants to Eliminate the Capital Gains Break!
If Joe Biden wins in November, and the Democrats take over Capitol Hill, watch out. Biden favors TEN major tax increases, especially on high-income earners, investors, corporations and heirs.
High-income earners beware! He wants to extend the payroll tax (Social Security and Medicare) to anyone earning more than $400,000 a year, including Sub S corporate income.
Investors beware! Biden plans to eliminate the special low rate on long-term capital gains, raising it from 23.9% to 39.6%, the same as ordinary income. This will end the bull market on Wall Street.
Business owners beware! Biden wants to raise the corporate income tax from 21% to 28%.
Heirs beware! Last but not least, the Democratic candidate demands that Congress do away with the “stepped-up basis” in your inheritance. This means you will pay huge taxes on any appreciated assets that you inherit from your parents or grandparents when they die, and you decide to sell.
Plus, a New Wealth Tax!
But there’s more! A new wealth tax is likely to be adopted if the radical Democrats get into power. Senators Bernie Sanders and Elizabeth Warren, and Congresswoman Alexandria Ocasio-Cortez (AOC) have already come out in favor of a huge wealth tax.
It’s true that we already have a wealth tax that is imposed on retirees age 72 or older: The dreaded Required Minimum Distribution (RMD), where elderly Americans are forced to withdraw 5-10% of their IRA money every year and subject it to the progressive income tax.
I wrote about this massive tax increase a few months ago in Skousen CAFÉ. Read it here: https://www.markskousen.com/we-already-have-a-wealth-tax-and-its-a-lot/.
It wouldn’t take much for the new president and Congress in 2021 to expand the RMD to include all investors of all ages.
Three Reasons Why a Progressive Wealth Tax Is Dangerous
Wealth taxes are scary for several reasons. First, a progressive wealth tax does not replace the income tax or other forms of revenue. It’s a sinister new tax that allows the government (the IRS) to investigate you at any time and arbitrarily tax you more because “wealth” cannot be precisely measured. How much are those paintings, sculptures, rare coins and other collectibles worth?
Second, an imposition of a wealth tax is an invasion of privacy. You would be required to list ALL your assets, including coins, jewelry, diamonds, bearer bonds and cash. Hiding anything from authorities could make you a criminal.
Third, when you adopt a progressive tax, you are at sea without a rudder. What is the best marginal tax rate — 50%, 70% or 90%? It’s impossible to choose objectively. I would not be surprised if they raise the tax rate over time.
British economist John Ramsey McCulloch said it best: “The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or their property, you are at sea without rudder or compass, and there is no amount of injustice or folly you may not commit” (emphasis added).
A Sequel to Marx’s Das Capital
The Bible of the New Socialists is Thomas Piketty’s bestseller “Capital in the Twenty-First Century” and its sequel, “Capital and Ideology,” published this year.
The original “Capital,” published in 2014, focused on the alleged growing disparity between the rich and the poor, and a call for soaking the rich. I question the whole thesis. If you look at the quantity, quality and variety of goods and services, you see how everyone has benefited, not just the rich.
For example, today everyone has a smartphone to call, email or text anyone, and draw upon information and knowledge from anywhere in the world. It’s the great equalizer.
While it may be true that the super-rich class is earning more, if you actually look at actual goods and services, the middle class and the poor are gaining ground in terms of food, housing, transportation and entertainment.
Piketty made other mistakes in the first “Capital” book. For example, he said Steve Forbes was a billionaire. Far from it. He also said that the wealthiest class gets richer and richer as it passes along its assets from generation to generation. Actually, the opposite happens. Not a single heir of the John D. Rockefeller estate is now in the Forbes 400 Richest People in America.
A New Call for Socialism
The sequel, “Capital and Ideology,” didn’t get much fanfare like the original because of the pandemic, but it is remarkably candid in Piketty’s call for a new form of socialism. He does not call it “democratic capitalism,” whereby everybody benefits from the market economy.
Rather, in the final chapter, he insists on “participatory socialism.” Piketty is, in reality, a Marxist socialist and a very dangerous one.
Notice the word “Capital” in each title. Piketty is imitating Karl Marx and his classic work “Das Capital.” He’s a French economist at the Paris School of Economics and a mixture of Marx and Keynes. Like Keynes, however, he is no fan of Soviet-style communism, which he readily admits didn’t work.
While he opposes outright nationalization, he does favor social control of companies, big and small, through unionization, regulation of executive boards and high levels of taxation, all with the intent to “facilitate circulation of wealth and reduce the concentration of private property and economic power.”
In particular, Piketty is fond of a progressive tax on wealth, “which would be used to finance a universal capital endowment for each young adult.”
The Book The New Socialists FEAR the Most!
How do you get rid of a bad idea, such as “participatory socialism”?
Earlier this year, before the pandemic hit, I spoke before 400 conservative leaders at a conference at the Ritz Carlton, in Laguna Niguel, California. My topic was “How to Get Rid of a Bad Idea (Democratic Socialism): With a Better Idea — Democratic Capitalism!”
At the end of my talk, I told the audience that my book, “The Making of Modern Economics,” has become “the Book the New Socialists Fear the Most.” Why? Because my book addresses students directly — those who find socialism appealing.
As one reviewer wrote, “The Making of Modern Economics offers the most devastating critique of Marxism and Keynesianism ever written.”
My book has converted many young socialists to “democratic capitalists” — the stakeholder philosophy that shows that enlightened capitalism can benefit everyone, rich and poor. It solves the “inequality” issue that young people are most concerned about.
It has full chapters on Karl Marx, John Maynard Keynes and the free-market schools of Milton Friedman, Ludwig von Mises and Friedrich Hayek.
John Mackey, CEO of Whole Foods Markets, says, “Mark’s book is fun to read on every page. I have read it three times! I love this book and have recommended it to dozens of my friends.”
And William F. Buckley, Jr., stated, “I champion Skousen’s book to everyone. I keep it by my bedside and refer to it often. An absolutely ideal gift for college students.”
It’s been endorsed by Milton Friedman and was recently ranked as #2 in the Top Ten Most Important Books in Economics by the Ayn Rand Institute (right behind Henry Hazlitt’s classic “Economics in One Lesson”).
After my talk, I sold my entire lot — 51 copies — of the paperback version of “The Making of Modern Economics.” People were buying multiple copies to give to their children going to college and to their friends.
Get your autographed copy today! The third edition is handsomely published by Routledge and 499 pages long. To order the paperback version, send $35 to www.skousenbooks.com, or call Harold at 1-866-254-2057. (Hardback copy is $50.)
Special announcement: Imperial Governor of Nevada Cancels FreedomFest 2020
My wife and I joined thousands of patriots in mourning on July 4 after the governor of Nevada extended Phase II to the end of July and abruptly canceled FreedomFest 2020 next week in Las Vegas.
See our full statement at www.freedomfest.com.
Phase II limits conferences to 50 people, and we had more than 1,000 people signed up. Caesars Palace management promised us that Phase III would be in place by next week, which would have accommodated our conference, but it was not to be. Our small staff spent thousands of hours redoing the schedule and complying with all the new rules and regulations of social distancing and wearing of facial covers to make our conference safe, but it didn’t matter.
It is ironic that our conference was at Caesars Palace this year — and Governor Sisolak is acting as an imperial Caesar! No hearings, no apology, no offer to reimburse us for the hundreds of thousands of dollars we will lose.
Both Caesars Palace executives and I should have taken more seriously Sir Harry Schultz’s warning on page 112 of “The Maxims of Wall Street”: “Never underestimate the size of a panic nor the power of a politician.”
If you don’t have a copy of “The Maxims of Wall Street,” now is the time to get one or more at www.skousenbooks.com. The price is only $20 postpaid, and $10 for all additional copies. A further discounted price is just $300 for a box of 32 copies. I autograph each book and mail them at my expense if mailed in the United States.
On the positive side, our attendees and you, my subscribers, have been very supportive, and most have helped us out by moving their registration to next year’s FreedomFest (July 14-17, 2021, Paris Resort, Las Vegas), where our theme will be “Healthy, Wealthy and Wise.” We also will celebrate the 40th anniversary of my newsletter, Forecasts & Strategies, at that time. Thank you.
Good investing, AEIOU,
You Blew it!
Stanford Adopts Sinister Name from the French Revolution
Two weeks ago, in response to concerns about racial bias following the publicity around the police killing of unarmed black men, Stanford University President Marc Tessier-Lavigne announced a new surveillance program to weed out all forms of racism on campus.
The name of the program is the “Community Committee for Public Safety,” which will conduct “listening sessions” and document racial “bias, both explicit and implicit” among students, faculty and staff. It includes meeting “in small groups this year with every Black staff member at Stanford who wishes to engage in conversation.”
What’s ironic about the new program is that the name is the same one used by the Jacobins in the French Revolution in 1793 to 1794 to carry out the Reign of Terror: “The Committee for Public Safety.”
Under the radical Jacobin Maximilien Robespierre, over 16,000 people were falsely accused of treason and publicly executed.
Was the name of this committee chosen by accident? After all, the Stanford president is a French-Canadian. Surely, he knew.
Tessier-Lavigne is also the man who issued the unilateral decree that Stanford would be closed this year and sent all students and faculty home in an overreaction to the pandemic. All other colleges and universities everywhere followed his decision to close.
He made his decision without consulting many Stanford medical experts, including Michael Levitt, a Nobel Prize-winning chemist who spent years studying previous Chinese coronaviruses. Today, most experts agree that the schools never should have been closed, that the virus poses little threat to the lives of young people.