The Tax Man Cometh

Tax this and your unrealized gains

It’s almost unbelievable, but since I’m pretty much convinced that the world ended in 2012 like the Mayans predicted and we are just spinning on vestiges of whatever the Matrix can come up with next, taxes on unrealized gains somehow makes sense now, I guess.

Honestly, what kind of spending problem do you have to have to begin looking to tax money that hasn’t been made yet? The Looney Bin “economists” that come up with this stuff aren’t concerned with anything but raising money for an entity that has already spent what it can raise for 300 years into the future.

But, ulimately, it’s our own fault. Our fault because we’ve accepted the entire idea that income should be taxed and not consumption. We accept this because no matter who we are, we want to use tax policy to shape social behaviors. Go ahead, admit it, it’ll be good for you: you want others to pay higher taxes when they don’t act like you want them to act. Whew, feel better?

It’s an addiction, and one we need to get out of our systems because so many problems go away when we do. The power to tax is the power to destroy what you are taxing. Who in their right mind wants to destroy incomes? Even those on the far Left don’t want to eliminate incomes, that’s why they have such do-gooder programs as Universal Basic Income. Taxing incomes destroys them … or more precisely forces them to be paid out on inflated dollars.

Before income taxes went mainstream, a single breadwinner could afford to feed and house a family. Income taxes began chipping away at the available supply of dollars so institutionalized inflation had to be introduced to inflate the spending power of the remaining dollars. That has gone on for 100+ years now and quite frankly, it’s all gone, folks. The Emperor has no clothes; your dollars can’t buy you anything anymore. This is why 2 earner households are born into, live through, and die with debt. Pretty soon we are going to have to normalize polyamorous relationships just so we can get another paycheck in the house.

And it’s so addressable, it’s stupid. First, switch the model to a consumption-based tax and pick your percentage. Historically the state has taken 1/5, 20% of value, to fund its essential functions; make $100k, pay $20k in tax, simple and pure with no social engineering of the results. Tax less than that and you’ll get more of what you want — consumption-drive commerce — so in some years, or in some places, you could tax 8% and produce a 4x increase in transactions — more people buying more stuff from more people selling more stuff — according to some economists.

In 2022, the US GDP was $21T. If you assume that all of that bought or sold (and largely it was), then roughly $4T in total revenue would be available for all levels of government spending, which is actually an increase on what was actually collected by a tremendous margin, and even what was spent, and even what was spent to fund the spending (debt).

Second, install safeguards that says deficit spending must be limited to 150% of the average three years of collected tax revenue. Collecting revenue takes time and energy so you need to have a financing vehicle that allows for the near-term payment on the long-term collection of taxes. You must cap it by law, though, or else the spendocrat class simply gives away tax money to garner personal advantage. Capping it also has the most marvelous effect of making government debt a small and desirable commodity. Debts that are hard to invest in, and super secure cost less for the borrower to borrow. In other words, interest rates on the debt would plummet to the .5% range where they should be anyway.

Finally, pass a law that says that any citizen is excused from any homocide of a political that votes to spend more than we have. OK, maybe that’s a bridge too far, but you have to rein them in somehow.

“Money doesn’t like noise. Wherever there is lots of money, it’s always quiet. You go to the bank? It’s quiet. You go to a rich neighborhood. Quiet. The loudest places and the loudest people are normally the brokest.”

— M. Bongeni