TAXATION IS THEFT

Especially on Unrealized Capital Gains

There are people who aren’t aware that we haven’t always had to pay income taxes.  In 1862, President Lincoln created the first income tax to pay for the Civil War.  Five years later, due to its unpopularity, the tax rate was decreased substantially, going back to relying on money from liquor, beer, wine and tobacco taxes.  Even this was repealed in 1972.  In 1894, the Wilson Tariff Act revived the tax and created the Bureau of Internal Revenue, but in the next year, SCOTUS determined that the income tax was unconstitutional because it is a direct tax and not one that was apportioned to the states based on population. 

In 1909, President Taft asked Congress to propose a constitutional amendment that would give the Fed the ability to tax incomes without the state apportionment.  Finally, in 1913, Wyoming became the 36^th and last state to ratify the 16^th Amendment.

"Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."

This was bad enough.  But over time, the desire to get more money overwhelmed politicians and they went to graduated tax rates, purportedly to be fairer to lower income people.  This was a lie; they just wanted more money to make the government larger and more powerful and to enrich themselves.  Those salaries and benefits the federal government personnel enjoy don’t come for free.

Taxing Unrealized Capital Gains

Harris wasn’t the first uber-Lefty to float this plan.  The idea has been popular for a while, as then, they don’t have to directly change the levels of income taxation, a behavior that loses them votes.  But what does this mean?  Let’s make it simple.  If you bought your house 10 years ago for $100,000 and now it is worth $200,000, you would be taxed on the gain you might receive, if you sold it.  But this kind of tax makes you pay even as you haven’t gotten any money for it.  Anyone looking at Zillow and Redfin knows how crazy the numbers get.  Do you get money back if you lose equity?  Of course not.  And unrealized gains ARE NOT income.  Is it even Constitutional?

These laws would tax unsold financial assets, ownership stakes, fixed investments, intellectual property, collectibles and other forms of wealth.  Who would dare to invest, build businesses or otherwise grow the economy under such a burden?  It wouldn’t be worth anyone’s time.  And even so, how would you value these things?  I’ve written five books; that’s my IP.  How much is that worth?  For publicly traded companies, it is easier to come up with a value number, but private firms, of which there are at least 25 million, would be almost impossible.  Who gets to value these things?  The IRS? 

The compliance costs would dwarf what we now go through to just pay income taxes, taking hundreds of hours more than we waste now.  The only justification the politicians put forth is that this is a way to solve our government debt problem.  Notice, it requires no sacrifice on the part of politicians or government workers.  But imagine a farmer who has a lot of land, but makes just enough to provide for his family.  Taxed on the value of that farm, he would have to sell the family land in the first year. 

Why Now?

There is a belief that too many people have too much money, which is taking money away from others.  This is a lie.  Except for those with long-term, inherited wealth, which isn’t all that many, the rest have built businesses, which employ people, pay high taxes already and benefit our economy.  Would you really like to see what would happen to Apple if they had to pay unrealized capital gains.  It’s important to point out the word “unrealized”.  If it is unrealized, you don’t really know what it might be and you do not benefit.  Thus, the government shouldn’t benefit from it either.

But people are angry about inflation and angry that there are people who don’t have to care that gas costs are through the roof.  This minority population can afford the higher food prices and ignore the cost.  But in reality, America has always been a place where people can thrive through hard work, innovation and responsibility.  Two guys in a garage started Apple, spending thousands of hours and risking their own money to create a computer.  Don’t they deserve their wealth?  And by hiring thousands of people to work there, they are providing more benefit than any government program.  In fact, if everyone were as hard-working and ingenious as those guys, we would all be rich.  There isn’t this pie of money that gets smaller when one person earns more.  Wealth can grow, but you have to put in the effort.

Those of us who work for companies like Apple should be grateful to have a good way to earn a good living.  If you manage your money in a smart way, you spend less than you earn, saving 17-20% of it every month and have a six-month emergency fund.  Your life will be pretty good if you do this.  If you’re just starting out, show initiative.  A 40-year-old with a family who is still flipping burgers deserves the struggle.  Why haven’t they risen past that high-school job?

Too many people want free money from the government. But unlike money made by companies and innovative people, ALL that money comes from us, the taxpayers.  There is no “free.” 

One good thing about Harris’ failure to win the presidency is that Trump will never implement this plan.  The hard Left wants to destroy the economy and the country, so they can rebuild it as a socialist “paradise.”  This tax would very quickly accomplish their aims…but do nothing good.  Remember this when you vote next.