HOW GOVERNMENT STEALS FROM YOU
The growth of government budgets, leads directly to a decline in your freedom – UNLESS YOU TAKE EVASIVE ACTION.
The growth of government as measured by us is simply how much more government spends now than it did in prior years. The tax and spend growth rates of most western governments during the past 60 years have been phenomenal. From a base of nearly zero, close to two-thirds of all wealth generated in the Western Democracies is now spent by politicians, not by the people who create or earn wealth. But worse than this bad news is that the percentage of wealth being confiscated is still growing. Government spending grows faster than national income, personal income, per capita income, adjusted after inflation income or as a percentage of Gross National Product. In grossly overtaxed Europe, it seems clear that the new bureaucracy of the EU will add another layer of parasitic bureau-rats with new taxes to support them. If someone takes more and more of your earnings and assets, that someone is obviously eroding your freedom. In most industrialized countries, the typical citizen can no longer choose how to spend, invest or bequeath most of his own money. If such choices are made for you by someone else, you are obviously, less free. The PT can achieve a much higher degree of physical and economic freedom than the average man or woman. In this chapter we get a quick overview of what is at stake.
A government can spend only by taxing its subjects. Yet some types of taxes are hidden from the people who must pay the bills.
Taxation takes three main forms:
1) Income taxes and hidden taxes like sales taxes, import duties or VAT which raise prices. Sales taxes are generally believed to have a greater impact upon the poor since they (wage-earners and state-supported individuals) tend to spend a greater amount of their earnings on consumer items. In France, much more money is raised from sales-type taxes than from the income tax. Why? Probably because the wealthy French, who are supposed to be hardest hit by income taxes, have evaporated and now live abroad.
2) Borrowing which is a deferred tax. The class of persons who will have to pay it being at first, unclear. In an expanding economy with moderate inflation, an increase in national debt can be a healthy thing if the debt is used to pay for infrastructure (like highways and communications systems) that facilitate commerce and generate funds to retire the debt. In an ideal world, users of improved facilities would pay for them. But, more typically, funds raised by government borrowing are squandered. They end up being exported. The poor may buy imported consumer goods. The wealthier recipients of government largesse invest abroad. The country is thereby impoverished, and living standards drop. Who must pay the debt? No one and everyone! With a debt that becomes too large to service with taxes, the country cannot simply roll over the debt and issue more paper to pay off maturing bonds and the interest on them. The government has a hard choice: it can end the game with a default (as many Latin American countries do, from time to time) or more likely, it will issue ever-more worthless currency (see below) to pay the debts. Russia has taken this rampant inflation route. The burden of the borrowing and the default falls on those who have not had the financial ability or good sense to ship their assets abroad. [Note: How much money has been sent abroad to offshore money and tax havens? Recent figures unearthed by us indicate that more American dollars (presumably owned by Americans), have been deposited abroad in secret accounts in the past 30 years than the total now on deposit in all banks in the United States. This amazing situation of more than half the national wealth having being exported has been the response of the smart money to the growth of a rapacious government. The situation in the USA is not unique. Many Europeans have done the same thing. With a new repressive tax regime in Spain, private Spanish wealth is now seeking haven abroad. The French bourgeoisie, ever distrustful of government, bury their money in gold coins and bars, or keep it “offshore”. Most liquid wealth in most industrial countries is now beyond the reach of the tax-collectors, regulators and planners. Financially at least, everyone of substantial wealth is already a PT.
The most common form of taxation in the past has been:
3) Printing unbacked currency which by law, must be accepted in payment of all debts, public and private. This running of the printing presses, by causing inflation, erodes the value of creditor’s holdings (thereby reducing or eliminating government debt) and raising general price levels. This is a tax on those with assets in the form of cash, bonds, secured or unsecured debts due from others, in the form of bank savings deposits or the equivalent. Inflation shifts wealth from the creditor class (who are owed money) to the debtor class (borrowers) for a time, but eventually erodes all wealth and endangers stability. In times of inflation, no one can make long term plans or invest in plant or equipment Even a farmer can’t safely raise a herd of cattle or pigs. The creation of real wealth (growth) always declines when there is double digit inflation (over 10 per cent).
What can you as an individual do, to protect yourself? Strangely enough, governments who squeeze their own citizens, offer incentives to foreigners to use them as a tax haven. Ireland, with one of the most repressive tax systems on Earth welcomes visiting Americans with signs at Shannon Airport inviting the deposit of funds in special inflation-protected, tax-free, high- interest, secret accounts. For high-rollers there is an entire section newly-built at Dublin Docks devoted to the management of money of foreigners who seek to avoid theirhome-country’s taxes.
The only people who can’t use these schemes and facilities are the Irish themselves. But then Great Britain provides similar services to the Irish (and anyone else) at the Channel Islands and the Isle of Man. Even the worst, repressive communist regimes had special banks offering such services for foreigners. Their successors have kept these banks functioning as a profit center as almost every other state-owned facility disintegrates. It is a strange paradox that almost every country offers facilities to assist tax evaders of every nationality but its own! This reminds us of the statistic in a Hite (sex) report that almost every husband has had affairs with several married women, but believes his own wife to be faithful. The conclusion: either some married women are having all the fun, or some husbands are living in a dream world. With governments trying to seduce foreign tax evaders, and at the same time trying to convince the remaining few loyal and patriotic taxpayers that they shouldn’t go offshore, we wonder who is fooling whom.
Moral of the story? Get your assets out of your home jurisdiction. Have the paperwork ready to export your corpus if and when it becomes necessary. In short, be Prepared Thoroughly.