Ok, the election is over, and we want to tax Americans like they do in Europe. Sock it to the rich, to pay for our past sins. We look to Europe for an example. Europe is suffering, austerity is in the coffers. Spain’s unemployment is over 25% and Greece…well does Greece even have any employment? What even does Greece make besides olives and tomatoes?
France talks of a ‘tax rate of over 75% on the rich.’ Tax…tax…tax…spend spend spend. Is Europe hurting? Well if this picture of mine from Monaco says anything to you, the answer is NO. At least the rich in Europe are not hurting. Tax rate of 75%? 75% of nothing is still nothing. The answer is very simple math, ala Bill Clinton, who in a way has become my personal hero, and is possibly the only man alive that can save America (can’t we vote for him again?).
This is the math of the rich. Tax rates go up, they hire people to find loopholes and they pay less. They put their money in Monaco, they put their expensive yachts in Monaco. They live between St Moritz, Switzerland, their house on the Rivera, and beaches in Greece. For kicks, they show up in Milan at fashion week or in Paris. Many have said that the rates of the 1950s and 60s were 90%, and less now. Yes they were but nobody paid them. People with money set up family corporations and paid little just like now. If rates go down, it is actually too much work to pay less so many rich end up just paying. Let dividend tax rate go to 35% and presto, nobody pays dividends, they do Dutch auctions to create capital gains. Make that 35% too, well the rich will do something different.
Are the rich hurting in Europe? Art sales as monitored through artprice.com have reached a record. I’ve seen crazy bidding at the auctions I’ve been to. The big art auction today in New York features an Andy Warhol and a Roy Lichtenstein that went for record prices to whom? Europeans. LVMH luxury maker sales…records. Cartier…big numbers. No the European rich are not hurting. They are certainly not. No austerity there.
So when they say in Europe, more taxes, who pays? The average Joe worker pays. The solution of making it difficult to fire people? Nobody hires. Lots of unemployment benefits? High costs of maintaining workforce so again, nobody hires and again everyone pays.
Let us bring this back to America. Let us tax 100%, take it all. Will the government get Warren Buffets or Steve Ballmer’s income? How about Steve Jobs estate? No, they either will either just defer their income entirely or they will just move their income to overseas subsidiaries. How about a teacher? Nope, can’t pay the accountant to set that up. So in the end will the government get anymore money from the superrich? No, probably less but what they will do is block the path to upward mobilty to allow those in the middle to get to the top.
If there is one thing I’ve learned in my life is that the rich don’t like newcomers to wealth. One way to keep the classes in check is to block those from joining the club through taxation. I have mine, and now you can’t get yours. It is complex and in some ways against everything that is American where a guy in a field can dig a hole and find gold or all of the Texas oil wealth from the 1930s-60s.
I was in Maple Grove Minnesota last weekend and the malls were filled as were the restaurants. This is an area of Minneapolis that is upper middle class and everyone was spending money like it was burning a hole in thier pockets. Much like Monaco, their was no austerity seen.
Is American really hurting, or is this some sort of bubble like many of the places in Europe? Or…as I suspect, are we like the grasshoppers consuming until the very eve of Winter and seemingly unaware that our demise is upon us? I don’t really know but I fear the latter.
So here we are facing the fiscal cliff. We have spent borrowed money largely borrowed from ourselves invented in the bowels of the Federal Reserve to pay for things that have been consumed or blown up in worthless wars that neither side seem able to just quit. We face taxing people who won’t pay and then taxing us who have no choice and then won’t hire ans we can’t create. In the hope of charity and a greater planet and a better humanity we have devised benefits nobody can pay for and made regulations so bad, that the costs of just doing them outweigh the benefits from them to the payers.
Everyone, yes everyone, the 47% and the other 53% wants their cut, in tax breaks, hand outs, fat governmental contracts, benefits, jobs for life..the list goes on.
We are in the paradox of the immovable object versus an unstopable force and I fear, the result will be destruction. It is either 1922 in Germany or 1927 everywhere else, I can’t tell which. Both of which ended badly. I wish I had answers but alas like a lonely prophet I can only shout and warn, I have no powers to fix.
But I’m not crying for Europe and I’m not shedding a tear for those of us being the grassshopper, here in the USA. Until Monaco has a recession, Europe will continue in some sort of delusion. Is Cannes hurting, how about Geneva? The rich are trying to kick the can down the road to mostly pay for their high end tastes and unfortunately here in America, we are putting on the shoe and positioning the can.
I make jobs here in America and as I assume, the government will do everything to take my power to do so away, eventually I won’t. Unfortuately Ayn Rand is rolling in her grave or even laughing somewhere as we do this, somehow she saw all of this coming. We’ll see. Maybe our congress will do the right things and everything will turn out all right.
Hope for a change