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How Politicians Are Creating the Worst Economic Crash in History
Politicians have totally and completely misunderstood the trends within the global economy and as a result, they are actually creating one of the worst economic debacles in history. I have explained several times that the bulk of investment capital is tied up in two primary sectors – (1) government bonds and (2) real estate. Because of income taxes, real estate has offered a way to make money in capital gains without having to pay income taxes.
Money has looked to park in real estate around the world for many various different reasons as in Italy it was the escape from inheritance taxes as well as banks or in Vancouver to gain a foothold for residency fleeing Hong Kong. In Australia, there was the Super Annuation Fund which allowed people to use retirement funds for real estate. In New Zealand, the new government wanted to declare foreign investment just illegal and in Australia, they made it a criminal act for a foreigner to own property and not inform the government they were foreigners. Over in London, they imposed taxes on property which created a crash.
People spend more when they believe that they have big profits in their home. The recession of 2007-2010 was so bad recording the worst of all declines since the Great Depression all BECAUSE it undermined the real estate values. People then spent less because they viewed their home declined in value. As taxes have been rising and the average home value collapsed, the velocity of money kept declining. Especially as real estate values declined and interest on savings accounts vanished hurting the elderly who saved money for retirement and discovered their savings were producing less income, the velocity of money just plummeted. The velocity of money began to turn up finally in the USA ONLYwhen interest rates began to rise.
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The Tried-and-True Blueprint for Raising Taxes
The Tried-and-True Blueprint for Raising Taxes
As the global economy slides into recession and the U.S. economy catches a cold, the blueprint for raising taxes will be dusted off in every state.
The blueprint for raising taxes in the modern era was first established in 1913 when the federal government instituted permanent income taxes. Prior to 1913, income taxes were viewed as wartime emergency measures to raise money for the immensely costly prosecution of war.
Here’s the blueprint for raising taxes:
1. Declare the tax is an emergency measure.
2. Start the tax out at a low rate to minimize resistance.
3. Levy the tax only on the wealthy to play the “it’s only fair” card.
4. During some late-night session when the public isn’t looking, make the tax permanent by burying the provision deep inside some popular and/or complicated legislation.
5. Raise the tax rate in response to deficits, i.e. “we need more money.”
6. Gradually expand the base by reducing the qualification level from “wealthy” to “well-off” and eventually to everyone.
7. Gradually reduce deductions and exemptions to pittances.
8. Auction off exemptions for the super-wealthy via campaign contributions.
You can watch the blueprint in action in any number of locales–for example, Rhode Island, where the governor is proposing a first-ever statewide property tax on second-homes worth more than $1 million. The proposed levy has been dubbed the Taylor Swift Tax in honor of Swift’s $17 million mansion on the Rhode Island coast.
According to the data presented in these links, Rhode Island property taxes are in the top 20% of the nation. Depending on how the tax is reckoned (as a percentage of median home value, for example), Rhode Island scores in the top 10 of the 50 states.
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