Today’s self-described “Progressives” seem to have adopted the universal answer, “Tax the Rich.” It doesn’t matter what the question might be; the answer lies in a burning desire to punish successful Americans through taxation, in the name of solving societal problems. Constantly tilting at the windmills of increased government revenue, these people live in a political Utopia we call the “Big Lie.”
To illustrate The Big Lie, we can examine President Biden’s recent claim that “The Rich” only pay an 8% tax rate, far less than the rest of us. An old adage says that there are 3 kinds of lies: White Lies, Damn Lies, and Statistics. In today’s world, a fourth type of lie, and perhaps the most insidious, is the Lie of Omission. The Big Lie is a combination platter, based on the Progressive notion that when a lie is repeated often enough, it is true.
Many politically liberal activists have long favored and frequently introduced, the concept of a Wealth Tax. So far, it has not been implemented, partly because it would be virtually impossible to administer, but also as it is not likely to pass Constitutional muster. Progressive activists remain steadfast in their attempts to fleece our hated Billionaires, who ironically fund a large portion of political campaigns for those very politicians.
The fundamental precept of a Wealth Tax is to levy a tax on appreciated, but unsold, assets. In our Blog of December 13, 2023, we referred to the Wealth Tax concept as, “Taxation Without Monetization.” Taxes are generally derived from the proceeds of income-generating transactions, whether earning income or selling assets. When payment is made, we call the income “realized,” meaning received. The worker, or the seller, keeps the post-tax proceeds of the transaction after the government collects its legal percentage from the realized cash flow.
American taxpayers understand that one of the most favorable tax rates on realized income is the Long-Term Capital Gains Tax (LTCG), which is applied to the realized (monetized) gain on assets held at least one year. For most Americans, that rate is 15%, but it rises to 20% for higher-income Americans. “The Rich” pay an additional tax of 3.8% on investment income, brought to them by ObamaCare, and designed to further fund Medicare.
Throughout modern American history, tax rates have fluctuated wildly. From government records, we find that when tax rates were raised, revenue shortfalls resulted. When authorities react to reduced tax receipts, they lower tax rates. Following each tax rate decrease, revenues to the government rise. Such a simple and demonstratable principle, yet the Big Lie never dies.
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