Democrats want to eat the rich… It’s part of a 100-year-long power grab… The roots of American socialism run deep… In the mailbag: Is AOC a “genuine phony”?…
Unless you’ve been living under a rock, you’ve heard of Alexandria Ocasio-Cortez (AOC).
The freshman congresswoman from New York grabbed the headlines after she said she wanted to slap a 70% tax on personal earnings over $10 million. (The current rate is 37%.)
And it’s gotten your fellow Daily Cut readers thinking about the direction America is headed in.
Here’s reader Bill T., writing in yesterday’s mailbag…
I hate to break it to you, but socialism is already here in the U.S. and it’s not going anywhere.
Think Social Security, Medicare, Medicaid, unsustainable pensions for government workers, etc. And nobody is going to vote for anyone who wants to reduce or eliminate those benefits.
And here’s reader Greg D.:
Our system WAS laissez-faire capitalism. Today, the “United States” government controls all the major means of production (and most of the minor means!).
As regular readers know, our immediate focus at Legacy – the new partnership between Bonner & Partners, Casey Research, Palm Beach Research Group, and Jeff Clark’s Delta Report – is on the big money-making trends shaping the markets.
But our ultimate goal is to help you achieve personal freedom through financial freedom. And that means not only looking out for opportunities to profit, but also understanding where the threats to your wealth lie.
Building and holding on to wealth are already a tough task in a late-stage bull market like the one we’re in today.
And it’s going to be a lot tougher when Washington is waging a war on wealth.
AOC is not alone in wanting higher taxes on the wealthy. A recent Fox survey revealed that 70% of Americans – including 54% of Republicans – said they support her tax proposals.
As Legacy Research co-founder Bill Bonner summed it up over at his daily e-letter…
There’s no doubt. The rich are on the table. And all leading Democrats are getting out their knives and forks.
Bill’s fellow co-founder Doug Casey put it in even stronger terms…
I’m afraid Alexandria is evil on a basic level. I know that sounds silly. How can that be true of a cute young girl who says she wants just sunshine and unicorns for everybody?
But evil shouldn’t be associated with horned demons and eternal perdition. It just means something destructive, or recklessly injurious.
Her fellow Democratic Socialist Bernie Sanders… and Democratic Senator Elizabeth Warren… also have their sights set on the wealthy.
And they make AOC’s proposal look mild by comparison. Here’s Bill’s co-author on The Bill Bonner Letter, Dan Denning, with more…
Bernie Sanders proposed revising the death tax. He wants the government to take 77% on assets over $1 billion. There’s not a lot of them. So you can make the argument that it really only affects people who can afford to pay for it.
But then you look at the fine print… and Sanders also wants to take 45% on assets between $3.5 and $10 million. There’s quite a few people in that category… including some of our readers.
And Warren is taking it even further. Dan again…
An income tax and a death tax are both taxes on a taxable event – money you’ve earned or somebody’s death.
But that’s not what Warren is proposing. She’s saying that if you have a net worth between $50 million and $1 billion, you’ll pay a 2% levy on that – on top of what you’ve already paid out in taxes on your income.
You may be saying, “I’m not that rich. So what do I care if the government is going after them?”
And that’s a natural reaction.
Once the feds establish that it’s okay to go after people’s wealth like this, it’s only a matter of time before they lower their threshold for who gets soaked. As he explained…
The government is establishing a new principle. It doesn’t have to wait until you receive a paycheck… or pass on your estate to your heirs. It has the right to tax you on your net worth. It’s got nothing to do with a transaction that you’ve made.
To me, that’s a technique. It’s called anchoring. If we establish that this kind of thing is fair game, it’s just a matter of time before that’s extended to people who are currently well below that threshold.
This is what Washington has done throughout history. It’s pushed the boundaries of its power by establishing new principles like this.
Initially, people see these new principles as radical… even dangerous. But they soon come to accept them as normal.
The first was in 1913, when Congress established the Federal Reserve as the country’s central bank. This was the first step down the road of government-controlled money.
1913 was also the year when Congress made an income tax a permanent fixture of the U.S. tax code. (There had been a tax on income during the Civil War… and almost again in the 1890s. But the Supreme Court ruled it unconstitutional.)
The second power grab came in two steps during the Great Depression, under Franklin D. Roosevelt.
First, under the 1934 Gold Reserve Act, the feds banned Americans from owning gold and forced them to surrender their holdings to the Treasury Department.
Then, in 1937, FDR pushed his New Deal programs past the Supreme Court… and forced a huge expansion of government into the private sector.
The third power grab was in 1971, when President Nixon cut the final ties between gold and the U.S. dollar. (He refused to exchange foreign-held dollars for gold at the fixed rate of $35 an ounce.)
This established a purely credit-money system. And it gave Washington the power to create as many dollars as it liked to fund its spending programs – without ever having to settle the bill.
Today, most people don’t remember that income taxes were once illegal… that gold was money… and that the government had a limited role in society.
That’s why you should be worried about these new proposals to soak the rich. They may not affect you today. But they open the door to future government grabs that could.
We’ll leave Dan with the final word on that…
AOC, Sanders, Warren – these folks are establishing what seems to some people like a radical position. But by doing so they’re redefining public discourse. And history shows proposals that once seemed radical soon became widely accepted.
Our readers need to realize that you don’t have to be a billionaire to slowly have your financial freedom eroded and taken away from you. Folks today are asking if we’re headed toward socialism. But if you understand history, you see that we’ve been heading that way since 1913.
Tomorrow, we’ll have more on how socialism became so popular… and the steps Dan recommends you take now to protect what you’ve earned.
Then let us know your thoughts. Is AOC “evil,” as Doug claims? Or is she just part of a much wider trend toward socialism? Write us at [email protected].
At least one of your fellow readers thinks so…
Ms. Ocasio-Cortez is what Truman Capote would call a “genuine phony.” But our problem is not Ms. Ocasio-Cortez or her (in my view) cockamamie policies. Since 1971, our policy is “adding zeroes.” We started with million-dollar deficits, then billion-dollar deficits, then onto the unthinkable trillions, and soon maybe likely quadrillions! It’s just 3 more zeroes, right?
And who can blame the Millennials and many of their parent Boomers for advocating socialism? In their lifetimes, they have seen the U.S. spend on anything and everything, and the bill NEVER comes due! It’s magic; the spending goes on seemingly ad infinitum.
Now, seriously, if there is no repercussion on spending to oblivion, why hold back? Yes, we tell ourselves there will be hell to pay, but I’m 66, and it hasn’t happened yet. I thought it would happen 30 years ago. Who is the fool?
– Paul M.
Meanwhile, the conversation turns back to Tesla – and its eccentric billionaire CEO, Elon Musk…
Loved the piece on Tesla. I believe you and Jeff are spot on. Regardless of the side of like or dislike for Elon Musk, one must consider if a single person can be that important to a company. There have been a few others in history and the same traits are common in each as history has shown, but only one in a billion people have the whole package. We can compare Elon with Steve Jobs or even Howard Hughes.
Invest in the person and not just the company. How many times have the naysayers been wrong? Elon is special. Vision, leadership, drive and determination, prowess, and he constantly does what seems impossible. Even his flamethrowers from his Boring Company (which, for customs purposes, are not flamethrowers) are incredible. I, for one, am in for the ride – pun intended.
– RJ L.
I have had my M2 Tesla for over four years and enjoy it tremendously. I have owned Mercedes, BMW, and two Ferraris. The Tesla is better than all of them. I cannot go back to driving a guzzler. Too many moving parts and too much maintenance with mediocre performance. My Tesla has great performance and looks with low maintenance. What else is there in a car? I bought it trying to keep cost down, so I have only three options: leather interior, multicoat paint, and free supercharging at Tesla chargers. I do not have the tech package, which includes navigation and power liftgate and other features.
The car has been everything I expected and more. It has room to haul and power to tow everything I need. Performance is exhilarating, even though it is the small 60 kWh model.
I have had two repairs and one regular service on the car. One repair was replacement of the drive unit for a noisy bearing under warranty. And the other was repair of the driver door handle by a Tesla technician at home in my garage for $220.
Can you think of a better car ownership experience than that?
– Marv N.
Do you own a Tesla? What’s been your experience with it? We’d love to hear your thoughts. Write us at [email protected].
February 5, 2019
Delray Beach, Florida