From: Llywarch Hen <ecgwulf@postoffice.worldnet.att.net>
Date: Thu, 15 Aug 1996 10:27:57 +0800
To: cypherpunks@toad.com
Subject: Re: Capital and Taxes
Message-ID: <2.2.16.19960814232605.1a77b8fc@postoffice.worldnet.att.net>
MIME-Version: 1.0
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Quotes taken from recent Tim May posts here.

First we'll assume that economic benefits result in social benefits, 
otherwise what's the point?:
>And the cloud of ideas connected with somehow forcing capital investment to
>remain in the U.S....well, the best way to do this is to alter the tax laws
>so that America (for example) becomes a magnet for investment. (If one is
>looking to help America, that is.)

Now the example of how capital gains taxes hinder investment. First we'll 
portray an income tax as a property tax:
>something else that's terribly important: taxes must be paid on other
>assets sold to raise the $100K. For example, if I own shares in Intel,
>bought many years ago, I have to sell $160,000 worth of Intel stock, send a
>$60,000 check to Uncle Sam and Uncle Pete . . .

But this was an income tax. The capital gains are taxed at a rate less than 
earned wages and are free of the regressive social security and FICA taxes. 
Tim really doesn't want to pay his fair share, and here's the reason:
>. . . . . . . . . . . . . . . . . . . . .  and then send the remaining
>$100,000 to my friends. If the new investment *doubles*, my $100,000 gain
>is taxed at 38% and I'm left with a gain of about $62,000.
>It doesn't take a number theorist to see that I may as well have not even
>bothered. So long as I just sit on the Intel stock, no taxes are owed.
>Sounds like a no brainer to me.

Yep, we've adopted the fuzziest-headed of liberal ideas in promoting 
government as an agent of change to improve things for Tim and his pals by 
asking wage earners to subsidize his economic activities by distributing the 
costs to the public so he can enjoy the profits. But this is just the result 
of the massive jobs program whose beneficiaries prefer to call the Cold War, 
MAD, and so on. The most Keynesian solution of the century combined with a 
not so subtle transfer of wealth from the poor to the rich and renamed 
'supply-side' so its clients don't have to admit they have been on welfare 
for the last twelve or fifteen years. Combined with a massive twelve-year 
capital bull market in which it would have been difficult to lose money, we 
have a class of people who have confused personal wealth with personal merit 
and the notion that they did it on their own.

Is this simple dishonesty masquerading as intellectual dishonesty or just 
standard innocent and dim-witted Republican-Libertarian opportunism 
buttressed by quotations from free-market theologians?
>. . .
>huge "backlog" of unrealized capital gains (aka gains on paper, but not yet
>taxable) is what is being spoken of when people like Jack Kemp and Steve
>Forbes speak of "unleashing" the capital gains now tied up due to the high
>tax rates.

>Personally, I favor open borders--but no public schooling, no tax-funded
>handouts, no welfare, no child support, no public hospitals, etc.
This supposes that Tim paid the workers hired to clear brush from his land 
enough so that they could afford private schooling and excellent health 
care.

Two more quotes and from different sources.

The aristocratic complaint is quoted in Amabel William-Ellis and
F.J. Fisher, M.A., _The Story of English Life_:
"The world goeth from bad to worse when shepherd and cowherd
demand more for their labor than the master-bailiff was wont to take
in days gone by. Laborers of old were not wont to eat of wheaten
bread; their meat was of beans and coarser corn, and their drink of
water alone. Cheese and milk were a feast to them; their dress was
of hodden grey; then was the world ordered aright for folk of this
sort. Ha! age of ours, whither turnest thou? For the poor and small
folk, who should cleave to their labor, demand to be better fed than
their masters."

A widely published remark made by Mr. George Soros:
"Economic history is a never-ending series of episodes based on 
falsehoods and lies, not truths. It represents the path to big 
money. The object is to recognize that trend whose premise is 
false, ride that trend, and step off before it is discredited."

-- Llywarch Hen