The IMF wants you to pay 71% income tax

When the IMF suggests increases in tax rates potentially as high as 71%, we should listen.  The IMF has been at the forefront of global financial political agendas such as the one world currency (SDRs), default of the USD from the Gold standard (thus creating Forex market), and the backing of international ‘death’ loans as described by the Economic Hitman John Perkins.

From Sovereign Man:

December 12, 2013 
Sovereign Valley Farm, Chile

forex

The IMF just dropped another bombshell.

After it recently suggested a “one-off capital levy” – a one-time tax on private wealth as an exceptional measure to restore debt sustainability across insolvent countries – it has now called for “revenue-maximizing top income tax rates”.

The IMF’s team of monkeys has been working around the clock on this one, figuring that developed nations can increase their overall tax revenue by increasing tax rates.

They’ve singled out the US, suggesting that the US government could maximize its tax revenue by increasing tax brackets to as high as 71%.

Coming from one of the grand wizards of the global financial system, this might be the clearest sign yet that the whole house of cards is dangerously close to being swept away.

Think about it– solvent governments with healthy economies don’t go looking to steal 71% of people’s wealth. They’re raising this point because these governments are desperate. And flat broke.

The ratio of public debt to GDP across advanced economies will reach a historic peak of 110% next year, compared to 75% in 2007.

That’s a staggering increase. Most of the ‘wealithest’ nations in the West now have to borrow money just to pay interest on the money they’ve already borrowed.

This is why we can only expect more financial repression from desperate governments and established institutions.

This means more onerous taxation. More regulation. More controls over credit and capital flows.

And that’s only the financial aspect; the deterioration of our freedom and liberty will continue at an accelerated pace.

Can a person still be considered “free” when 71% of what s/he earns is taken away at the point of a gun by a bankrupt, bullying government? Or are you merely a serf then, existing only to feed the system?

This is why we often stress having a global outlook and considering all options that are on the table.

Because the other side of the coin is that while some countries are tightening the screws and making life more difficult, others are taking a different approach.

Whether out of necessity or because they recognize the trend, many nations around the world are launching new programs to attract international talent and capital.

I’ve mentioned a few of these already– economic citizenship programs in places like Cyprus, Malta, and Antigua (I met a lot of these programs’ principals at a recent global citizenship conference that I spoke at in Miami).

[Note to Premium Members: you’ll receive the details and contact information for the Antigua program today.]

Then there are places like Chile and Colombia which have great programs for entrepreneurs and investors. Other places like Georgia and Panama have opened their doors to nearly all foreigners for residency.

Bottom line– there are options. Some countries are really great places to hold money. Others are great to do business. Others are great places to reside.

The era we’re living in– that of global communications and modern transport– means that you can live in one place, your money can live somewhere else, and you can generate your income in a third location.

Your savings and livelihood need not be enslaved by corrupt politicians bent on stealing your wealth… all to keep their destructive party going just a little bit longer.

The world can truly be your playground. You just need to know the rules of the game.

Of course, as always, there are options, and solutions.  It’s not a bill in Congress, more like a subtle hint warning.  From The New American:

If such a tax were delayed in implementation, governments that had borrowed and spent too much might not be able to confiscate enough money to escape short-term financial trouble and would have to default on their promises or inflate them away:

The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away (these, in turn, are a particular form of wealth tax — on bondholders).

This is where the IMF’s interests really lie: Those bondholders, including central banks, which have allowed governments to exceed their borrowing capacity and are now facing the threat of severe haircuts through either default or inflation.

Just how much would the IMF’s “capital levy” be? Say the authors:

The tax rates needed to bring down public debt to precrisis levels are sizable: reducing debt ratios to end-2007 levels would require … a tax rate of about 10 percent on households with positive net worth.

After reading the entire 107 pages, Forbes’ columnist Bill Frezza was livid:

[The IMF proposal] means that all households with positive net worth — everyone with retirement savings or home equity — would have their assets plundered….

It would merely “restore debt sustainability,” allowing free-spending sovereigns to keep tapping the bond markets until the next crisis comes along.

Romain Hatchuel, the managing partner of asset-manager Square Advisors, saw the same dangers but noted that the tax rate on everyone owning anything in the United States would be much higher than just 10 percent:

As the IMF calculates, the … revenue-maximizing [tax] rate … is around 60 percent, way above existing levels.

For the U.S., it is [between] 56% and 71% — far more than the current 45% paid … by those in the top tax bracket…

From New York to London … powerful economic players are deciding that with an ever-deteriorating global fiscal outlook, conventional levels and methods of taxation will no longer suffice. That makes weapons of mass wealth destruction — such as the IMF’s one-off capital levy… — likelier by the day.

This is going to be a tough sell, which is why it must be mandated through international agreements. Back in 1999, Donald Trump, the perennial presidential candidate, unleashed his own “net worth tax” proposal, a 14.25 percent tax touted by him to be the complete solution to America’s fiscal problems. At the time he estimated it would raise enough money to pay off the national debt, which was then less than $6 trillion. (It’s now at $17.2 trillion, nearly three times higher.) That would free up $200 billion in interest payments that the U.S. government paid annually, which Trump said he would, as president, use to shore up Social Security, giving the rest back to taxpayers. At the same time, Trump announced he was forming a committee to explore whether he should seek the presidential nomination from the Reform Party. His campaign sputtered and he dropped out a few months later.

When a wealth tax was installed in France, the wealthy moved away to more tax-friendly havens, such as Belgium. Denis Payre, a French citizen at the time, had built and sold a high-tech company for $110 million in stock, and decided to retire. French authorities imposed its 2.2 percent wealth tax on stock that he owned but couldn’t sell owing to regulations. When he got a bill from the French government for $2.5 million, he moved to Belgium. Said Payre: “They were asking me to pay taxes on money I didn’t have. I had no choice but to leave the country.” Payre explained, “France is penalizing success in a big way. The loss in income for the government is the smallest part. The big issue is the loss of all that creative energy this country is dying for.”

From its report the IMF admits that previous attempts to install wealth taxes have largely failed because the wealthy could move, but the IMF hopes to close any escape hatches via mutual governmental cooperation:

In principle, taxes on wealth … offer significant revenue potential at relatively low efficiency costs.

Their past performance is far from encouraging, but this could change as … stepped up international cooperation … reduces evasion opportunities….

[Such schemes must] address more fundamental aspects … and find better ways to realize mutual gains from closer cooperation in tax matters.

That’s why it’s called the “International Monetary Fund.”

Further Reading

http://www.zerohedge.com/news/2013-12-12/imf-wants-you-pay-71-income-tax

http://www.thenewamerican.com/world-news/item/17107-international-monetary-fund-rolls-out-dangerous-wealth-tax-proposal

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