The Economic Alamo

Tyler Durden's picture

Submitted by Jeff Thomas via Doug Casey's International Man blog,

“And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed.” – Luke 2:1, New Testament

 

“Since the beginning of recorded history, the business of government has been wealth confiscation.” – Ron Holland

It’s a common assumption that governments exist in order to serve the people of a country and that in order to do so, they must be accorded the necessary evils of power and taxation. I believe that the opposite is true, that in the perception of those who rule, power and the ability to exact tax are the very purpose of government, and service to the people is merely a justification for that pursuit.

This condition is perennial. Throughout history, rulers have maximised their power over their minions and, likewise, have exacted as much taxation as they have been able to get away with. Consequently (and quite understandably), it’s always been the norm for people to try to protect their wealth, however large or small, from confiscatory taxation.

Taxation is, of course, legalised theft. It is never collected voluntarily, as it might be with a charity or place of worship; it is taken by force. (If you don’t agree, try refusing to pay.)

Centuries ago, those who had acquired a measure of wealth might have hidden it under the floorboards or buried it in a field. However, over the last century, as long distance travel became increasingly possible, those who have possessed wealth have developed a more reliable method: store it in another country, one where the laws of confiscation are either not so rapacious, or—better still—don’t exist at all.

The Era of the Tax Haven Blossoms

Tax havens are not a new idea, but they didn’t come into their own until the 20th century—a time when they flourished. Deservedly, they’ve become increasingly sophisticated and serve their clients extremely well. So well, in fact, that they’ve become a threat to those countries (mostly much larger countries) that are oppressive in their tax regimes. Eventually, these countries joined together to form the Organisation for Economic Co-operation and Development (OECD), which, despite its euphemistic name, is charged with the dual goals of ending tax havens and creating forced equalisation of taxation in most of the world’s countries, whilst they allow the primary OECD countries to do as they please (to operate independently of the forced taxation equality).

In recent decades, the OECD have ramped up their campaign. First, they created propaganda describing tax havens as centres of “money laundering,” suggesting that money that had been obtained through criminal means was being transferred to overseas banks to disguise its source. (An excellent treatise on this subject can be found here.)

At the same time, the OECD made a concerted effort to avoid discussing the volume of tax-haven business that actually was caused by the fact that OECD member-countries operated oppressive tax regimes, and that tax-haven clients were merely seeking freedom from economic oppression.

The OECD have made great progress in their effort, with much of the world’s taxpaying public now believing that tax havens are merely for criminals and “tax cheats.” (More recently, the OECD have been working to create the belief that tax havens are linked to terrorism, and I predict that we shall see this effort increase dramatically in the future.)

But now, the OECD have a greater impetus to crush the economic liberty in the world that tax havens provide. Most of the OECD countries have squeezed their populations to the limit and, wanting still more, have turned to massive, unpayable debt as a solution.

Just like an addiction to heroin, this dependency on a level of money that’s beyond what can be taxed has led these countries to a desperate impasse: the economic system itself is on the verge of collapse and nearing the end of their ability to maintain the cost of their overreach. They are redoubling their efforts to limit the activities of the world’s tax havens.

The Last Holdout

In recent years, we’ve seen one law after another passed in the EU, the US and other First World countries, laws that allow for greater capital controls and the confiscation of wealth by banks and governments.

In addition, governments are passing legislation that increasingly limit the ability for an individual to make currency transactions. Whether spending, receiving payment, depositing or withdrawing, the freedom to transact is attracting greater scrutiny. (The ultimate stage will be the need to request permission to make any transaction.)

Since the early 2000s, several associates and I have tracked this development and termed it “The Great Race.” The OECD countries hope to gain total control over tax havens before their over-taxation and debt cause their economies to collapse.

If they fail to gain complete control prior to that time, they may not economically be able to take control after that. Although we’ve watched developments closely over the years, I must confess, we’re no closer to knowing whether they’ll win the race… It will be close.

On the surface, it would seem that the outcome wouldn’t matter much one way or the other. After all, the collapse of these economies, although possibly not imminent, is nevertheless inevitable. Sometime in the next few years, one trigger or another will bring down the economic house of cards. So, if the tax havens are destroyed in the meantime, why could they not simply reinvigorate themselves post-crash?

The problem is that if the OECD nations win the Great Race, the last bastion of economic sanctity—the tax havens—would have fallen, and much of the wealth they now contain might already have been transferred to the dying empires.

Like gold going down in 17th century Spanish galleons, it would be a long time before that wealth would be likely to resurface in the hands of those who are productive. It would have been squandered by the rulers of the OECD member-nations in their last gasp of world economic domination.

This does not mean that the world would never recover. After all, wealth is never destroyed; it only changes hands from time to time. But it could very well mean that, as in the aftermath of the collapse of the Roman Empire, sufficient wealth was not in the hands of those who are by nature productive. Therefore, a return to a productive free market would likely be slow in developing.

Historically, whenever collectivism has become total, recovery in its aftermath has always been slow.

And so the race is on—in a very big way. The world’s tax havens are, today, the last bastions—the Alamo—for the free ownership of wealth, and no one can say for certain to what degree the OECD nations will succeed in their quest prior to their economic fall.

To be sure, many low-tax and no-tax jurisdictions have been taking the position that “The OECD have the biggest guns. If we can only placate them for a bit longer and remain in business in some form until they collapse, we’ll be poised for recovery once the dust has cleared.”

In the meantime, many residents of OECD countries, who are only now figuring out that their governments are closing in on their wealth, are questioning whether there is any point in moving their money to jurisdictions where the laws are less confiscatory. They tend to say, “But if the OECD are going after the tax havens, what good will it do for me to diversify my wealth? They’ll get it all in the end anyhow.”

There’s certainly logic in that reasoning, but as any long-term investor who is familiar with the benefits of tax havens will say, “There is no guarantee your government won’t strip you of your wealth, but there never was.

The whole point has always been to not be the low-hanging fruit. Get your wealth as far removed from countries whose objective is to take it from you. In doing so, you raise the odds that you’ll retain your wealth… At the very least, you’ll be the last to be victimised and you might escape altogether.”

In essence, the world’s tax havens are the economic Alamo—the last holdout against world economic domination. In a few years, we’ll know whether they’ve succeeded in preserving economic freedom for the future.

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Waylon Bits's picture

Remember the Alarmo!

ZH Snob's picture

tax havens are desirable, but certainly not the alamo.  and the push for a cashless society, if successful, will in time end them.

the real alamo is P2P exchange outside the monetary or cashless systems.  this is what the control freaks are pushing us to.  the last vestige of freedom it will be in bartering, and will be a thriving and robust black market.  we will all get to know each other better than we ever wanted to.

agent default's picture

The only true tax (and central bank) haven is gold.  Everything else is subject to the insanity governments regularly create.  As far as cashless society goes, this push may very well be the straw that breaks the camel's back.  People will not like it when they are told they cannot hold on to what is theirs. The plan was too unpopular and eventually rejected in Japan in the 90's, I don't see a bunch of pissed of Americans being more compliant when it comes down to handing in their FRNs.

NotApplicable's picture

People won't have to hand in any FRNs. Instead they'll grow old and die while being replaced by a younger population with no use for cash.

Boxed Merlot's picture

last vestige of freedom it will be in bartering,...

 

I got to chuckling over the weekend with a guy that runs a prison canteen for the state.  The currency of the realm is top ramen, they go through cases of the stuff.  At .18 frn per hr. of work, (when given the privilege to do so), there's not a lot else to denominate trade in.  "Soups" are the lowest denomination while the higher denominated candies are a show of wealth; soups are the necessary coin to transact commerce.

And while I found it amusing, it’s no joke to those inside.  These guys understand real life banking better than most of us on the outside.  Their system of accounting plays for keeps.

jmo.

Bobbo's picture

Remember the Hindenberg!

Pairadimes's picture

It has been and always will be easier to take wealth than to create wealth. Until we can figure out how to have a government that doesn't employ a single human being, this will always be the problem.

The only real solution is to keep the damn thing small, and always have a few guns pointed at 'em.

Bastiat's picture

Small and locally controlled and more limited in scope (ie smaller in function) the farther from the local they are.

Bighorn_100b's picture

So when are churches going to pay taxes, property taxes, taxes on donations? Taxes on Bingo, food drives or just pay taxes like every other business. If the governments around the world want more money, then go after places of worship.

Oh please, everyone knows religion is just a business.

The Count's picture

My friend, there is no better way to make yourself a ton of enemies than to question a religion. This is not limited to Islam, I dare anybody to really diss the Pope or the Jews. The powers that be have it all tied up, mess with religon (or even sports for that matter) and you will get your ass kicked in a serious manner.

Bighorn_100b's picture

I do believe in God. Just don't label me by any kind of man made, made up, my religion is better than your religion, give me your money kind of religion.

Looks like your one of those my religion is better than mine kind of people. I call people like you a hypocrite.

Don't feel bad, most if not all people that favor one kind of fake religion over another are hypocrites. Live long and prosper.

The Count's picture

You misread my entire post. I believe all organized religons are a total bunch of pure nonsense, only created to subdue and control the masses. 

Boxed Merlot's picture

all organized religons are a total bunch of pure nonsense, only created to subdue and control the masses...

 

As far as I know, any group of persons with similar ideas, beliefs and desires to grow in their respective association with one another can and do.  Motorcycle clubs, gun clubs, hunting clubs, the NAACP, the Asian Chamber of Commerce, etc., including the plethora of religious groups you refer to, all claim in their core the right to be selective, to exercise discrimination while at the same time taking advantage of the protective right of freedom of association.

Once upon a time people knew that the right to tax was inherently the right to prohibit.  Because the freedom of association was recognized with equal ferver as the right to bear arms, the right to tax, i.e. the right to prohibit was not extended to these types of voluntary organizations.

It's also true that in times past, the church was given the right to tax, which it no longer has, just as it no longer recognizes the right to bear arms or exercise the power of the sword as the governments of today do.  The Christian church has fought the battle of the minds of people since it's inception and has suffered its most humiliating defeat, (and rightfully so, imo), when it had such power and authority.  

To force compliance on what is essentially a voluntary act of love is the definition of defeat.  Isn't that why people go to work on Hillary's campaign for nothing?

 

jmunderstanding. 

WillyGroper's picture

+100 Merlot.

With all this hubub with the Pope, Lucifer observatory, aliens, blah blah, ad nauseum, listened to an interesting pod cast today. The guy is very learned, theologian, astronomer. His research is compelling. He connect many dots with astrology, astronomy, physics, mathmatics, scripture, lack of publications from NASA since 93. Hidden knowledge. His pics of Hiroshima paralleled Lot's wife. I was not familiar with the Bible ISR, nor 2600 translations of as we know it. There's aways an agenda. He referenced the Torah also. Trash away folks.

https://www.youtube.com/watch?v=bQDeKV7tHtA

SofaPapa's picture

Once upon a time, Christianity explicitly collected taxes.  But in its modern iteration, the money people give to their churches is still voluntary.  If people want to give money to an organization they believe is doing good (which it may or may not be; the point is that they are honestly transacting), why the hell should the government get yet more forcefully taken wealth than they already do?!  Your solution to the government stealing from private individuals is to allow the government to steal from those individuals collective attempts to act charitably?  That's really screwed up.

Bighorn_100b's picture

They already do that, it's called the Lottery! Also, when you give a donation you get a tax break. I'm not talking about the person giving, I'm talking about the company receiving the donation.

You know the type, where 10 cents out of every dollar actually goes to help people. The rest 90% of every dollar, money gets lined in crooks pockets.

You know I'm right. Charity starts at home. When was the last time you did something nice for your neighbor for free?

blindman's picture

taxes, how about law, (including the legal
tender variety), property rights
and monopoly on the judiciary?
taxes .... they are "for little people".
Imelda Marcos

NotApplicable's picture

Umm... how can anyone believe that wealth cannot be destroyed, yet believe it can be created?

*head asplodes*

BigJim's picture

Yes, imagine if a total nuclear war breaks out, and the whole surface of the globe becomes dirty, radioactive glass. I'd say wealth had been destroyed.

The Count's picture

If you add all the taxes one pays, from income to inheritance, property to sales tax, fuel, energy etc etc etc. you will find that we are all only carbon life forms, sucked dry to feed a much larger, truly evil, entity. Hey, that's just like in the movie The Matrix, who would have thought they allowed us to see reality the way it really is. 

 

 

falak pema's picture

wealth confiscation by state is a concept that should be contextualised with the concomitant wealth confiscation by an elite class of private conquistadors.

These Feudals, who have political, judicial, legislative and military might; both in state and private cirlces of power;  use that leverage to exercise "divine rights" of the "unequal order" of old; by levying taxes on their serfs to enrichen themselves. This is the RENT of the empowered class.

When the state was born it defended the "rightless" by birth by creating financial means to spread out the wealth so that some of that PRIVATELY confiscated wealth got transferred back to the downtrodden. It did it in name of fairness and general good so that all segments of the newly born would have minimal access to a piece of the economic pie. 

We are living in an age of abnormal wealth confiscation by the wealthy via their financial intermediaries, the TBTF banks and their shadow banking pardners.

Its time to righten the ship of nation. But it should be done in a context of transparent debate and execution of "general good" once the ills have been clearly established.

This libertarian poster is biased. He ONLY talks about state confiscation and NEVER about that other one even more pernicious as done behind the curtain in obscure circles; the CRUX of the matter since 1971;  enacted by the Oligarchs empowered by their stooges in political power : the Nixons, the Kissingers, the Reagans, the Thatchers, the Bushes and Clintons and their mignons who run WS. 

Who wants to Bilderbug with a Lady Lagarde absent in flesh but all too present in spirit ?

 

DIscount Lion Safari's picture

MMMMMMMMMMMmmmmmmmmmm...mignon................

VW Nerd's picture

Blind man, I thought it was Leona Helmsley that said the quote about taxes being for the little people when she and her hubby Harry were brought up on tax evasion charges.  I may be wrong....I could see IM saying the same thing.

Government needs you to pay taxes's picture

"in the perception of those who rule, power and the ability to exact tax are the very purpose of government, and service to the people is merely a justification for that pursuit."

Amen.

What we are witnessing is the perversion of righteous government.

It is not 'of the people, by the people, for the people" but "from the people, to buy the people, to glorify a few Gods"

Government needs you to pay taxes

polo007's picture

According to the International Monetary Fund:

http://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf

Causes and Consequences of Income Inequality: A Global Perspective

EXECUTIVE SUMMARY

We should measure the health of our society not at its apex, but at its base.” Andrew Jackson

Widening income inequality is the defining challenge of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging markets and developing countries (EMDCsf), with some countries experiencing declining inequality, but pervasive inequities in access to education, health care, and finance remain. Not surprisingly then, the extent of inequality, its drivers, and what to do about it have become some of the most hotly debated issues by policymakers and researchers alike. Against this background, the objective of this paper is two-fold.

First, we show why policymakers need to focus on the poor and the middle class. Earlier IMF work has shown that income inequality matters for growth and its sustainability. Our analysis suggests that the income distribution itself matters for growth as well. Specifically, if the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth. The poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels.

Second, we investigate what explains the divergent trends in inequality developments across advanced economies and EMDCs, with a particular focus on the poor and the middle class. While most existing studies have focused on advanced countries and looked at the drivers of the Gini coefficient and the income of the rich, this study explores a more diverse group of countries and pays particular attention to the income shares of the poor and the middle class—the main engines of growth. Our analysis suggests that

- Technological progress and the resulting rise in the skill premium (positives for growth and productivity) and the decline of some labor market institutions have contributed to inequality in both advanced economies and EMDCs. Globalization has played a smaller but reinforcing role. Interestingly, we find that rising skill premium is associated with widening income disparities in advanced countries, while financial deepening is associated with rising inequality in EMDCs, suggesting scope for policies that promote financial inclusion.

- Policies that focus on the poor and the middle class can mitigate inequality. Irrespective of the level of economic development, better access to education and health care and well-targeted social policies, while ensuring that labor market institutions do not excessively penalize the poor, can help raise the income share for the poor and the middle class.

- There is no one-size-fits-all approach to tackling inequality. The nature of appropriate policies depends on the underlying drivers and country-specific policy and institutional settings. In advanced economies, policies should focus on reforms to increase human capital and skills, coupled with making tax systems more progressive. In EMDCs, ensuring financial deepening is accompanied with greater financial inclusion and creating incentives for lowering informality would be important. More generally, complementarities between growth and income equality objectives suggest that policies aimed at raising average living standards can also influence the distribution of income and ensure a more inclusive prosperity.

withglee's picture

After all, wealth is never destroyed;

Tell that to the guy who had a factory full of steam engines when the electric motor came along.