Does IMF Have Plans For Your Real Estate And Savings Plans?

Our Most Important Message This Year If you care about preserving your wealth, you must read this. Save it. Reread it often. Share it with your friends and family … and tell them to share it with all of their friends. This is that important. We should all fear the probability that what you are about to read will emerge one day – possibly soon – in America. The International Monetary Fund (IMF) a few weeks ago released a report carrying the otherwise innocuous title, Fiscal Monitor: Taxing Times. Last Tuesday, in the Sovereign Investor, I first sounded the warning about just what this IMF report is proposing, because the contents of the 100-plus-page report are anything but innocuous. For anyone with any degree of positive net worth, the IMF’s ideas and ideology are an attack on you that will almost certainly see the light of day in some fashion and in the not-too-distant future here in America. The Western world, the IMF knows, faces straits more dire than the average citizen fathoms. Debt is the most-insidious, most-destructive form of finance ever created, a malevolent shadow that hangs around – forever – unless it is paid off or written off at great cost. Many Western nations, and most relevantly the United States of America, have no means of repaying all the debt they’ve accumulated. Many of those obligations result from egregiously generous give-away programs like Social Security, the Medicare prescription-drug plan and various welfare programs – all of which are so electrified politically that lawmakers dare not reform them into something more logical for fear that aggrieved voters will boot offending politicians from their cushy posts in Congress. Nor do most Western nations find it convenient – nor wise – to write off their debts, the ramifications of which would destroy the heavily intertwined global financial system. Moreover, no Western nation has the horsepower to drive its economy at such a pace that radically higher business activity would generate such a wealth of new tax revenue that debt-addled nations could repay their obligations. With that as background, the IMF has established in this report the idea that the world’s Western powers have little choice but to pursue greater tax revenue – even to the point of confiscating wealth for the good of the state. Yes … confiscating wealth. As in: “Hey, we see you have to two nickels to rub together. We want one of them … now!” Here’s the IMF’s language directly from the report: The sharp deterioration of the public finances in many countries has revived interest in a “ capital levy” – a one-off tax on private wealth – as an exceptional measure to restore debt sustainability. The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair). … 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. By themselves, each of the concepts in that one paragraph is frightening to anyone who has worked to build a nest egg of any size. “Debt sustainability” implies that countries continue to rely on debt to mainly fund swollen welfare programs, which must, out of financial expediency, beget another capital levy at some point. “May be seen by some as far” is code for mollifying welfare-class beliefs that anyone with money should be forced by the hand of government to share that wealth with those who want the system, rather than their own sweat, to provide an adequate life. “Repudiating public debt or inflating it away” tells you that, outside of governments legally stealing part of your wealth, the only other option the IMF sees is one in which nations simply disavow their debt or purposefully destroy your spending power by continually stoking inflation, since only rampant inflation will devalue currencies enough to reduce debts to a less-death-defying level … and neither of those options is good for us. “Before avoidance is possible” tells you that when this happens – and I am convinced some version of it will, for reasons I will explain in a moment – it will happen with blitzkrieg speed that prevents you from acting to preserve your wealth before Washington extracts the pound of flesh that it will demand. But it’s that initial idea of a capital levy in the first place that causes me and Erika the greatest alarm. When you read the IMF report, and I have, you realize this is not some plan to simply separate the rich from their wealth. The IMF recognizes that the much-loathed 1% do not exist in numbers sufficient enough to mitigate Western debt woes. Instead, the IMF would have Western nations levy a tax on all positive wealth. Add up all your assets; subtract all your liabilities. And if you see black instead of red, you owe money to America – simply because the people we’ve elected through the years haven’t the mental capacity to understand the power of compounding or that spending wildly more than you earn always ends badly. To help America and other profligate nations steal as much money as possible to “strengthen public finances” that government itself destroyed, the organization envisions a variety of taxes, including a potential “recurrent tax on net wealth.” And because the IMF knows that money and people are highly mobile these days, it envisions “a case for taxing different forms of wealth according to their mobility – meaning a higher rate on nonfinancial wealth (largely real estate) than financial.” Where and When Will This Start? Just how wealth confiscation will come to America isn’t clear. We just know it’s coming, and we’ve given thought as to what it will likely look like, based on the IMF’s language. Here’s some of what we see happening … We will see a national real-estate tax, since real estate is impossible to hide and the Feds can assess it quickly. The systems are already in place. Local governments have records on every parcel inside their jurisdictions, and a data dump to the Feds would require little effort. So anyone with land will owe property taxes at the state and federal level. We also see the elimination of the mortgage-interest credit homeowners now benefit from on their annual tax returns; that’s $70 billion annually that the federal government wants, and it will get it, regardless of the protestations of the national real- estate and home-builders lobbies. We believe we will see renewed efforts to attack wealth on death and then again when that wealth is transferred. Taxes on estates, inheritances and gifts, the IMF reports, “raise very little [because] rates are low, and exemptions and special arrangements create multiple avoidance opportunities.” Most galling is the IMF’s assessment that “the primary appeal in inheritance taxes is in limiting the intergenerational transmission of inequality.” Think about exactly what that’s saying … the wealth that you amassed through sweat equity while others sat on their ass is but a source of continuing inequality if you’re allowed to pass that wealth to your heirs. Instead of giving your family a better life through financial gifts and inheritance, your money should go to the state. Language like that tells us that anyone with any wealth should  prepare for higher estate taxes imposed upon death … and higher inheritance taxes imposed on the recipient when the wealth is transferred – and there could be no exclusions, regardless of estate size. The report tries to present itself as objective, a sort of, “Hey, don’t shoot the messenger; we’re just battin’ around ideas here.”  But the underlying message could not be clearer. “Strengthening fiscal balances … remains at the top of the policy agenda” for indebted nations, and among the “key challenges [is] how can taxation best help bring down debt ratios in advanced economies?” Understand, please, that the IMF doesn’t publish random musings. It deliberately sends messages to those with the greatest influence in shaping the world’s monetary and taxation policies. It is the central bank to the world’s central banks. It was built by Western powers as part of the Bretton Woods agreement in 1944 that established the dollar as the world’s reserve currency. Though nearly 200 countries are now IMF members, the organization is funded largely by the West and it is always headed by a Westerner, usually from western Europe, though the U.S. has always exercised control over which European ultimately takes the reigns as IMF director. My colleague, Bob Bauman, ran this report by Dan Mitchell, a tax expert at the Cato Institute, a D.C. think tank. And, like me, Dan absolutely knows that the IMF doesn’t insert language into its reports “without some high level people deliberately deciding that it's time to lay the groundwork for a bad idea. And the folks at the IMF clearly understand much of the Western world is screwed, so they know radical steps will be necessary. Don't be fooled by the cover-your-ass language that the IMF included for purposes of simultaneously floating a bad idea while at the same time being able to pretend it isn't in favor of that idea.  Remember, the IMF first and foremost seeks to please the governments that control the executive committee. So some bigwigs decided that this idea needed to be on the table. We should worry.” Which is exactly why we’re worried. What happens to America when versions of these IMF suggestions are implemented? What happens to the wealth creators in this country? Will they, like the put-upon industrialists in Ayn Rand’s Atlas Shrugged, say enough is enough, leaving America to those least capable of building and maintaining an economy? Our worry is that America lacks a voice strong enough to rise up indignant against any plan that steals our wealth for the enrichment of a state that has proven incapable of managing the riches it has been given through geography, geology and the talents of the world’s most entrepreneurial people. Where will that voice come from? And will it even come? Or are we so far gone that bad ideas like those proffered by the IMF are the only salvation? Because of the chills we now feel, we’ve just booked the dates for a retreat we’re holding in Uruguay: March 28 to April 1. We haven’t named the conference yet; we don’t even have the speakers lined up. All we have is a block of hotel rooms in Punta del Este for just 75 people and a desire to share with you the opportunities we see for creating your personal escape pod for the day you wake up to find that D.C. has decided to confiscate part of your wealth and impose broad new taxes on your assets so that government can maintain its welfare-spending priorities. Uruguay offers robust banking options. It has a strong real-estate market built almost exclusively around cash buyers rather than cheap mortgages that allow real-estate bubbles to grow. And it offers an agreeable, middle-class lifestyle not unlike any average American city. If you want to join us, to get a feel for the place before American politicians come after your wealth, then join our mailing list and you will be among the first to know all the details of the trip once we’ve hammered them out. Click here to sign up. With the release of this IMF report, we’ve reached the point where protecting your financial future is now a critical, front-burner issue. And it’s one that we will be following extremely closely in the pages of both The Sovereign Individual and Bauman’s Offshore Confidential. Our personal wealth is now a pawn in a global game to save Western governments from their own stupidity … Until Next Week, Erika Nolan and Jeff Opdyke Delray Beach, FL and Baton Rouge, LA November 3, 2013 sovereigndigest@gmail.com