Would You Move If Taxes Were 75%?

What is your breaking point? Would you leave the US if taxes went to 65% or 75%? You should be thinking about it, especially if you are now one of those nasty big earners. If you have been successful by working hard and maybe you had a bit of luck, you now are the new despised minority. If you could jump into your "way back" machine and ask the Founders the following question: should those who were successful would be despised or honored? They would have thought you lost your mind. It would be the latter. Hating success was never the plan, however,  in the past four years, demonetization of those successful people has gone on unabated. Even the last election was all about the 1% as if they had stolen all their wealth. The irony is that only a small fraction of the truly wealthy did not earn their way with their smarts. Warren Buffet's dad was a teacher and did not earn a lot of money, whereas his son has done spectacularly. He invested well and yes, made lots of money. Bill Gates did  not inherit his wealth either. He came up with an idea and was able to sell it better than his competitors.  He has been one of the most wealthy people in the world due to his skill and abilities.   Why should we punish either Buffet or Gates or for that matter anyone who came up with an idea, perfected it and prospered. Isn't that what the US is all about?  Until Obama that might have been true. With the "fiscal cliff" deal done and most Americans getting a nasty increase in their taxes (by some calculations 6-7% on everyone) and NO reduction in spending, one has to wonder where taxes will be in a year or five.  In the accompanying article, we see that French leaders are trying to pass a 75% income tax along with an assortment of other taxes. Folks, we are not far from there. Would you accept a 75% income tax? Most of us would not.  Can you imagine having to work until September 30 just to pay the taxes? Most would not. We see what is occurring in France, the wealthy are leaving and instead of getting their pound of flesh, the country gets nothing. We think that is a reasonable approach and would encourage the producers in this country to start looking elsewhere. The debt that this country has accumulated will have a devastating effect when interest rates rise. For example,  the average rate of interest that the government is paying on our debt in November 2012 is 2.534% (http://www.treasurydirect.gov/govt/rates/pd/avg/2012/2012_11.htm).    What happens when interest rates go up and now the rate that needs to be paid is  3% or 4% or doubles to 5% (all still historically low rates)? Taxes will have to rise significantly so as to pay the interest. All one has to do is to look to Greece and see the destruction that higher interest rates do. If you are happy with tax rates as they are now, don't do anything. We need as many slugs as we can get to work in the mines.  Rates are going up and going up fast and it will effect everyone and not  only the highly compensated, even the janitor was hit with the "cliff" and he will be paying 1% type rates in the next few years. However, if you are not interested in giving all your money to the government,  prepare to move elsewhere. We are looking into alternatives, you should also. Conservative Tom When It's Time to Give Up On Your Country By Dr. Steve Sjuggerud Thursday, January 3, 2013

France's leaders are calling actor Gerard Depardieu "unpatriotic" and "pathetic." You see, Depardieu is leaving France. He's leaving because of the new French tax laws. French President François Hollande is trying to push through a 75% income tax, plus a higher "wealth" tax, higher capital gains taxes, higher inheritance taxes, and a tax on selling your business, among other taxes. Depardieu has had enough… He said he paid 85% of his income in taxes last year. He says he's paid 145 million euros in taxes to France over his career (roughly $190 million). So he's moving to Belgium to avoid taxes. France's Prime Minister called this move "pathetic really." He continued: "Paying taxes is an act of patriotism and we're asking the rich to make a special effort here for the country." At what level is tax no longer an "act of patriotism"? This question doesn't just apply to France… European countries are just a few years ahead of the U.S. in terms of becoming more socialist, with an insatiable demand for more of your income to pay for ever-growing government programs. Depardieu took offense at being called "pathetic." Based on that, he offered to surrender his French passport. Belgium's finance minister said he welcomes Depardieu and "any other French citizens." And Russia's President Vladimir Putin offered Depardieu citizenship. Other successful French citizens are leaving, too. For example, the founder of Moet Hennessy Louis Vuitton is also applying for citizenship in Belgium. Even worse, not only are talented people leaving France, but you can't get talented people into France to work. "We can't bring high-level managers to France," Eric Chaney, an economist at French insurer AXA, told Bloomberg news. "They work in an international market. And the market price for those salaries is well above 1 million euros." So major French companies are looking to hire senior managers in London or Amsterdam instead of Paris, Chaney explained. France will miss out on all their taxes. By raising tax rates so high, instead of getting more in taxes, France will get no taxes from these guys. Again, at what level is tax no longer an "act of patriotism?" At what level does it become an "act of confiscation" by the government? And when that point is reached, when is it time to give up on your country? I don't know what the right level is. It appears that Depardieu has found the level for himself… and that's 85% of his income. What do you think is the right level? How much of your income should the government be allowed to take? Is Depardieu a traitor? Or is he courageous? With ever-increasing budget deficits in the U.S., and no real political will (on either side of the aisle) to dramatically cut entitlements, it's a safe bet that higher and higher tax rates are coming in the U.S. It's time to start thinking about how "patriotic" you want to be. Good investing, Steve