This article originally appeared in The Daily Capitalist.
I've been meaning to write a major piece on the inheritance/estate/death tax for quite a while, but until then I wish to share some brief thoughts on it since the topic is front and center in the current tax debate in Congress.
First some background. The inheritance/estate/death tax came into being in modern times by the Brits in order to break up the large landed estates held by the leftover royalty. They really hated these families who had gathered huge estates from as far back as feudal times. The socialist Labor Party made class warfare a foundation of their party. After the nobles were hit, then anyone with money was their target in their goal of socialist leveling.
That great regressive president, Woodrow Wilson had such a tax passed in the US in 1916. Wilson was a "Progressive" and basically believed in social engineering. The concept behind the law had nothing to do with feudal estates, but more with class warfare, the enmity that demagogues stir up against the "rich" among needy voters.
The ostensible reason that Wilson had for the law was that "concentrated wealth" in his version of what capitalism should be was bad for America. There is no evidence, empirically or theoretically, that "concentrated wealth" is harmful to the economy. You hear this argument anew with people like Bill Gates, Sr. who has no clue what he is talking about. But he sure "feels" strongly about it.
In other words, they say, without the tax financial power is concentrated in the hands of the rich whose interests are obviously adverse to "society's" interests. Somehow they will use that financial power to gain economic and political advantage. What a crock. If that were the case then, every successful institution should be stripped of wealth in order to protect society from their harmful effects.
The other reason is, they wish to control the way you raise your children as part of a social experiment. Such inherited wealth is bad for your kids because they won't work hard. Instead, the State has a duty to step in and stop you from making decisions that they believe are socially harmful -- to your kids. And we can't have that.
The real reason for the tax is class enmity. It is an ancient view of wealth that equates entrepreneurial success with theft. Which it was in pre-capitalistic societies through feudal and royal privilege and government-created monopolies. Today in free market1 capitalist societies, wealth is created through the entrepreneurial process. Businesses don't steal your money, they earn it. But old ideas, like stubborn bacteria, are hard to kill.
Today there is another idea floating around and that "we can't afford" to "cut" the estate tax and give "the rich money." In other words they are saying it's OK to tax the "rich" because "we" (i.e., the government) need it. Which is another way of saying that "we have wasted the taxpayers' money because of our foolish and wasteful spending and don't care where we get the money as long as we get it. Screw the rich." As I heard on a news report the other night, politicians have been using the argument that we need this money to balance the budget for the past 50 years and they haven't been fiscally responsible yet.
One last thought. If you think about the theory of taxation, almost all major taxes are based on some economic event: earning money, selling something at a profit, paying dividends or interest. So when has death become an economic event? It isn't and that's why it doesn't make any economic sense (assuming any tax makes economic sense). You work a lifetime to build a business and you've become successful and wealthy. You have been paying taxes on earnings, profits, and gains over the years and now they want to take a big chunk of your wealth just because you died. It's just theft. How is that morally justifiable?
1I'm not talking about current forms of crony capitalism such as exist in our financial markets which has resulted from government interference and manipulation. Free market capitalism is something else entirely.
Wednesday Worries – Ireland “Fixed” – Who’s Next?
Courtesy of Phil at Phil's Stock World
So many things are pissing me off today.
I got my political outrage out of the way in my earlier post: "Thanks for the Gas Money, Mr. President," so we don't need to talk about that again. Ireland, as of 7:45, has not actually voted to accept the EU's deal, which will pull $20,000 per Irish family directly from national pension funds to pay for the speculative mistakes of Irish Banks. Additionally, the Irish people are being asked to borrow another $75,000 per family from the EU at about 6% interest, also to pay for the speculative mistakes made by the Irish Banks. While this may seem insane - it's only a drop in the bucket compared to what Americans are spending to bail out our own speculators so why shouldn't they join the club?
At least Ireland gets to vote for their obligations, we have a Federal Reserve System where a single man, known as "The Bernank" is able to spend what is now heading towards $3.5Tn of OUR MONEY to bail out his banking buddies. That's $31,818 per American family spent over two years IN ADDITION to the stuff I complained about Obama and our spineless Government spending in the last post. As I said, things are pissing me off today! I should be in a better mood - we had a fabulous day trading in Member Chat yesterday. In yesterday's post, I closed with "One last stab at making some bearish profits for us (see Morning Alert)" and you can click on that Alert, which was posted on Seeking Alpha and check out our trade ideas for the $10,000 to $50,000 Portfolio which included (at 7:22 am yesterday) QID Jan $10 calls, which opened at $1.80 and finished at $2 (up 11%), DIA Dec $114 puts, which opened at .80 and finished at $1.33 (up 66%), XRT Jan $44 puts, which opened at .35 and finished at .55 (up 57%), USO Jan $36 puts, which opened at .66 and finished at .90 (up 36%), PCLN weekly $400 puts, which opened at $.50 and finished at $1.40 (up 180%) and NFLX Jan $155 puts, which opened at $1.70 and finished at $2.30 (up 35%) but should look much better this morning, where we will exit. Of course I featured the idea to short NFLX last Thursday in the Morning Post (which you would get at 8:30 every morning in progress if you subscribed!) and we talked about shorting oil in the Weekend Post and I mentioned XRT last week as well so it's not like these are even our "super-secret" trade ideas - this is just the stuff that looked obvious enough to risk our small portfolio plays on (as you don't want to take too much risk in a small portfolio, even when it is aggressive like our virtual $10,000 Portfolio). Once we got into Member Chat for the morning we went with more aggressive trade ideas like PCLN weekly $410 puts at $1.60, which finished the day at $4.20 (up 162%) and 6 other plays that we're not done with yet plus shorts on the oil futures at $90 that worked out very well. So why am I angry? You can't really have a better day than we had yesterday. Yesterday is the reason we have sat patiently (well kind of patiently) in cash for a month as we finally got an opportunity to commit to a whole bunch of very obvious trades, the most trade ideas I've had in a single day since early September, when we jumped on Uncle Ben's bullish bandwagon. Sure we find things to trade every day but these are the opportunities we wait for. I guess I'm pissed because we had to pull our December short plays off the table because the cartoon bears have warned us that they will be "Buying the F'ing Dips" and we know better than to argue with cartoon bears because it's simplistic little BS premises like that that rule this market. Ah, that's why I'm angry! As I keep saying, I don't enjoy day trading - it's not satisfying but it's what we do while we wait for real investment opportunities to come along. While it may be exciting to make 100% on a trade in a single day - it's small money and a tedious (and stressful) way to build up a portfolio. I suppose at heart, I'm a long-term investing coupon-clipper but those kind of investors are being chewed up and spit out in this market and, while we found many, many things to buy earlier in the year, now we're down to one or two long-term opportunities a day while most of the rest of the market looks better as a short. But you can't even stay short past the closing bell. Even as I write this post our paranoia in taking the money and running (our usual strategy) on our quick gains is looking justified as the dollar is, as usual, being shoved off it's overnight highs (used to prop up the Nikkei in our famous "3am Trade") during the slower EU lunch break in order to now goose the US futures to give US markets the best possible open on the least possible amount of volume (ergo cost to the Gang of 12). Despite debasement efforts by Obama and The Bernank yesterday, the dollar still rose back to 80.81 in overnight trading and that sent the Dow futures all the way down to 11,285 but don't despair - they've already been goosed back to 11,350 - just 5 points shy of yesterday's weak close. See, in a "normal" market we would have simply stayed short because clearly the momentum was down and the fundamentals indicate that all the efforts of Obama, The Bernank, the BOJ, the BOC, the ECB... are "too little, too late" to put the Humpty Dumpty global economy back together again. Some of the fundamentals we're watching: These are just TODAY'S headlines and they all add up to RISK. Lack of risk recognition by the markets was the primary reason I called for cash in early November. We are approaching 2008 pre-crash market highs with many stock trading higher than they were then on LESS revenues than they had at the time. Meanwhile, 10% of our population is unemployed, consumer credit is down by over $1,000,000,000 (15%), household wealth is down 20% and income is down while the CPI, even by BS Government measures, is up 5% since then, effectively giving those people who still have jobs 5% less to spend anyway. And when you consider that discretionary income is just 20% of income - if the 80% they HAVE to spend went up 5%, then that's 4% of discretionary income gone, which is 20% of discretionary income out the window - FOR THE PEOPLE WHO ARE STILL WORKING. The other 10% have ZERO to spend and that's not good either. All of this is being ignored as "investors" buy stocks on the hopes that they will expand sales internationally and keep cutting costs despite the same inflation the speculators are using to justify their very high valuations. We're effectively writing off the US economy and placing all of our bullish eggs in the global basket - even though they have 20% unemployment "over there." - that's kind of nuts, don't you think? I'm not even going to ask if the above chart (from Calculated Risk) disturbs you . Clearly, from the results of the last election, it does not. We are over 6M jobs away from recovery and we added less than 40,000 last month. At least in Ireland, their population is shrinking, with 65,500 people (1.5%) abandoning the sinking ship as of April of this year. That's less likely to happen in America as Mexico is not that attractive and Canada doesn't want us and most people can't afford to move anyway as they are upside down on their mortgages so we, as a people, sit and wait. We sit and wait for something good to happen. Any minute now... Something good is bound to happen... NOW! OK, maybe not now but really soon - something good has got to happen, right? That pretty much sums up our national policy - we don't actually do anything to create jobs but if we sprinkle enough magical fairy money on the rich, we're sure they'll start hiring people real soon! Maybe as soon as they are done merging and acquiring smaller companies with all that money where they then create efficiencies by laying off 50,000 people a month (Challenger Job Cut Report) while more and more jobs are outsourced every day ($6Tn worth of jobs are currently outsourced). And why not? There are huge tax advantages to outsourcing US jobs - tax advantages that our President is perpetuating as he bends over and accepts the massive Republican tax cuts for the wealthy on behalf of the American people. Did I mention I was pissed? Good, then moving along... So we kept our Jan shorts and didn't add any longs because we expect a bounce on the usual opening nonsense but I don't see enough dry powder left for the bulls to take us over that critical Dow 11,500 mark. Meanwhile, CAT is way too high and they are a Dow component, as are XOM, CVX, IBM and MCD - all stocks that are major components in the price-weighted Dow and are more likely to pull back than move higher. EU money printing will not inflate our stocks - it may even boost the Buck and that would be bad for commodities, who had a pretty rough day yesterday (and we shorted a few). I wish it were easier and I wish we could just say "CAT is overbought so we're going short" but the fundamentals of the stock are trumped by rumors of infinite Chinese demand and inflation expectations that somehow ignore the negative impact of rising steel prices and increasing borrowing costs on the company. Of course the weak-dollar expectations have everyone moving into stocks, which are just another form of commodity to trade and, even as I write this, the dollar is being jammed back below 80.50 to goose the US open. At least we know how this game is rigged and we can have lots of fun betting the suckers never do find that red queen but what a shame that this is what the global economy has been reduced to - a shell game - and it's an empty shell at that!
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Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
Fox <b>News</b> Dubs Elie Wiesel 'Holocaust Winner'
shitlox news........are we morons........you decide? right wingnut garbage...delivered in a carnival barker style ! Reply. 5. 6. Flag as Offensive. Seems fair on Dec 22, 2:03 PM said: Since it never happened. Who cares? ...
Facebook Makes <b>News</b> Feed Filters Available To All
It looks like Facebook has made its revived news feed filters available to all users, after initially made them available selectively last week.
Ben Sherwood - ABC <b>News</b> | Attack Video | Mediaite
If a video posted to Vimeo is to be believed, there are some insiders at ABC News who don't really care very much for newly-named boss Ben Sherwood, described in the video as the Draco Malfoy of Broadcast News. The video--essentially a ...
bench craft company scam
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