I work at a brokerage that has about 150 clients, almost all of whom qualify as high net worth investors. Since the last election we’ve all joked about the Republicans losing all reins of government, the appearance of the nanny state, and what will happen to American initiative. All conversations included a paragraph or so of stock liquidation. Until last week this was all talk. On Thursday last three of our clients began slowly liquidating their stocks with the intention of being out of the market within a month. The talk is rampant, but so far it’s mainly talk. So far…
The main problem with taxing wealth excessively is that wealth can move. These guys are all a keystroke or a signed document away from being residents and citizens of Dubai or any one five or six other countries. It CAN happen here; unlikely but a possibility.
The Free Market will not be denied. And if you try to deny it, the Free Market will move somewhere else. Which means that the capital that we as a country use to keep our economy moving will not be there when we need it. If you tax the hell out of someone, that person will do whatever they can to keep more of their own hard-earned money in their pockets and out of the greedy, clutching hands of the gummint. And that means moving their money to a country that won't take it from them hand over fist.
Well, just where do you think the money for loans comes from? Where do you think investment capital comes from? Do you think that banks own all that money they deal with? Hell no. That money belongs to someone else. When I put my money into a CD or a savings account, the reason the bank pays me interest is because THEY ARE USING MY MONEY. They use it to give out loans, or to conduct other business. The interest I accrue is my payment for allowing the bank to use my money.
Now, if the gummint decides that I have too much money in my savings account, and they take a big chunk of it, what reasons do I have for keeping my money in that bank? Why wouldn't I take my money out of a US bank and invest it offshore somewhere else that won't take as much in taxes?
Here's a Capital Gains tax calculator you can use to find out just how much money the gummint will take from you if you sold some stocks today. If the
Pray for President Bush to veto a whole bunch of spending bills from Congress. And remember just who you want to deal with in 2008.