In a concept paper called “Treat Wealth Like Wages”, the ranking member of the US Senate Finance Committee laid out a plan late last week to radically overhaul the tax code in a way never before seen.Just as you’d expect from the title.
His central idea is to tax wealth; if you own just about anything, this Senator wants you to start paying an annual tithe to the federal government.It’s sort of like how property tax works: you don’t actually -own- your own property. You’re just renting it from the government.They charge you a tax each year– some percentage of the property’s value– to use the land. And if you don’t pay your property taxes, they’ll come and take it from you.
Nowthey want to create a similar federal tax that applies to almost every major asset you own.This includes CASH in your bank account. Financial assets like stocks and bonds. Private business and partnership interests. Your entire real estate portfolio. Collectible assets like art and fine wine.Never mind that you’ve bought these assets with money that’s already been taxed. Now they want to tax it again, every year.
And when you die they want to tax it again.They even included Individual Retirement Accounts.Hell, for that matter they even proposed taxing “household goods” beyond a certain threshold. So you could even pay tax on your toaster oven.What I found really interesting about this proposal, though, is that the guy who authored it is NOT one of the 10,000 people running for President right now.In fact, this US Senator (Ron Wyden from Oregon) isn’t even up for re-election until 2022, at which point he’ll likely retire.
We’d expect to hear about wealth taxes from all the Bolshevik presidential candidates who are seeking attention and headlines. Or from some firebrand Twitter Queen who hates rich people.But Ron Wyden is neither of those. He’s a seasoned, 70-year old US Senator who created a detailed 33-page plan on why AND how to implement a wealth tax.This shows that the idea is really catching fire.The wealth tax, of course, joins a slew of other taxes and hikes that have been proposed by the motley gang of Bolsheviks.
Several candidates plan to drastically raise the Death Tax while slashing exemptions. Others want to raise the top income tax rate to 70%. Another wants to tax UNREALIZED (i.e. paper) gains on investments.They always say, of course, that they only want to tax the wealthy. They might even mean it.But take a look at the income tax itself as a great historical example.
Whenthe income tax was first implemented in 1913, it was intended to affect only the wealthiest households in America. Plus, the base rate was just 1%, and the top rate was 7%.It was only a few years later that the middle class got ensnared into paying taxes. And by 1922, there were FIFTY SIX different tax brackets, all the way up to 73%, with nearly everyone in America owing a ‘fair share’.
Point is, whatever they create to tax the rich almost always ends up affecting the middle class.And this latest proposal shows that the idea of a wealth tax has a LOT of momentum.It’s no longer some lofty sound byte. There are detailed plans and real support behind it… which means you might want to strongly consider your own options for a Plan B.For some people, that might even mean picking up and moving. It’s not such a radical concept… people do it all the time, especially state-to-state.
Justa few days ago, Billionaire Carl Icahn announced he was moving to Florida to save on New-York’s ever-increasing taxes.He also said that his whole office is moving with him… and that anyone who doesn’t move won’t have a job anymore.And a long list of billionaires have already moved to Florida to take advantage of this including Paul Tudor Jones, David Tepper, Eddie Lampert, etc.But for those who are willing to leave the mainland, there are even better places.Sir John Templeton, one of the first-ever billionaire investors, moved to the Bahamas late in his career.
And from his tax savings alone, he was able to increase his charitable donations by an ADDITIONAL $100 million per year.Puerto Rico is one place that offers exceptional tax advantages; investment income and capital gains are taxed at 0%… and corporate tax is just 4%… all in a tropical paradise that’s a 2 hour flight from the US mainland.US citizens don’t even need a passport to move here.
Because Puerto Rico is a US territory, moving to PR is no different than moving from New York to Florida.I’ve said it over and over again, but it’s worth repeating– these incentives won’t last forever.That’s why I insist the time to start strongly considering them and taking action is NOW.If you’re interested in learning more, you can read our in-depth report on Puerto Rico’s tax incentives.