Steroids For The State — And You’re The Dealer

You filed a tax return on money you’ve already paid to the government. April 16, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Steroids For The State — And You’re The Dealer SEAN RING Dear Reader, Uncle Miltie didn’t mean to do it, but the repercussions are undeniable. Milton Friedman played a significant role in developing income tax withholding from employees' paychecks during World War II. As an economist at the Treasury Department, Friedman was part of a technical group that developed the withholding system to collect taxes as income was earned rather than a year later. The primary objective of introducing the withholding system during World War II was to finance a significant portion of the wartime expenditure with tax money, thereby mitigating the risk of inflation. Despite his later regret and call for the repeal of withholding, Friedman acknowledged his inadvertent contribution to a system that made taxes seemingly invisible and painless for taxpayers, paving the way for the current practice of direct tax deductions from employees' paychecks. [Friedman wrote]( “At the time, we concentrated single-mindedly on promoting the war effort. We gave next to no consideration to any longer-run consequences. It never occurred to me at the time that I was helping to develop machinery that would make possible a government that I would come to criticize severely as too large, too intrusive, too destructive of freedom. Yet, that was precisely what I was doing.” Before World War II, when income tax rates were comparatively low, most people paid tax in a lump sum in March. Tax day was the shock it should be for the nation. The country got to see in real-time what the government actually cost them. Yesterday was merely the day Americans filed. In a couple of months, they’ll get a “refund.” And they celebrate. Pathetic. [External Advertisement] [The #1 Energy Passive Income Investment for 2024]( It's not a stock, bond or private company... But this little-known alternative investment could hand you BIG MONTHLY INCOME from the oil and gas surge in 2024. [CLICK HERE TO FIND OUT WHAT IT IS]( [Click Here To Learn More]( Living in Singapore When I lived in Singapore, I was blown away. My paycheck arrived “gross” every month. That is, I received the entire paycheck in my bank account. Then, it was my responsibility to set aside enough money to pay my taxes at the end of the year. The Singapore government allowed a 12-month interest-free payment scheme if I couldn't do that. The only caveat was that if I were to leave Singapore permanently, I would have to pay all the taxes due before I got on the plane. Believe me, Reader, they enforce it. A friend of mine was stopped at the airport gate and forced to stay until he paid up. It took him a year to do it. While the US system infantilizes the taxpayer, the SG system forces the taxpayer to grow up and take charge of his affairs. I know I’m much better with my money because I was forced to save for my taxes. And I felt the pain of seeing that colossal cash outflow every year, though it was far less than I would’ve paid had I not renounced my US citizenship. Steroids For The State Withholding income tax at source is the equivalent of an interest-free loan to the government because the money that is withheld from an individual's paychecks is held by the government until the individual files their income tax return. During this time, the government uses the withheld funds for its own purposes, effectively borrowing the money from the individual without paying interest. This means that the individual isn’t earning any interest on the withheld money, and the government uses the funds to finance its operations without incurring additional costs. The withheld funds are typically refunded to the individual if they have overpaid their taxes, but this can take several months. In the meantime, the individual has effectively provided the government with an interest-free loan. This is significant for individuals who have large amounts withheld from their paychecks, as they may be missing out on the opportunity to earn interest on that money. So you’re not losing only the cash itself, but the opportunity costs of that cash, too. Why The State Loves Withholding Income Tax These may seem like positives to you, but a government taking your money should be the hardest thing in the world. Withholding tax ensures that employees have enough money to pay their taxes, making it harder for them to evade taxes. It also makes it practically impossible for tax protesters and evaders to keep their money out of the IRS's hands. Withholding tax lowers collection costs because most people have all or most of their taxes sent to the government by their employers. Fewer taxpayer dollars are needed to fund the IRS's collection efforts. The government uses the money sooner and steadily, allowing for a more predictable and stable revenue stream. This is particularly useful for financing bloated government programs and operations. Withholding tax reduces the risk of non-compliance and underreporting of income, as it requires payers to withhold tax and remit it to the government. Tax authorities take your income as quickly as possible. Withholding tax increases transparency in the tax system, allowing tax authorities to track and monitor tax payments more efficiently. Then, it’s easier to identify and address issues of non-compliance and underreporting. Withholding tax encourages compliance with the tax system, as it makes it more difficult for taxpayers to avoid paying their taxes. This helps ensure that the government receives the revenue it needs to fund public expenditure and social programs sustainably. Wrap Up I’m sure yesterday sucked. And getting a return in a few months might feel good. But I encourage you to consider what happens when your employer pays you directly. And if you haven’t already, start a side hustle that pays you the total amount. When you get around to paying taxes on that, you’ll understand much better the slogan “taxation is theft.” And if you’ve already got a thriving business paying the government the fewest times a year you can, I salute you. Starving the beast is the only way to solve our problems. All the best, Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. In Case You Missed It… The Ominous Mountain SEAN RING Thursday night, I set off from Asti to Turin, where I’d take the short flight down to Naples. Four months ago, Aussie Trav, Irish Jerry, and I agreed to meet in Italy to make it easier for me to show up. Regrettably, I had missed our last two attempts at a lads’ weekend due to family stuff. So I write with a heavy head this morning, as there was more than enough wine, beer, and limoncello to go around this weekend. And my hotel bed was so soft I barely slept more than three hours at a time. Trav, Jerry, and I embarked on our journey at London Business School in September 2000, a time when the world was simpler. We navigated the complexities of our studies and the evolving global landscape, finally graduating in July 2002. Our shared experiences and the bonds we formed during those years are a testament to our enduring friendship. We talked about many of those complications this weekend, from war in Ukraine and Israel to an incredibly indebted United States government. Those situations and more seem like an inexhaustible mountain of problems crying out to be solved. And then I looked up and saw The Mountain. The Mountain Credit: Sean Ring As we sat high above the harbor, overlooking the fabulous Gulf of Naples, we took in a breathtaking view of Mount Vesuvius. While I was sipping on my Aperol spritz, I was thinking, “How do people live with this?” Reader, when I say, “It’s right there,” I mean it’s right there. If this volcano’s west face collapsed, there would be no more Naples. In the famous AD 79 eruption that buried Pompeii and Herculaneum, Neapolis (“New City,” as Naples was then called) was only spared because the south side of the mountain collapsed, and most of the ash and pyroclastic flows went that way. What’s much less known is that there was a terrible eruption in AD 60. The eruption caused notable destruction and was followed by a series of seismic activities and minor eruptions leading up to the catastrophic event in AD 79. In essence, it took nearly twenty years of smaller seismic events to build up to the main event. Is that what’s happening to us now? [Stocks Crash Whenever This Happens ad]( Ever since 1955, there is ONE indicator that has been 100% right about stocks. Whenever it appears, stocks crash. Jim Rickards calls it “The Black Pattern.” Because it is quite literally an Angel of Death for the stock market. And this Black Pattern is telling us 2024 could be the worst year for stocks we’ve seen yet. Consider this a WARNING and to alert you of a MASSIVE opportunity that could be extremely lucrative to investors. [The full breakdown is here.]( [Click Here To Learn More]( Current Events Was the 2008 Financial Crisis the pivotal event or merely a precursor to what might be looming on the horizon? This is the question that keeps me up at night. Since 2009, we’ve experienced the following events: - The European Sovereign Debt Crisis (2010-2015): This crisis was characterized by the inability of some European countries to repay their government debt due to the aftermath of the 2008 financial crisis. The affected countries included Greece, Ireland, Portugal, and Spain. - The Chinese Stock Market Crash (2015): In June 2015, the Chinese stock market sharply declined, resulting in significant losses and triggering concerns about the health of the Chinese economy. - The 2019-2020 Global Economic Slowdown: Several factors cause this slowdown, including trade tensions between the United States and China, geopolitical risks, and the COVID-19 pandemic. The pandemic, in particular, led to a global recession, with many countries experiencing negative economic growth. - The 2020 Oil Price War: A price war between Saudi Arabia and Russia led to a significant drop in oil prices, causing financial stress for oil-producing countries and companies. This event also contributed to the 2019-2020 global economic slowdown. - The Evergrande Debt Crisis (2021): Chinese real estate developer Evergrande faced a debt crisis, with concerns about its ability to repay its debt. This crisis raised concerns about the stability of the Chinese property market and the potential impact on the global economy. Notice something? The United States only drove one of these crises directly. But politically, things have become more complicated, not less. The US is trying to find its way out of Ukraine while keeping face. It’s trying to get Israel to back off the Palestinians and Iran to back off Israel. And we hope the US isn’t trying to start something over Taiwan. And yet, Biden keeps tripping over his own feet. To wit, from [Intellinews]( (bolds mine): The London Metal Exchange (LME) and Chicago Mercantile Exchange (CME) have blocked the trade of aluminum, copper, and nickel produced by Russia, the UK government accounced late on April 12. The move will drive Russia deeper into China’s embrace as Shanghai is now the only major commodity exchange that is still accepting and trading Russian metal. To mitigate the risk of market instability, the government said that the new measures would exempt existing stocks of Russian metal on the two exchanges. These stocks can still be traded and withdrawn without restrictions, providing continuity for market participants. The UK ban is not expected to affect prices in the short-term as there are large stocks of Russian metal in the LME warehouses. This move, part of existing bans, aims to intensify restrictions on prohibited Russian metal exports, thereby curtailing a 'crucial source of revenue for the Kremlin,” the UK said. The key Russian metals of titanium or platinum group metals were excluded from the ban as Russia remains a major supplier of both of the hard-to-find metals. You simply cannot fight inflation with metal bans. All three of those crucial metals will get more expensive. And with this, the stock market has gotten wobbly. Friday was a rough day: During the session, investors drove gold, silver, and copper to new highs before violently selling off. Jared Dillian, author of The Daily Dirtnap, posted this on Friday: Credit: [@dailydirtnap]( I’m hanging onto my gold, silver, and copper miners, that’s for sure. Wrap Up As the sun set Saturday night over Naples, Vesuvius faded to black, and the city came alive with its lights. It was a gorgeous scene, with excellent company and fine wine. But Vesuvius was still there, lurking in the distance. And yet, the sun rose on Sunday, and life continued. Since I was in Naples, I did as the Napolitans do: I ate pizza for breakfast. All the best, Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. 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