Worldwide Theft, Imperial Style

His Majesty’s minions are looking to implement US-style citizenship-based taxation. [The Rude Awakening] March 12, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Worldwide Theft, Imperial Style [Sean Ring] SEAN RING Dear Reader, The Empire is dead as a doornail, old Chaz Dickens would write, were he still alive. However, the fact that London is one of the top three cities in the world for finance obscures the broken-down wreck known as the United Kingdom. If you think Janet Yellen’s coffers at the US Treasury are dry, you should see the disaster UK Chancellor of the Exchequer Jeremy Hunt has to deal with. At least Yellen has the US military and the world’s reserve currency in her favor… for now. Since Suez, no one has cared about the British pound, and the British have long since outsourced their military misadventures to… the United States. So, I read [Merryn Somerset Webb’s nonsense in Bloomberg]( with a mix of blood-boiling anger and throw-my-bald-head-back-and-laugh-my-ass-off incredulity. She urged the UK to implement US-style citizenship-based taxation on UK expats. If taxation is the answer, you’re asking the wrong question. Here’s why. Taxation is Theft In The Ethics of Liberty, anarchocapitalist Murray Rothbard presents a libertarian viewpoint. He famously argues that taxation is tantamount to theft. Rothbard bases his argument on the principle of self-ownership. He asserts that individuals own themselves and the fruits of their labor. He argues that any coercive claim to a portion of someone’s labor is equivalent to claiming partial ownership over the person themselves, which contradicts the principle of self-ownership. From this perspective, taxation is seen as coercive because it’s imposed by the government under threat of penalty or imprisonment if not paid. Individuals cannot opt out of taxation, making it fundamentally different from voluntary transactions or contributions. In voluntary exchanges, both parties consent to the terms and perceive themselves benefiting from the deal. Taxation, however, doesn’t require the consent of the taxed citizenry. Thus, Rothbard equates it to theft—an involuntary taking of property. When your commie friends claim The State has “the right to a portion of your income,” tell them The State is not a party to your employment contract and that you never signed Rousseau’s non-existent social contract. Rothbard also emphasizes the ethical dimension by arguing that if theft is morally wrong for individuals, it doesn’t become morally acceptable when carried out by a larger group, even if that group is the government. This standpoint challenges the moral legitimacy of government financing through taxation, suggesting that all interactions and transactions should be voluntary to respect individual sovereignty and rights. [Crypto Millionaire Reveals His #1 Coin for 2024]( Did you miss the Bitcoin boom? Don't worry - James Altucher (who called BTC success at $114 in 2013) just revealed his top crypto for this year, with the potential to turn $100,000 into $10 MILLION by 2030. [Click here to get the ticker 100% FREE now before it explodes >>]( [Click Here To Learn More]( What Tax is Really For Why do governments torture us for tax? Well, there are a few reasons. The primary purpose of taxes is to fund government operations and services. This includes infrastructure projects like roads and bridges and public services like education, healthcare, defense, and welfare programs. Without taxes, the government couldn’t do these things. Therefore, the private market would have to tax care of it. We can dream, can’t we? Taxes are theoretically used to reduce economic inequality within a society. Progressive taxation systems allegedly aim to redistribute income from the wealthier segments of society to those in need through social welfare programs. Taxes fund public goods and services that supposedly benefit all members of society, including those not excludable or rivalrous in consumption, such as national defense, public parks, and street lighting. Taxes influence economic behavior and allocate resources how the current government sees fit. For example, taxes on cigarettes and alcohol (sin taxes) aim to reduce the consumption of these goods due to their health risks. Amazingly, these same governments don’t think income taxes reduce the incentive to make an income. Governments influence economic activity through fiscal policy, including taxation. During economic downturns, lowering taxes stimulates spending and investment, helping to revive economic growth. Or, like the Biden administration, governments can just spend money they don’t have to pump up the economic numbers. Specific tax policies encourage investment and development in particular sectors or regions. Tax incentives for research and development, small businesses, or investments in renewable energy are examples of how tax policy can steer economic growth in desired directions. Excellent Reasons NOT To Implement This There are excellent practical reasons not to implement a worldwide citizenship-based income tax. - Double Taxation: Citizenship-based taxes often lead to double taxation, where citizens end up paying taxes on the same income in both their country of residence and their country of citizenship. While tax treaties and foreign tax credits aim to mitigate this issue, they don't always entirely prevent double taxation. This is unfair and economically inefficient, as it might discourage global mobility and international career opportunities. - Complexity and Compliance Costs: Managing tax obligations in two countries significantly complicates an individual's financial affairs. The need to understand and comply with the tax laws of two jurisdictions increases the risk of errors and the costs associated with hiring experts to navigate these complexities. This complexity seems unnecessary and is a barrier to living and working abroad. First, you can’t do your taxes on your own and not expect to get audited. So, you must hire an international accountant who charges far more than H&R Block. The accounting costs can overtake the tax owed. For years in the UK, I paid for an accountant to file, as it was legally required. But I paid no US tax because my UK tax was higher. What a complete waste of money! - Questionable Ethical Justification: Taxing citizens based on citizenship rather than residency raises ethical questions about what exactly citizens are paying for. Taxes are generally paid in exchange for government services and infrastructure. When citizens live abroad, they don't utilize these services, yet they're still required to contribute, which is - you guessed it - taxation without representation. - Impact on Global Mobility: The ability to move and work across borders is increasingly important in a globalized world. Citizenship-based taxation can deter individuals from pursuing opportunities abroad due to the financial and bureaucratic burdens it imposes. This is not just a loss for the individuals but also for global economic integration and the sharing of skills and knowledge across borders. If the US wants to retain its influence, it needs more Americans abroad, not less. The UK has expats worldwide, and they help London retain its influence. - Discourages Global Investment and Entrepreneurship: For those looking to invest or start businesses in their country of residence, the fear of punitive taxation from their country of citizenship can be a significant deterrent. This is particularly counterproductive from an economic standpoint, as it stifles cross-border investment and entrepreneurship, essential drivers of global economic growth. While each of these points has its nuances, together they build a case for reconsidering the fairness and wisdom of citizenship-based taxation, especially in an interconnected world. A Webb of Nonsense [In]( Merryn Webb wrote:]( Within all this, the UK government might be missing a mega money-raising trick. It makes sense to charge those with foreign passports living in the UK tax on their worldwide incomes. Might it also make sense to tax those holding UK passports who are living abroad on their worldwide incomes too? That’s the case for those holding US passports. Until now, UK expats who have lived abroad (or been domiciled abroad for tax purposes) for more than 15 years have not been entitled to vote in UK elections — which given they don’t pay UK taxes has seemed reasonable. No representation without taxation. But that has just changed. From this year, anyone with a UK passport can vote in UK elections as long as they were once resident and once registered to vote. On government estimates, that adds up to around 3.5 million people and these people are generally more highly paid than passport holders living in the UK. A UK passport has value — it regularly sits in the top five in the world for visa-free travel, for example, and comes with access to a huge range of non-contributory state benefits. With that in mind, surely those who live abroad should be putting something into the UK pot — particularly if they are now able to vote. First, using the US as an example of good tax sense is ridiculous. When it gets too onerous, even people want to leave the US: [pub] Second, just because the government lets me vote in elections doesn’t mean I’m willing to pay a percentage of my income for the privilege. The intelligent among us know that no matter what political system is in place, liquidity trumps voting every time. Third, Webb rightly points out that UK passport holders abroad make more than those still in the UK. Of course! It’s rare to move to a higher-tax country for fun. Finally, I’ve not felt that “huge range of non-contributory benefits.” But mostly, His Majesty’s Government is broke because The Stupid Party has been running it into the ground for the last 15 years, and The Stupider Party bankrupted the country in 2008, which was in fine fettle when it won in 1997. Not my fault. So piss off. Wrap Up There’s no help for this sort of nonsense. You just have to keep your money as safe as possible. Merryn Webb is free to donate more of her income to the UK government. Leave my expat bank account out of this. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( P.S. James Altucher’s predictions since our Paradigm Shift Summit in Vegas last October have completely changed the way I look at crypto… and altered the size of my bank account, to boot! With all this talk of government taking your hard-earned cash, I hope you’ve at least dipped your toe into crypto. If not, James is sharing the name and ticker of his #1 investment idea, free of charge, with no sign-up required. He calls it, “[The #1 Coin of the Decade]( and predicts it will crush Bitcoin’s performance, potentially soaring 100 times over by 2030. But if you want to act on James’ new prediction… I urge you to make a move before March 13th… Before this trigger event goes live. [Get in there and watch James Altucher’s Urgent Crypto Prediction Now!]( In Case You Missed It… Optimism Attacks! [Sean Ring] SEAN RING Paradigm Press’s Options Expert and self-appointed Head of the Department of Optimism, Alan Knuckman, relentlessly streams good news over our Slack editorial channel. Like Malcolm McDowall in A Clockwork Orange, my eyelids feel taped open as I read puff piece after puff piece Ivy League-educated interns write for the mainstream media, such as The Wall Street Journal. And I laugh and think of Dr. Pangloss. If you haven’t read Voltaire’s Candide, get yourself a copy. It’s only about 150 pages of some of the best literary hilarity ever committed to paper. Dr. Pangloss is a fictional character from the satirical novella Candide, ou l'Optimisme (Candide, or Optimism), first published in 1759. Pangloss is Candide's mentor and a staunch optimist, famously asserting that “all is for the best, in the best of all possible worlds." Voltaire wrote Candide and its optimism to send up the ideas of the German philosopher Gottfried Wilhelm Leibniz. I’m more familiar with Leibniz from his work on calculus, but there’s a reason he’s known as the “last universal genius.” Throughout the story, Pangloss maintains his optimistic outlook despite experiencing and witnessing a series of calamities and misfortunes. His unyielding optimism serves as a satirical device to criticize the optimistic philosophy of the time, implying blind optimism is both unrealistic and unhelpful in the face of the world’s harsh realities. I bet Voltaire is spinning in his grave as we speak. The Journal Alan Pangloss Knuckman posted a WSJ article over the weekend titled “[Jamie Dimon and Ray Dalio Warned of an Economic Disaster That Never Came. What Now?]( The article names such luminaries as Dimon, Dalio, and DoubleLine’s Jeff Gundlach as experts who got it wrong. One sympathizes. (To be fair, for nearly all of 2022, I targeted an SPX level of 3,213. The article states, "Gundlach recently predicted a recession this year and a drop to 3200 for the S&P 500.” I just don’t see it happening yet.) But this particular passage got my goat: The experts were way off. They underestimated the impact of government stimulus and the resilience of consumers and businesses. And they were too skeptical of the Federal Reserve’s ability to push inflation lower without sparking a recession. The economy continues to grow at a steady clip. Inflation is getting closer to the Fed’s goal of 2%, unemployment remains near a half-century low and the stock market is near record highs. In response, I wrote on the Slack channel: - There’s no recession because of the fiscal spending. That’s the G in the GDP formula. GDP ain’t gonna shrink when the government blows out the deficit. It’s mathematically impossible. - The inflation story isn’t over yet, not by a long shot. - Unemployment looks good. How about the labor force participation rate being at mid-70s levels? - Stock market is up, yes. So is margin debt. Was I correct… or hasty? [Urgent Publisher Warning]( Hi, I’m Matt Insley. I’m the Publisher at Paradigm Press. Today, I have [bad news to share]( regarding the future of Jim Rickards’ newsletter. [>> Click here now for my announcement.]( [Click Here To Learn More]( The Numbers “There’s no recession because of the fiscal spending. That’s the G in the GDP formula. GDP ain’t gonna shrink when the government blows out the deficit. It’s mathematically impossible.” I went to the Bureau of Labor Statistics to get the numbers: [pub] Recall that GDP = C + I + G + (X - M) if you’re an unreconstructed Keynesian. Note that consumption indeed makes up nearly 70% of the US economy. This is much higher than in other developed countries, where consumption is circa 60%. Notice that consumption and investment grew 2.4% and 2.3%, respectively. Those categories make up nearly 87% of GDP. So the “G,” as in “Government consumption expenditures and gross investment,” makes up the rest (as the trade balance is negative). G grew by 4.10%, much higher than C and I. It’s fair to say that Biden’s Booming Stimulus goosed the official GDP number by 50 basis points or a half percent. How much the knock-on effects of this stimulus caused C and I to increase is beyond my analytical ability. Incidentally, Jim Rickards mentioned, "The Federal Reserve has not been printing money for years, but rather reducing the money supply… the inflation is not from monetary policy but from fiscal policy and government spending.” I completely agree with Jim. And if you haven’t seen his latest YouTube video with Matt Insley, [catch it here](. “The inflation story isn’t over yet, not by a long shot.” I’ve got one chart for this: [pub] This is the percent change from a year ago. Yes, we’ve had disinflation. But we’ve had no deflation. And the Fed may still cut later in the year. Let’s revisit this later. “Unemployment looks good. How about the labor force participation rate being at mid-70s levels?” Yes, unemployment is still near the floor. But the civilian labor force participation rate isn’t so hot. [pub] The unemployment rate is the unemployed / labor force. The labor force participation rate is the labor force as a percentage of the civilian noninstitutional population. In the United States, the civilian noninstitutional population refers to people 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (penal, mental facilities, homes for the aged) and who are not on active duty in the Armed Forces. The good news is the people in the labor force are working. The bad news is that much less of the population is a part of the labor force. November 1977 was the last time the numbers were this bad. “Stock market is up, yes. So is margin debt.” This is another one where I’ve got one chart. [pub] Margin debt is on the rise after a significant falloff in 2022. We’d expect that. I conclude that a bunch of private and public debt is holding up this economy. Larry Summers Speaks Again! But the big shock came when I watched Bloomberg’s [Wall Street Week]( YouTube](. Looking like he just came off a keg stand at a frat party, Larry Summers claimed that the neutral, or natural, interest rate is much higher than previously thought. The neutral interest rate is the short-term interest rate that would prevail when the economy is at full employment and stable inflation. It’s the rate at which monetary policy is neither contractionary nor expansionary. So, in his backhanded fashion, he accused the Fed of being too accommodative (loose) already. Summers thinks the neutral rate is “closer to a 4-handle” and that we are already “at the foothills of bubbles.” It’s worth knowing the market still expects three rate cuts this year. Wrap Up Looking at the stock charts, there’s no reason to be short here. However, the market is starting to look a bit wobbly. But in this case, Leibniz, Pangloss, Knuckman, and their optimism win the day. Voltaire can sulk in his silk stockings. But I prefer to look at it like General Sir Harry Flashman, VC would: “Courage. And shuffle the cards.” Have a fabulous week ahead. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( [Paradigm]( ☰ ⊗ [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. 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