Murray Rothbard on Tax Day

Murray N. Rothbard at the lewrockwell.com on Tax Day

April 15, that dread Income Tax day, is around again, and gives us a chance to ruminate on the nature of taxes and of the government itself.

The first great lesson to learn about taxation is that taxation is simply robbery. No more and no less. For what is "robbery"? Robbery is the taking of a man’s property by the use of violence or the threat thereof, and therefore without the victim’s consent. And yet what else is taxation?

Those who claim that taxation is, in some mystical sense, really "voluntary" should then have no qualms about getting rid of that vital feature of the law which says that failure to pay one’s taxes is criminal and subject to appropriate penalty. But does anyone seriously believe that if the payment of taxation were really made voluntary, say in the sense of contributing to the American Cancer Society, that any appreciable revenue would find itself into the coffers of government? Then why don’t we try it as an experiment for a few years, or a few decades, and find out?

But if taxation is robbery, then it follows as the night the day that those people who engage in, and live off, robbery are a gang of thieves. Hence the government is a group of thieves, and deserves, morally, aesthetically, and philosophically, to be treated exactly as a group of less socially respectable ruffians would be treated.

This issue of The Libertarian is dedicated to that growing legion of Americans who are engaging in various forms of that one weapon, that one act of the public which our rulers fear the most: tax rebellion, the cutting off the funds by which the host public is sapped to maintain the parasitic ruling classes. Here is a burning issue which could appeal to everyone, young and old, poor and wealthy, "working class" and middle class, regardless of race, color, or creed. Here is an issue which everyone understands, only too well. Taxation.

War on Savings: Australia Doubles Retirement Taxes

Crisis or no crisis, Cyprus may have set a trend for governments to seek ways to tax private sector savings. 

Australia has reportedly doubled taxes on retirement savings.

Here is the eloquent Simon Black of the Sovereign Man

Though Australia’s national balance sheet is comparatively quite strong, the government has been running at a net deficit for years… and they’re under intense pressure to balance the budget.

The good news is that Australia now has a goodly number of investor-friendly immigration programs designed to bring productive foreigners into the country, similar to the trend we’re seeing across Europe.

On the flip side, though, the Australian government has just announced new rules which penalize citizens who have responsibly set aside savings for their own retirement.

Any income over A$100,000 drawn from a superannuation fund (the equivalent of an IRA in the United States) will now be taxed at 15%. Previously, all such income was tax-free.

The really offensive part about this is that the government is going to tax people’s savings ‘on both ends,’ meaning that people are taxed on money they move INTO the retirement fund, and now they can be taxed again when they pull money out.

The Cyprus debacle drew a line in the sand– fleecing people with assets, or income, in excess of 100,000 dollars, euros, etc. is now acceptable. This is the definition of ‘rich’ in the sole discretion of governments.

And make no mistake– if it can happen in Australia, which still has reasonable debt levels despite years of deficit spending, it can happen in bankrupt, insolvent nations like the US.

We can see from the following charts why.

The Australian government has embarked on a spending spree since 2009. Australia’s fiscal balance has been deteriorating since.

This shows of the Emmanuel Rahm syndrome or Austrian economist Robert Higgs’ ratchet effect where crises have always been an excuse to justify government expansion.

And by doing so Australia’s government has been ramping up debt. External debt grew by about 30% since 2009, while debt to gdp has began to reverse from years of austerity or fiscal “discipline”. 

And as I have earlier pointed out, Australia has also been manifesting signs of bubbles

Australia’s credit to the private sector as % to gdp is now about 128%

 

While the banking sectors exposure account for 145.76% of the gdp in 2011.

And like almost every country, low interest rates have been a principal factor in driving credit expansion

Despite the above, Australia’s stock market has hardly recovered from the 2008 global financial debacle. (all the wonderful charts above are from tradingeconomics.com)

This means much of the credit expansion has been directed to the property sector, as measured by the phenomenal manic growth of housing prices (chart from vexnews). 

This proves that much of today's statistical economic growth have been Potemkin Villages

Yet once the global pandemic of bubbles pop, we can expect governments coordinate the dragooning of the public’s resources via more confiscation of savings to advance the interests of the political class via bailouts and more quack Keynesian fixes.

Of course this relationship will persist until people tolerate them. However, eventually the curse of the laffer curve will prevail or a financial repression (tax) revolt can also be an expected response.

Tax Exodus: Former French President Nicolas Sarkozy Mulls Move to London

The curse of the welfare state and the Laffer Curve continues to haunt French politics. Aside from the controversial self-imposed exile by French actor Gérard Depardieu, the former French President Nicolas Sarkozy has been revealed as having plans of emigrating to London to dodge French “soak the rich” policies

From the Daily Mail,

Suddenly a handshake from David Cameron probably seems an awful lot more inviting.

Former president Nicolas Sarkozy could become the next wealthy Frenchman to flee to Britain over his country’s looming tax hikes on the rich.

Mr Sarkozy – who famously snubbed the Prime Minister’s attempt to shake his hand after Mr Cameron vetoed changes to the EU treaty in 2011 – is reportedly planning to move to London to set up a £800million investment fund.

The 57-year-old, who was ousted from office last June, has amassed a fortune from £150,000-an-hour public speaking engagements and is now said to be trying to raise capital from investors.

If the move goes ahead, the controversial Frenchman will become the latest to escape a potential top tax rate of 75 per cent in his home country.

He and his former supermodel third wife Carla Bruni-Sarkozy would be likely to settle in an affluent district like South Kensington – so becoming the most high profile Gallic celebrity couple in the city.

But the former president is under investigation for corruption in France, and if he does cross the Channel there will be outrage.

The bizarre thing is that politicians and public officials themselves are looking to shelter their assets elsewhere. The case of the top French taxman who is under investigation for stashing money overseas is another.

If Japan has a declining population due to fertility rates, France may soon join Japan as more people move away from repressive tax policies. Otherwise, France may soon experience a tax revolt

And as pointed out events today has been validating the warnings of the great French economist Frederic Bastiat

A Looming Tax Revolt? Protesting French Entrepreneurs Goes Viral

Because government holds the badges and guns, they haughtily presume of the complete subjugation of their subjects. They fail to realize that as humans, their constituents will respond to policies based on the latter’s self-interests—which could mean either life or death.

In France, the class warfare policies of President Francois Hollande has compelled entrepreneurs to bond together to demonstrate or protest on the highly repressive tax regime being rammed down their throats. 

The French entrepreneur’s grievances has gone viral (above logo is from their Facebook page) 

From Bloomberg,

French entrepreneurs have a new mascot -- the pigeon.

Using the bird’s role in French slang as the “sucker,” owners of startups have formed a group dubbed “Les Pigeons” to show that President Francois Hollande’s new taxes make them the fall guys for France’s economic woes. They are protesting the almost doubling of the tax rate on capital gains generated from selling a business in Hollande’s budget for 2013.

The group has gathered more than 34,000 supporters in less than six days on Facebook Inc.’s social network and spurred more than 3,600 posts under the “#geonpi” tag on Twitter, with the founders of Iliad SA (ILD), Vente-Privee and Meetic SA (MEET) throwing in their voices of support.

“The government thinks France’s entrepreneurs are pigeons,” the movement’s initiators wrote on a dedicated Facebook page. “Anti-economic policies are crushing the entrepreneurial spirit and exposing France to a big risk.”

Entrepreneurs have for months called on France’s government to avoid slapping them with more taxes, saying it will dry up interest in creating new companies or drive startups away.

Socialist President Hollande, seeking to appease his base in his first annual budget last week, raised taxes on the rich and big companies and included a minimum of spending cuts to reduce the deficit. The government introduced a 75 percent tax for income above 1 million euros ($1.29 million).

Class warfare policies foster social divisions. This means that if the French government will remain recalcitrant in the pursuit of harsh socialist redistributionist policies, untoward consequences or the risks of capital flight,  tax revolt and or civil unrest rises. 

Moreover, by assailing the productive tax paying class, French fiscal position will likely worsen thus the likelihood of bringing down the entire euro project with it.

So instead of attaining “social justice”, class warfare policies will only lead to greater risks of intensifying the current crisis, a violent outcome and social instability.

Again politicians and their sycophants never learn.