Sanders- Tax the Rich

The Bernie Sanders Deception – Feel the Burn- Part 3

As previously pointed out, Sanders propagates the myth that he is a democratic socialist who wants the kinder, gentler version of socialism that operates in Scandinavian nations. The problem is it is a mythology that doesn’t really exist.  As pointed out, in an article appearing on federalist.com Why So Many Millennials Are Socialists, Sanders promotes the image that nations like Denmark, Sweden and Norway offer a far more generous social safety net (with appreciably higher taxes however) but doesn’t interfere with businesses or people’s consciences because they are based on what he calls democratic socialism.

As noted in the last post, by the Danish Prime Minister Lars Lokke Rasmussen stated:

Denmark is far from a socialist planned economy. Denmark is a market economy.

As noted in the aforementioned article, these countries actually are not socialist, but “socialistic”:

To accommodate their massive social welfare spending, these countries opened their economies to free-market forces in the 1990s, sold off state-owned companies, eased restrictions on business start-ups, reduced barriers to trade and business regulation, and introduced more competition into health care and public services.

In fact, today these countries outrank the United States on business freedom, investment freedom, and property rights, according to the Heritage Economic Freedom Index. So, if anything, the lesson from Scandinavian countries is that market reforms, not socialist ones, explain their prosperity.

So keeping in mind that Sanders lures with mythology let’s take a look at some other Sanders proposals in light of the real world.

Tax the Rich- Make Them Pay Their “Fair Share”

According to Sanders website:

If we are serious about reforming the tax code and rebuilding the middle class, we have got to demand that the wealthiest Americans and largest corporations pay their fair share in taxes.

As noted in the first article in this series, 84% of all the taxes collected are already paid by the top 20%. The top 10% pay 53.3% of all taxes. The top 1% pay 24% of all taxes. Should we kill the gooseGolden Egg that laid the golden egg and gut it to see if we can get all those golden eggs out instead of waiting for them? (I wonder if guys like Sanders ever consider who hires all those poor and middle class people anyway? Does he think it is poor people?)

France – Tax the Rich 75% Supertax

Nevertheless, let’s take a look at how this has worked recently in France with its socialist President, Francois Hollande. With France’s high deficit, Hollande promised a super tax of 75% on individual incomes of over 1 million pounds a year during his 2012 campaign. It was opposed by the Constitutional Council, made up of 9 judges and 3 former Presidents (les sages- the wise), because it failed to recognize equality before public burdens saying 2 individuals from the same household could be taxed differently. It was passed anyway.

Hey, they’re socialists. They know what is best right? French Actor Gerard Depardieu (film Green Card) provoked attack as being unpatriotic by saying his was moving over the border to Belgium. Depardieu pointed out he was not alone. The newspaper Le Parisien produced an interactive map which revealed Switzerland as the country of choice for fiscal refugees including many entertainers and sports stars.

Supertax Dropped After Meagre Returns

After two years, the tax was dropped, Why? It was supposed to produce 500 million euros per year. The first year, 2013, it produced half that much 260 million euros. In 2014, it dropped to 160 million euros.

The reform clearly damaged France’s reputation and competitiveness, said Jorg Stegemann, the head of the executive search firm Kennedy Executive. It clearly has become harder to attract international senior managers to come to France than it was.

France was not only losing actors like Depardieu but also business leaders like France’s richest man Bernard Arnault, the chief executive of luxury group LVMH who also took out Belgium nationality. In short, the measure failed.

Why Tax the Rich Will Always Fail

In the French example, the reality was that the rich had the means to simply vacate the building. That is, to leave the country. However, there is no need to leave for the more established wealthy. They have prepared other responses to the problem of taxation.

Bear in mind that all of these techniques are completely legal according to our laws. After all, who creates laws but high powered lawyers who write the legislation and politicians? Who has the money for high powered lawyers and to buy off politicians by funding their way into office? Didn’t take you too long to figure out those answers did it?

If you change the laws, they change the legislation to accommodate the changed laws. That’s one of the biggest reasons we have such an enormous tax code of over 77,600 pages of regs btw.

If all else fails, they can always relocate to a more favorable tax environment as they did in France in 2013 and 2014. There are always nations willing to accept wealthy people to their economies because they know they will bring their money along with them and ultimately enrich the economy.

In answer to the taxation issue, the ultra rich have several additional one-word answers. The first of those is the word- foundations. The graduated income tax is the second plank of the Communist Manifesto– a heavy progressive or graduated income tax.

While this form of taxation was being approved in state after state, the wealthy were preparing their own one word answer- foundations.

As noted in The Rockefeller File by Gary Allen:

By 1910, state after state was approving the 16th amendment, which provided for a graduated income tax, John D. [Rockefeller] read the handwriting on the Congressional wall and, using his “deeply conspiratorial nature,” began making plans to avoid the consequences of the tax by hiding his wealth in the Rockefeller Foundation

Contrary to the income tax being opposed by the wealthy Allen notes, “The fact is that many of the wealthiest Americans supported it.”

You may wonder how that could be. Let’s take a closer look.

One of the best ways for the Rockefeller-Morgan insiders to eliminate growing competition was to impose controls on their income while providing an escape hatch for themselves. It is easier to control or eliminate competition by not having to battle them in the marketplace but rather to use the coercion of government to exclude them from the marketplace. As Allen notes: “according to many sources, the Rockefellers have as many as 200 trusts and foundations, and it is possible they have hundreds, even thousands more.”

As noted by Ferdinand Lundberg in The Rich and the Super Rich:

What it [the income tax] became, finally was a siphon gradually inserted into the pocketbooks of the general public. Imposed to popular huzzas as a class tax, the income tax was gradually turned into a mass tax in a jujitsu turnaround…

When the income tax was being considered in congress, the powerful Senate leader and maternal Grandfather of Nelson Aldrich Rockefeller, formerly opposing it as “communist and socialistic” reversed his stance and threw his support towards it.

The escape hatch was ready. By the time the amendment had been approved by the states, the Rockefeller Foundation was up and running. Exempting themselves from the burden of taxation, the ultra-rich forced the burden on their competitors. Larger wealthy families followed suit- The Carnegie Foundation, Ford Foundation and soon many others.

Foundations Today

Today foundations still isolate the wealth of the ultra rich- George Soros with his Open Society Foundation provides funding a gaggle of leftist oriented organizations including racist organizations like La Raza.

The Bill, Hillary and Chelsea Clinton Foundation had assets of over $247 million in 2013 and donated to organizations like Acorn while receiving money from Saudi Arabia, the United Arab Emirates and even donors connected to organizations like the terrorist group Hezbollah.

Not all is bad of course but according to a review of IRS documents by the Federalist of the $500 million raised from 2009 to 2012 by the Clinton Foundation, only 15% ($75 million) went to programs. The rest?

“More than $25 million went to fund travel expenses. Nearly $110 million went toward employee salaries and benefits. And a whopping $290 million during that period — nearly 60 percent of all money raised — was classified merely as “other expenses.”

Rupert Murdoch’s News Corp Foundation finances Republican activities but leftist oriented foundations supporting Democrats are much more prolific. Meanwhile, Democrats pose as representing the poor and lower classes.

Other Single Word Solutions to Taxation

There are other single word aids to the ultra-wealthy which serve to isolate them from taxes: lawyers and legislation.

When John D. Rockefeller Jr. died in 1960, it was expected that his wealth then estimated by Fortune magazine to be between $400 and $700 million. When his estate was probated it added up to approximately $150 million. It turns out that John D. Jr. was busy allocating his fortune to the foundations controlled by the family and trust funds.

As noted by Lundberg in The Rich and Super Rich:

Rockefeller Brothers
The Rockefeller Brothers (from left to right) David C., Winthrop, John D. Jr., Nelson and Laurence

The JDR, Jr., estate paid virtually no inheritance taxes because it was left half to the widow (inheritance tax law) and half to the Rockefeller Brothers Fund, a foundation.

Thanks to the lawyers they hire and the politicians they own through campaign contributions.

When last checked Bernie Sanders has raised about $140 million. Hillary about $220 million. Ted Cruz about $120 million. That nasty capitalist Trump about $37 million, most of it his own money.

Could this be why all those wonderful sounding campaign promises disappear after the election? By the time they reach office, they owe and are owned.

Tax the Rich?

Mainly an illusion. The rich through foundations and legislation armed with high powered lawyers and politicians they have bought are well protected from taxation.

As the French experiment demonstrated, they can also simply up and move to more favorable tax environments as well taking their wealth and perhaps even jobs for the middle class along with them.

So Bernie’s taxation rhetoric is nothing more than pomp and circumstance that while sounding good on the campaign trail will end up biting the hands of the voters who feed into it. The ultra-rich will protect themselves from taxation as they always have done. The middle class without the armor of protection wealth affords will end up fleeced- as always.

Next we’ll take a look at another Sanders proposal – a mandatory minimum wage hike.

Missed Part 1? Click here Part 2? Click here

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