What Do the Wealth Tax, the Estate Tax and RMD Have in Common?

Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

The immense accumulations of fixed capital [has been] to the great benefit of mankind.” — John Maynard Keynes (1920)

“Free-market capitalism is the best path to prosperity.”

— Larry Kudlow motto on CNBC

Karl Marx got one thing right. He clearly identified the source of prosperity under free enterprise, or what Adam Smith called “the system of natural liberty.” He called it “capitalism” because it is “capital,” broadly defined, that drives economic growth and a higher standard of living.

Capital consists of saving, investment, capital formation, tools, machinery and equipment, entrepreneurship, technology, innovation, training & education and other supply-side factors that advance civilization to higher levels of prosperity.

What Drives the Economy, the Consumer or Business?

Too often the financial media gets it wrong when the news organizations report, “Consumer spending drives the economy.” In reality, consumer spending is the effect, not the cause, of prosperity. Consumers benefit because entrepreneurs and venture capitalists create new products and services.

It is business spending that drives the economy. See my column here: https://www.markskousen.com/says-law-vs-keynes-law-which-more-accurately-reflects-reality/.

As economist Larry Kudlow states, “Though not one in a thousand recognizes it, it is business, not consumers, that is the heart of the economy. When businesses produce profitably, they create income-paying jobs and then consumers spend. Profitable firms also purchase new equipment because they need to modernize and update all of their tools, structures and software.”

How to Slow Economic Growth: Tax Capital!

That brings me to the headline in today’s Investor CAFÉ. If you want to encourage long-term growth, cut taxes on capital.

If you want to slow down prosperity, raise taxes on capital.

Exclusive  Betting on a Cloud Computer Company Leader

The truth is:

–a wealth tax is a tax on capital.
–an inheritance tax is a tax on capital.
–an estate tax is a tax on capital.
–a capital gains tax is a tax on capital.
–a tax on interest and dividends is a tax on capital.
–a transaction tax on stock trades (Tobin tax) is a tax on capital.
–a progressive income tax is a tax on capital.
–Required Minimum Distributions (RMDs) on retirees after 70 ½ is a tax on capital.

All these forms of taxes reduce economic growth in the long run and can be quite dangerous.

The ideal is a zero tax on capital formation. One of the few countries to recognize this ideal is Hong Kong. It has a flat 18.5% tax on income, and no tax on capital gains, interest and dividends. Not surprisingly, Hong Kong now enjoys the highest level of income and growth in Asia.

Good investing, AEIOU,

Mark Skousen

Upcoming Appearance

Join me for the Orlando MoneyShow, February 6-8, 2020, at the Omni Orlando Resort at ChampionsGate. I will be speaking Thursday, Feb. 6, 9:30 a.m. about My Most Important Forecast & Strategy: When Will the Mother of All Bull Markets End? On Feb. 7, I will talk at 5:30 p.m. about The Best Offense Is a Good Defense: How to Beat the Market with My Five Favorite ‘War’ Stocks! Other investment experts who will be speaking include Carlson, Hilary Kramer and Bryan Perry. Register by clicking here or call 1-800-970-4355 and mention my priority code of 049278.

Like This Article?
Now Get Mark's FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE


img
previous article

Jim Woods reveals and discusses an ETF that tracks an index of stocks that have been deemed to have "positive social characteristics."

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE