Sally Muffinsheep was a babe.
Now 48, by the time she was 16, it was evident she was going to have a comfortable life. Men would always fall all over her to help her. Sally was a progressive, an art history major from a tiny liberal arts college. Although she relied heavily on her father to pay her bills, she fancied herself to be a fierce, independent woman. During COVID, she idolized Tony Fauci and followed all his instructions.
One day, her friend Julia suggested Sally read one of Rob Smith’s very illuminating articles in Real Clear Markets. After reading just one article, Sally was struck blind by a huge white light, just like the Apostle Paul on the road to Damascus. When her eyesight returned, she tracked Rob down and begged him to teach her more.
Being a charitable and honorable man, Rob stated he would teach her about the serfdom she was already under and likely didn’t know it. He started with the U.S. tax system and how it robs the private sector of capital needed to grow the economy and lift living standards. He explained:
“Sally, you are taxed on the income you earn. When you invest the income you have after taxes, you are taxed on the income your investment earns. When you sell the investment that you already paid all these taxes on, you are taxed again on the profit you make. When you die, you are subject to being taxed at a 40% rate for whatever is left of your assets that you have been paying taxes on your whole life.
“You are taxed on the income you spend. Every time you buy a loaf of bread to feed your family, you are taxed. In fact, you are taxed on all food you buy. Often you are double-taxed for eating at a restaurant. It’s cold outside and you are freezing, you buy a jacket to keep warm, you are taxed on its purchase. In fact, it is so cold you go to the liquor store to buy a fifth of Old Rotgut to keep warm. You’ll end up paying federal excise taxes, state excise taxes and state sales tax.
“To calm your nerves, you need to buy a pack of Lucky Strikes, likely over 50% of the costs are taxes and fees to government entities. After your nerves are calmed, you hop in your car to drive home. For the privilege of having a car, you pay 4.57% of the car’s value every year in personal property tax, even though you paid a ‘sales and use’ tax and titling fees when you bought the car.
“You pull into the filling station and fill your car up. Approximately 20% of your purchase went to federal and state excise taxes, even though your station’s distributor was already taxed 9% on the gas it purchased.
“You get home and pull into your driveway on the house where your dad pays all your bills. For the privilege of you owning a home, your dad pays 1.2% of its value every year to your municipality. When he bought the house for you, this payment was $250 per month. He is now paying $900 per month. On your utility bill, you are being charged a distribution tax for electricity, water and gas.
“Your dad’s business is C-Corp. He pays taxes at the corporate level, and then if he makes a distribution to a shareholder, that money is taxed again. For every employee he has, he has to pay half of his Social Security tax, Medicare tax and his federal and state unemployment taxes. When your dad goes to sell his business, he will be forced to pay a huge capital gains tax.”
Rob then explained the Rule of 72 to Sally and told her how Social Security was robbing her of a huge inheritance. “If the money your dad paid to Social Security was put into an investment account, there would be millions in that account, but instead, he gets a mere pittance of a stipend that ends when he dies.”
Sally gasped.
Rob explained how if many of these taxes aren’t paid, both she and her dad could be jailed. When Rob asked her, “So Sally, are you a serf and do you have a master?” she was visibly distressed.
Rob told her to come back next week and he would explain the incredible waste and inefficiencies in government and how the country would be better off if this money was utilized in the private sector.
Before the next meeting, Sally dropped dead. After all, she had been jabbed six times.
Rob Smith lives in Richmond and is chairman and founder of Chartwell Financial Advisors. This article was adapted from one of his posts on Real Clear Markets.