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Weekend Edition

Why I don't vote... and you shouldn't either
Saturday, November 10, 2012

My good friend and intellectual mentor, Doug Casey, recently shared the five reasons why he doesn't vote.
 
He typically re-publishes these thoughts every four years. Perhaps you've seen them before.
 
While I agree with Doug in principle... I have a wholly different rationale for not voting. Given this week's election, I thought I'd tell you about it.
 
The reason I don't vote (and you shouldn't either) is...
 
Our current system of governance is nothing more than tyranny, and it's on track to destroy our country.
 
Like Doug says, asking me to vote is like four wolves sitting around the table asking the sheep what he'd like for dinner. It certainly doesn't matter what the sheep says. Asking me to participate in this charade won't bring it any legitimacy; it will only make me party to the fraud. Asking me to vote is like asking a free man to put himself willingly into bondage. It's insulting. 
 
And when I say that my vote doesn't count, I don't mean no one will count it. I mean that, given the structure of our tax laws, there's no way my voice will possibly matter.
 
I currently spend about 50 times more on federal taxes than the median taxpayer. I pay a rate of federal tax that's more than double the average.
 
The 14th Amendment supposedly protects me against this kind of inequity. It promises me the "equal protection" of the laws and says the state can't deprive me of my property without due process. But the last time there was a dispute about my taxes, the state seized every penny of my assets it could find. It took my checking account and my brokerage account without even bothering to tell me. It moved to put a lien on my house. I found out what was happening via a letter from Bank of America.
 
The IRS offered me no due process. It didn't even notify me.
 
And I certainly enjoy no equal protection. Just look at the rate and amounts I pay compared with more than 90% of other people in this country. (By the way, the matter was resolved after about six months. Turns out, the state owed me $2,000 in refunds. They declined to pay me, citing the statute of limitations. True story.) 
 
It is impossible for me to peacefully object to this kind of tyranny. Even if I were to give up my citizenship and leave the country, I would be forced to pay an exit tax that's roughly equal to the death tax my heirs will be forced to pay on my estate. These are the same kind of laws, by the way, that kept a generation of people locked behind the Iron Curtain. Leaving meant giving up all of your wealth. I can't possibly vote my way out of this situation. I can't peacefully object. I can't exit. Nor can I petition the courts for redress, as the Supreme Court has specifically ruled that the Bill of Rights doesn't apply to revenue matters. (See Lehnhausen v. Lake Shore Auto Parts Co... a 9-0 decision.) 
 
I understand no one will feel sorry for me. The vast majority of folks will continue to vote. And what they'll vote for is more and more of my wallet. They are the proverbial wolves. And I am the proverbial sheep. When the sheep complains, the wolves just laugh.
 
That's fine with me... I will get the last laugh.
 
You see, this system will inevitably lead to more and more government, higher and higher taxes, and bigger and bigger deficits. This system will eventually destroy our country, just as abuses like these have destroyed every democracy in history. Along the way, with a very small intellectual advantage, I will earn far more from various non-reported speculations (gold, silver, foreign real estate, etc.) than the government will be able to tax. The sheep may be shorn... but he will not be eaten. The wolves, meanwhile, will soon be feeding on each other.
 
This kind of progressive tax structure, where a tiny fraction of the population pays for essentially all of the government's spending, creates the illusion that the government and its services are free. Our system is a lie. The lie is that you can live at the expense of your neighbor.
 
Yes, it sure seems true right now. Today, about 10% of the population pays for roughly 75% of all income taxes. Looks like everything is working out the way the voters want... They want more government services... They want free "Obama phones"... and EBT cards that can purchase luxury items and booze... and discounted housing... and cheap mortgages... and free education... and free health care...
 
They want it all. And they will vote for it every time. More and more.
 
By 2011, 49.1% of American households received some form of direct benefits from the federal government. As a result, more than 60% of Americans now receive more benefits from the federal government than they pay in taxes.
 
Folks who are the recipients of this largesse have developed sophisticated arguments to explain why this is "fair" and "right." But the truth is, it doesn't really matter what they say. In a democracy, every argument about what's legal eventually comes down to the ballot box. And there's no way the 10% who have to pay can compete with the 90% who don't when it comes to a vote.
 
And so... since 1960, the average federal tax burden per family in the U.S. has soared. In real dollars (indexed to 2011), the tax burden in America has gone from $11,500 per household to almost $25,000 annually. Just ask yourself this question... how can the median household, which earned $50,000 in 2011, afford to spend half its income on taxes? Obviously, it can't. And by having sharply progressive taxation, it doesn't have to... at least on paper. We'll come back to this in a minute.
 
First... even though the mob can clearly vote itself whatever tax structure it wants... the tax burden is now painful enough to seriously harm the economy. That is, even though the political feedback loop is broken (the majority of voters don't have to pay the taxes, so there's nothing to stop them), the economic feedback loop can't be subverted. So the government has begun borrowing enormous amounts in order to satisfy the demands of the mob. Specifically, the federal government is now spending $3.5 trillion a year. Income taxes only raise $1.1 trillion a year. Thus, even if you doubled income taxes, we'd still run a deficit every year. 
 
My friends... that's pure insanity. That's why every time there's a committee of one kind or another that's tasked with solving our government's giant fiscal problems, it always comes back with nothing. No one in Washington wants to admit how much trouble we're in. There's no way to fix the system. The hole is far, far too big.
 
No government can survive long when it spends more than twice what it collects in tax revenue. Not even when it holds the world's reserve currency and has the world's most powerful armed forces. Just ask the Romans.
 
Yes, I know, the feds also collect about $250 billion in corporate taxes, but that doesn't change the math in any material way. And yes, I know all about the payroll taxes that support Medicare and Social Security. But you can't count those funds against the current spending because all that money ought to be going toward the future obligations of those programs.
 
The problem is that our political process – where the masses are allowed to vote themselves nearly unlimited benefits – masks the underlying economics. While any given individual might not have to suffer these burdens, everyone lives within the same economic sphere. We, as a nation, have a limited amount of economic power. We have a limited amount of opportunity. We have a limited amount of credit (believe it or not). And right now, the government is taking up a huge amount of these economic assets, an amount that can't possibly be sustained.
 
We are now spending $6.3 trillion a year on government at every level. That's $55,000 per household in the U.S. In other words, if we all paid equally for the burden of government on a per-household basis, the average household would owe the government more than 100% of what it brings in.
 
Obviously, if everyone had to pay these taxes... if everyone had to share equally in the burden of the government... then none of this spending would have happened. None of these debts would have accrued. And we would have never ended up in this position.
 
Politics masks these costs for the individual, who believes he won't have to pay. He thinks he can simply vote... and make people like me pay. But what he doesn't understand – and never will – is that the politics can't change economics.
 
Our economy can't afford our government. Our economy can't afford these debts – or even the debt service at any legitimate interest rate.
 
At some point very soon, this economic reality will overwhelm the political charade.
 
That's why I don't vote.
 
Regards, 
 
Porter Stansberry




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