by Henry Oliner
Atlas Shrugged is revered like a bible among the libertarians and the central character is one John Galt. He is the symbol for total liberty and the right of an individual to the fruits of his own mind and his own labor.
In the novel socialism moves from a creep to a gallop and the industrialists and capitalists respond to the government’s intrusion by withdrawing from their productive lives, leaving the socialists with the prospect of actually producing the wealth that they had previously simply stolen.
The result was of course a disaster and an economic collapse, not unlike the collapse of socialist societies we have witnessed in the last century.
With the threat of a president who promises to increase taxes and regulation on the producing class we can expect them to react accordingly. They will be less likely to put money in productive assets, less likely to take a market risk, and more likely to move their capital to another country with a more receptive economic climate.
China, by the way, has a capital gains tax of zero. Ireland has a corporate tax rate of 12%.
The investor class is responding to the pending threat with actions to protect their assets that will reduce the government’s revenue. Capital gains will be taken this year to avoid a higher rate later. Deductions like charitable contributions will be pushed into the following year where their prospect of higher taxes will increase the value of their deductions.
But some will just drop out, take their money, pay down their mortgage to zero, put their money in land, treasuries or assets that give them satisfaction and pleasure without generating income that the government will just take away.
Unable to protect their interests at the polls, they will seek to protect their interests in the open market, where the political powers only delude themselves into thinking they have some sense of control.
The producing class can decide how and where they will spend and invest their assets. They can also decide how not to spend it.