Biden administration coming for middle-class money, not billionaires’ wealth
Editor’s note: This essay is adapted from the new, New York Times bestselling book, "You Will Own Nothing: Your War with a New Financial World Order and How to Fight Back" by Carol Roth.
While the Biden administration and others on the far left like to talk about the billionaires and ultra-wealthy paying their "fair share," the proposals that they put forth always seem to focus on keeping the middle class struggling.
Whether it is hoping to hire 80,000+ new IRS staffers – which clearly isn’t meant to just go after 800 or so U.S. billionaires – or lowering the IRS reporting threshold for online transactions from $20,000 to $600, these endeavors are squarely focused on Main Street America, not Wall Street’s billionaire class.
But these proposals pale in comparison to the setup for what could be the greatest government wealth heist of all time.
The government sees big pools of middle-class wealth that represent an opportunity to buy them more power and bail them out of their debt debacle. (iStock)
Financial consultants Cerulli Associates, which track wealth trends, estimates that between 2021 and 2035 there will be a total of $84.4 trillion in wealth transferred. Of that, just more than $11 trillion is set to go to philanthropic endeavors (that’s more than the yearly GDP of every country other than the U.S. and China), and a historic $70 trillion is set to be transferred to heirs.
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This would be a historic, free-choice transfer of wealth; assuming that the government doesn’t get there first.
There is a ton of wealth that has been earned. Those who have earned it deserve to decide what happens to it. If it ends up in the hands of their designated beneficiaries, it could meaningfully help thwart the efforts to strip ownership and wealth from the average Americans. These beneficiaries will include millennial and Gen X recipients and, to a smaller extent, Gen Z.
Even today, before this epic transfer begins in earnest, inheritances are meaningful for the average American.
A 2019 report by Insider referenced a study that showed the median inheritance size had already moved up by almost 3.7 times over the last three decades, from $15,000 to $55,000. In terms of beneficiaries, Insider said, "They’re more middle class than you might imagine. The data show they earn about $69,000 annually – though about 25% earn less than $35,000 a year – have no college degree, and have just $25,000 in retirement savings."
Not only are median inheritances increasing, but averages are as well. A Wall Street Journal article reported, "The average inheritance in 2019 was $212,854, up 45% from an inflation-adjusted $146,844 in 1998, according to an analysis of Fed data by economists at a unit of Capital One Financial Corp."
It’s not just cash, stocks and bonds at stake but also tangible and intellectual property, including homes, businesses, farms and land.
However, the government sees big pools of wealth that represent an opportunity to buy them more power and bail them out of their debt debacle. Using your money to shore up government obligations or make new promises, the coming turnover of wealth will likely turn into a historic cash grab by the government.
The U.S. has recently seen its second credit downgrade. The public debt has well surpassed the GDP. Even the Treasury and the CBO have said the U.S. is on an unsustainable financial trajectory.
And, in addition to the massive national debt load, the U.S. government has made promises of a scope that they cannot realistically fulfill.
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Social Security, Medicare and state pensions, as well as some union pensions that the government also helps guarantee, unsurprisingly, have tens of trillions of dollars worth of unfunded liabilities. Per Truth in Accounting’s 2021 Financial State of the Union report, federal government liabilities were estimated at around $129.1 trillion!
Given that there is all this wealth that the government is salivating over for its needs and wants, what’s the plan to shift it from a voluntary wealth transfer (from those who earned it to their families and other beneficiaries) to a forced wealth transfer (to the government)?
The mechanisms rely on wealth taxes and inheritance taxes. You may remember Treasury Secretary Janet Yellen over the past couple of years talking about taxing "unrealized capital gains." This is a wealth tax with a different wrapper.
While you may think it is just the billionaires’ dollars that government is after, that won’t happen. It’s undeniable that the wealthiest have gotten wealthier with historic transfers of trillions of dollars in wealth by Fed and government policy, but their wealth is still a fraction of what’s out there and not nearly enough to make a dent in government spending.
Not to mention, the wealthy are the friends and financial supporters of those making the laws. They can afford fancy lawyers and accountants to find loopholes.
The mantra "We are going after billionaires and the ultra-wealthy" is a trick they use to get you to give up your principles because once you do, they can come after you.
Just like they aren’t trying to hire 80,000+ IRS agents to go after those 800 or so billionaires, they aren’t looking to add wealth taxes and expand estate taxes to come after the ultra-wealthy.
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The middle class, which holds a substantial portion of that wealth today, doesn’t have the same type of advocates and service providers.
Here’s what is at stake if they put in place wealth taxes or taxes on "unrealized capital gains." Imagine that your parents bought a house in the 1970s for $100,000. Today, you look on Zillow and it estimates that today it is worth $2 million. That means they would owe taxes on $1.9 million. How could they pay for that? They would have to sell the house to be able to do so.
Now imagine that for businesses, stocks, farms, art and more. This would be a devastating outcome that would upend American prosperity as we know it.
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Be wary of calls for both wealth taxes and rules aimed at just one group of people. Because eventually, that can be used to come after your money and your legacy wealth.
The government’s and the Fed’s fiscal mismanagement doesn’t give them the right to come after more of your wealth. The story is always the same; no matter what they say, their actions show they want the rich to get richer and to hollow out the middle class. Don’t fall into their trap.
CLICK HERE TO READ MORE FROM CAROL ROTH
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