Republicans Aim To Abolish The Tax Code. Wish Them Luck!

In writing for our readers, we do serve up a lot of bad news. We don’t like bad news any more than you, but it’s our job. The only thing worse than bad news is not knowing about it and not being prepared for the consequences.

It’s our responsibility to analyze the economy and geopolitics, identify problems over the horizon, and help readers prepare for what’s coming. We are not helpless. There’s a lot we can do financially, logistically, and personally to keep our families financially and physically secure.

That said, there is some good news out there for investors. We’re always glad to highlight it when we can.

The Republicans have recently taken control of the House of Representatives. More importantly, the policy agenda of the new House Republicans is being set by real conservatives who care about people instead of the old crowd of country club Republicans who only care about business and campaign contributions.

One of the new initiatives put forward by these conservative Republicans is the abolition of the income tax! Don’t laugh; they’re serious.

This proposal has kicked around for a long time but it has new life. It’s partly a response to Biden’s legislation that gives $81 billion to the IRS so they can hire 87,000 armed IRS agents to come after small businesses and entrepreneurs. Of course, the government still needs revenue, but that is provided for in this new bill.

The law would impose a 30% national sales tax to be collected at the state level (which also reduces the need for federal tax agents). A 30% rate is steep, but if you didn’t have to pay any income tax you might find it quite congenial.

Besides, you only pay the 30% sales tax if you buy stuff. If you minimize your consumption and put your income into savings and investment, you might not have to pay that much at all.

Exemptions could be created for basic items like food. Poorer individuals could qualify for a sales tax rebate so that the burden is not placed on them.

The macroeconomic benefits of increased savings and investment are hard to overstate. That’s the source of innovation, business formation, business growth, new jobs, and technology, all of which contribute greatly to growth. It would be one of the best things that ever happened to stocks.

Is this bill likely to become law with Democrats in control of the Senate and Biden in the White House? No way.

Yet, change doesn’t happen overnight in Washington. First, an idea is put on the table. Think tanks explore the benefits. Politicians adopt the cause and win elections. Then a national consensus develops and finally, the proposal becomes law some years after it was first proposed.

The Federal Reserve was first thought of in 1908, was planned in 1910, became a subject of national debate in 1912, and finally became law in 1913. That’s five years from start to finish.

This income tax abolition debate is just beginning. Let’s hope it gets done in five years or less! It will be great for citizens, great for the economy, and fantastic news for the stock market.

Corporate leaders and institutional fiduciaries looking to incorporate state of the art predictive analytics to their risk mitigation and strategic analysis should click the link to learn more about Raven Predictive Analytics®.