How protectors always become criminals in the end

 

TAXES & the Risks Associated with The Infrastructure Deal

Posted Jun 28, 2021 by Martin Armstrong

This bipartisan deal on new infrastructure spending that President Biden has reached this week with a group of “moderate” Democrats and “liberal” Republicans in the Senate represents a significant departure with respect to the Internal Revenue Service. Hidden within the claimed “infrastructure bill” you find $40 billion to beef up the IRS to hunt down everyone they can once again. The Biden White House is out to attack not the super-rich because they have everything in foundations and trusts which are tax-exempt. They will be targeting small businesses and harass them further if they survive the lockdowns.

The budget of the IRS was reduced because they were abusing their power back in 2010. The IRS has seen its budget shrink by one-fifth between 2010 and 2018. Perhaps you will recall  Lois Lerner who was the IRS former executive who was at the heart of a scandal involving the deliberate targeting of political opponents of the Obama administration. The DOJ waited for almost two years to dispose of this case quietly with never a prosecution even after Lerner herself apologized for targeting Tea Party groups. Those in government service who violate the law which is for the benefit of government are NEVER prosecuted for their crimes.

Today, we have five “moderate” Republican senators who have unleashed the IRS once again to resume its biased political attacks of targeting people for tax evasion. These Republicans have signed off on the deal but they have betrayed their own party for allowing this to be covered up. The investigative news outlet ProPublica published a story based on a vast trove of leaked confidential tax data for the richest Americans. The IRS is at it again.

This is why the Founding Fathers prohibited direct taxation which Congress repealed in 1913.  Once you have direct taxation, they can bankrupt anyone by simply launching a massive tax investigation and your legal bills will go through the roof and they are doing it simply for political purposes. This is why I have been in favor of REPEALING the income tax and replace it with an indirect tax such as a national sales tax. They used the tax code to imprison Al Capone.

The government prosecutors wanted Al Capone the same as people who want to hunt or fisk and score a big one. They target him for everything and anything. Capone and his bodyguard were arrested in Philadelphia for carrying concealed deadly weapons and within less than one day they were sentenced to one year in prison without a public trial. Capone was released on March 17, 1930. Then on February 28, 1931, Capone was found guilty in federal court on the contempt of court charge and was sentenced to six months in Cook County Jail. His appeal was dismissed.

The prosecutors called in the U.S. Treasury Department which developed a case for tax evasion charges. They used taxes to go after all the mobsters because they could not find any other evidence to prosecute them on. Therefore, they used tax evasion against Al Capone, his brother Ralph “Bottles” Capone, Jake “Greasy Thumb” Guzik, Frank Nitti, and other mobsters. Finally, on June 16, 1931, Al Capone was charged pled guilty to tax evasion and prohibition charges based upon a deal for a two-and-a-half-year sentence.

However, the presiding judge, James Herbert Wilkerson (1869–1948), informed Capone he was not bound by any such deal. Capone then changed his plea to not guilty. Wilkerson was not about to let Capone off easy despite the fact they could not charge him with a serious crime. The prohibition was repealed by FDR 3 years later. On October 18, 1931, Capone was convicted after a mock trial, and on November 24, Judge Wilkerson sentenced him to eleven years in federal prison, fined $50,000, and charged $7,692 for court costs, in addition to $215,000 plus interest due on back taxes. The six-month contempt of court sentence was at least served concurrently.

Capone was confined to the Cook County Jail and of course a political case of this nature had all appeals denied. Capone entered the U.S. Penitentiary in Atlanta, serving his sentence there, and was then transferred to the infamous Alcatraz. It was alleged that Capone was denied medical treatment which is really on par for high-profile cases. On November 16, 1939, Al Capone was released after having served seven years, six months, and fifteen days, and having paid all fines and back taxes. His health deteriorated greatly during his confinement. Immediately on release, Capone entered a Baltimore hospital for brain treatment. He was released and moved to his Florida home, an estate on Palm Island in Biscayne Bay near Miami. He never recovered and died with his family due to a stroke and pneumonia on January 25, 1947. Such is the fate of high-profile cases in America.

If it were not for the INCOME TAX, Al Capone would never have gone to prison. Even Prohibition was a failed experiment that actually made the Mafia. The Mafia was respected among the Italian community because they would even counterfeit food ratios during World War I to ensure the community was fed and did not starve.

It was making liquor illegal that created a profitable opportunity for the Mafia which in the United States was entirely different from that in Sicily. Indeed, in Sicily, the term “mafioso” had no criminal connotations and was used to refer to a person who was suspicious of central authority – an anti-government faction. During the 19th century, some of these groups emerged as private armies to protect the people from the government. This evolved where some began to extorted protection money from landowners to protect them from the corrupt government. Eventually, some factions became violent criminal organizations which turning the original protection into a means to extort money which then began the Sicilian Mafia. The American Mafia, however, did not rise to power until the prohibition and they too began as an admired protector of the people.

Europe could NEVER compete with the USA for they are EXTREMELY regulated. The #1 country in Europe to start a business is Great Britain.

Culture & Workforce Are Key to the Value of a Currency

Posted Oct 9, 2019 by Martin Armstrong

QUESTION: Hi Martin – was reading your latest post where you say “All currency is backed by the total productive capacity of its people.” – if this is the case, wouldn’t the number of productive workforces indicate a stronger currency? I take the case of India with a young workforce, and compare that with the US, with an aging baby boomer generation. Yet, it seems the INR is getting weaker against the USD. Am I missing the meaning of what you said here, appreciate your clarification on this thought?

JPM

ANSWER: It is not the sheer number of people. It also requires (1) education, (2) skills, and (3) a non-restricted economy with the least government interference. Otherwise, you can go to some countries where people are still herding animals and living in the bush.

The example of the non-restricted economy is simply communism. That is why it collapsed due to central planning and the denial of people to act in a free manner. They needed someone to sweep streets and you were next in line.

I had a friend whose family owned property in East Germany before the wall. They were able to get back their property and moved to open up a plant there for manufacture. I warned him it would be a bad move. He said I didn’t understand, they were German with a good work ethic. I said he did not understand they had no work ethic. His operation failed in less than 2 years. He then understood what I said. It took 4 East Germans to do the work of 1 West German. They did not know how to work.

The element (4) is the culture. In some cultures, there is a work ethic. In others, there just is not. In Japan, you jumped in a cab and you paid what was on the meter. If you tried to give him a tip, he would hand it back to you. It was more of an insult. Go to Hong Kong and the meter will say $8 and you hand him a $10 and he keeps the rest and tells you to get out. In Rome, the cab driver will start talking with you about America to distract you so he does not turn on the meter and then when you get to your destination he tells you how much which is typically twice what the meter would have been.

When you travel the world, as I do all the time, you see the huge difference in cultures which will account for vast differences in economics. In Italy, they are the third-largest economy in Europe. Yet on the street, you quickly see that it is far more entrepreneurial than France or Germany. So why do the numbers put Italy as #3? They also have the biggest black market because Italians simply ignore the government as best they can.

In the case of India, they do a lot of outsourcing there for programming. But language has another element to it that is typically never understood. Language is the key to the thinking process of culture. For example, in the USA I would say, “Here is my business card.” In Japan, that would be an insult. To them, why do you have to say it is “my” business card when that is obvious? You are elevating yourself above the person so it is more like saying, “This is my business card, you little schmuck!”You simply say, “Business card”.

Language is the window to how different cultures THINK. Asian culture BELIEVE in cycles — it is part of their religion. Western culture believes in a linear progression. Just look at global warming. They argue that the weather should be the same and it is not so we must be to blame.

It is more of a complex issue with these four distinct elements. Europe could NEVER compete with the USA for they are EXTREMELY regulated. The #1 country in Europe to start a business is Great Britain. Germany is #10 on the list. This is why Britain remains the financial capital of Europe. Despite all the nonsense that the banks will leave London and go to Paris or Frankfurt — good luck! They will not just have their entrepreneurial wings clipped. The infrastructure in Continental Europe compared to London could NEVER handle international telecommunications. It’s a real joke.

They will continue to raise the age and reduce the benefits especially healthcare.

Italian Pension Crisis – a Blueprint for the Rest of Us

Posted Apr 11, 2018 by Martin Armstrong

Back in 2011, the government Mario Montis instituted a pension reform deciding the Fonero right. Italy has to impose this reform to reduce its debt to comply with the Maschrict Treaty. The Social Affairs Minister Elsa Fonero, increased in the retirement age completely abolishing early retirement and eliminated indexing pensions to inflation above a threshold income level. These overall stricter pension conditions have been leading sources of the political discontent with government in Italy that led to the political outcome this year. 

Now the newly elected government ran on a platform promising pension reform which is the general expectation in Italy. The five-star movement and the Lega Nord had both advocated for an increase in pensions and a reduction in the age of entry. Of course, to re-institute that will cost almost 100 billion euros from the outset. The continued cost will probably wipe out Italy entirely. There has been a strong undercurrent of communism there for decades. They will rise up again and demand to go after the rich and this will ensure the economic collapse. There is little hope without reforming the monetary system. The economic pressure will also lead many to move to separate from the EU when that clashes with their domestic social agenda.

We will see the same tactics applied worldwide. Pensions will no longer be indexed to inflation as one means of escaping political liability. They will continue to raise the age and reduce the benefits especially healthcare.