Capital Gains Taxes And Property Rights

If you need to get permission from the State to use something, then you don't fully own it. You need a State permit to drive your care. Therefore, the State owns really owns your car. The State lets you sort of use your car like a partial owner.

Similarly, property taxes mean that you don't really own your home. You're leasing it from the government. You have limited rights to do what you want with your home. You may sell your lease to someone else. Due to property taxes, you don't really fully own your home.

If you need to get permission from the State to sell something, then you don't really own it. Via capital gains taxes, you need to get permission from the State whenever you sell your property.

In effect, the State has a prior lien against all your property. When you sell, you must pay a percentage of the profit to the State.

Inflation exacerbates the problem. Via inflation, you owe capital gains taxes, but that gain was merely compensation for inflation.

Suppose you buy gold for $1000/oz and sell two years later for $2000/oz. You have a capital gain of $1000/oz. With a 28% capital gain taxation rate, the State stole 14% of the value of your investment.

Did the value of an ounce of gold really change? Probably not. What really happened was that the dollar was devalued by 50%. If you believe "gold is money", then this is a definition. Even if you don't use that definition, the gold price should track true inflation.

Capital gains taxes on gold and silver are immoral and Unconstitutional. It's immoral, because you're taxed on a gain that only occurred due to inflation. It's Unconstitutional, because the Constitution says that only gold and silver should be used as money. Unfortunately, a judge would disagree with my conclusions. The moral argument is much more important than the legal argument.

Here's another example. You buy shares of stock in a corporation. There's a 5% dividend, the share price rises 20% but true inflation is 30%. Before taxes, you're already a loser compared to true inflation. You owe tax on the 5% dividend. You owe tax on the 20% gain when you sell.

Your broker will automatically report all transactions to the State. You're forced to pay capital gains taxes and dividend taxes. If you take physical delivery of gold or silver, and sell off-the-books for cash, then you can avoid capital gains taxes.

Via inflation, the State creates nominal capital gains. They aren't real gains. However, you owe tax when you sell. In effect, the State partially steals your property, via inflation and capital gains taxes. Even if your returns underperformed true inflation, you owe capital gains taxes when you sell.