A wealth tax has been talked about by some “progressive” types nationally. It’s not out of the question as social welfare programs tend to grow to consume all available wealth of the productive class.

I love the word “progressive” that these busy bodies give themselves. Stealing money that isn’t yours and spending it for your own benefit is not “progressive” at all. It’s as old as the hills.

I live in New Jersey and taxes of all sorts are significant issues, and have been for a long time. But that has never stopped any of our state legislators from increasing or creating new taxes (opps, sorry – they are called “fees”.).

At some point, even “progressive” elected officials will realize that you can only increase taxes so much before (1) There is a revolt, or, (2) Those who earn a high income decide to leave the state (happening already).

What has not been publically discussed, and what really concerns me, is not an increase in income taxes, but the creation of a net-worth tax. It is not inconceivable to me that New Jersey will shift from a gross income tax to a net worth tax. This approach has the benefit of capturing both income and wealth in one fell swoop.

I sure hope those in Trenton, NJ, our state capital, do not read this blog.

Ed

I don’t think anyone knows what a dollar collapse will do. Too many variables to predict such a thing. There was a 50% decline in the dollar over the decade of the 1970s and the portfolio did fine with gold posting large gains. Part of this was due to the breaking of the gold standard, but part of it was good ol’ fashioned dollar value panic.

IRA and 401(k) may indeed come under tax pressure in the future. IMO. I think there is just too much untaxed money sitting in them to not make them a desirable target by the parasites in DC at some point. It may not be a direct tax, but I could see some type of national sales tax imposed that would rope in those spending from their savings. Or there could be means testing where you get less of your SS benefits because you were responsible and saved “too much” in your own retirement plans. Who knows? For now they remain a viable option for some type of tax sheltering though so you may not want to forgo them completely.

If you don’t want to use US Govt. bonds for ethical reasons then you can use a LT corporate bond fund. Just realize that you are taking on credit risk and they may not perform as well if we get sustained deflation like the 1930s.

It’s funny that you mention Argentina. That was one of the countries I looked at closely in terms of a worse case scenario. I’ll be talking more about it in the future. For now, someone did an analysis of the portfolio as it would have worked in Iceland’s collapse last year. The portfolio did not turn a profit (something almost impossible to expect in such serious situations). However the portfolio did mitigate much damage and an Icelander who was using it is in FAR better shape than one who did not. Also an Icelander who had been using it before the crash was reducing their risks as the markets there rose by something like 700% they would have been selling down their stocks to buy gold and other assets:

http://europeanpermanentportfolio.blogspot.com/2009/08/permanent-portfolio-in-iceland.html

I don’t know about everyone else on this blog but I’m worried about a potential dollar collapse. Does the Permanent Portfolio really protect us from such a catastrophic event when 50% of the assets are in government securities?

Also, I’m about fed up with this Federal Government (Ron Paul we NEED you) and I don’t trust them one bit. I stopped contributing to my Roth IRA and 401K since government can actually SEIZE these assets since they were granted through the tax code ala Argentina. Am I over reacting? The Permanent Portfolio is tax efficient anyway so there’s no need for retirement accounts I believe.

Lastly, as I said before I have a strong distrust for our Government. We were promised “change” but as I predicted its the same nonsense no matter who’s elected. I feel like a hypocrite having 50% of my assets (bonds & cash) in government securities……can’t I leave my cash portion in a solvent bank and my bond section in a AAA Blue Chip company like Microsoft? If so, would that dramatically alter the Portfolio in a negative way? I want to starve the beast…….but the Permanent Portfolio actually helps further their cause…….what a conundrum.

Thanks love the blog