Originally posted by Larry Johnson in December 2012. (View all of Larry’s posts and biography.)

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The fundamental difference between genuine conservatives and genuine liberals is this–liberals believe they can make people do what they, the liberals, conceive as the right thing by passing laws and imposing sanctions. See, liberals know what is best for others and do not trust people to choose for themselves to do the right thing. Genuine liberals believe in the power of the collective and see the individual as a mere cog in the wheel of state that must be made to do the right thing. Genuine conservatives, by contrast, believe that the person, not the state, is the highest value and strive to create opportunities for people to choose what to do with their life and property.

Let me give you a current example. In Colombia, traffic is terrible. Rather than build new roads and create incentives for people to use their cars more wisely, the liberal mind in Colombia decided to impose restrictions on who can drive on a particular day. Their solution? Only allow cars with license plates that end in an odd number to drive on odd number days and only allow cars with even number plates on the road on even days. Such is the naivete of the liberal mind.

Guess what average people, liberal and conservative do to circumvent this? They buy an extra car or they buy an extra license plate. As a result, you wind up with more cars on the street.

Raising taxes is another typical example of the liberal naiveté. They believe that if you raise the tax rate, people will pay more and the problem of deficit spending will be magically solved.

So what happens when investors and the wealthy face the certainty of higher taxes?

As lawmakers struggle to agree on a plan to avert the series of tax increases looming next year, many investors are taking preemptive action to get out of harm’s way.

Americans are moving to sell investment homes, off-load stocks, expand charitable donations and establish tax-sheltering gifts before the end of the year. Financial advisers and accountants say people are trying to avoid the higher taxes that will take effect in 2013 if Washington does not avert the “fiscal cliff.”

For the nation’s top earners, who as a group make a large share of their incomes through investment returns, those moves could have a major impact on their tax bills.

“We are seeing a lot of questions about what assets to sell,” said Debbie Haines, a partner at CST Group, a Reston accounting firm. “A lot of people are wanting to liquidate stocks that have a gain. A lot of people are harvesting their capital gains. There is also some concern that itemized deductions will be cut, and some people who are charitably inclined are thinking about making bigger donations this year.“

Also, with the tax laws covering gifts set to tighten significantly, several Washington area estate lawyers say they are facing a rush of people interested in establishing trusts that under current law allow a couple to protect more than $10 million in assets from the tax man. Impending changes in the law could reduce the gift exclusion to $1 million for an individual or $2 million for a couple.

Hell, even the liberal Washington Post acted like a conservative one per center. AP reported last Friday:

The Washington Post Co. will pay its 2013 dividends before the end of this year to try to spare investors from anticipated tax increases.

The media and education company said Friday that its dividend of $9.80 per share is payable Dec. 27 to shareholders of record as of Dec. 17. The payout is instead of regular quarterly dividends next year.

This means that the funds for investments will shrink in the coming year, not expand. That means a contraction of economic activity, not an expansion.

Those with money who can afford it will flee from high tax states and set up residency in lower tax states. There will be a tightening of belts across the land. Despite Obama’s silly, stupid promise that his Obamacare would reduce costs, the opposite is happening already. A tax on medical devices already is leading that part of the medical industry to lay off workers. It also means the price of those devices will go up. That means we will all pay more. This is basic economics–rising prices generally are accompanied by reduced demand.

Of course, there are some goods and services–e.g., food and fuel–that people must have. The price on those items is somewhat “inelastic.” That term simply means that people will continue to buy the items despite the rise in prices. However, the type of food purchased will shift. Folks accustomed to eating steak and pork on a regular basis will scale back and go for cheaper items.

One other thing happens in the face of higher taxes–people turn to the black market and the grey market. Folks will increasingly deal in cash transactions. Activity previously captured with credit cards will shrink. This means the government will actually wind up with less money and those groups most adept and meeting demand in the black market (i.e., the criminals) will prosper.

If Obama succeeds in raising the rates on the so-called 2%, he will have a pyrrhic victory. Any addition increase in revenue will be short-lived. The net effect will be to knee cap the already faltering economy. Unfortunately, most Americans must learn the hard way. Some tough lessons are coming. You can count on that.

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Larry C. Johnson is a former analyst at the U.S. Central Intelligence Agency, who moved subsequently in 1989 to the U.S. Department of State, where he served four years as the deputy director for transportation security, antiterrorism assistance training, and special operations in the State Department's Office of Counterterrorism. He left government service in October 1993 and set up a consulting business. He currently is the co-owner and CEO of BERG Associates, LLC (Business Exposure Reduction Group) and is an expert in the fields of terrorism, aviation security, and crisis and risk management, and money laundering investigations. Johnson is the founder and main author of No Quarter, a weblog that addresses issues of terrorism and intelligence and politics. NoQuarterUSA was nominated as Best Political Blog of 2008.
  • KenoshaMarge

    Obama and the damn Dems know very well that raising taxes on the rich won’t do much of anything. They know and don’t care. Because by demonizing one class in order to placate another they have achieved the division they wanted.
    Of course rich liberals are exempt from the demonization.

    Divide and conquer is as old as time. And people being stupid enough to fall for it is just as old.

  • elizabethrc

    So today I learned that in Feinstein’s ban the guns bill, Congresspeople are exempt from her law!
    I worry when our government sees fit to purchase tens of thousands of rounds of bullets (Homeland Secuity) as well as thousands of guns. Why? What do they have in mind?
    Shouldn’t someone who has access to the inner workings of varous government departments be investigating this?
    Larry (or anyone) please let us know what is going on. This sounds a little too ominous to me. I hesitate to put a word to what might be going on, but I put nothing past Obama.

    • Hokma

      “Congresspeople are exempt from her law!”

      If that is true then this is unconstitutional and the reason fro the second amendment.

  • elizabethrc

    If I learned nothing else from my ex husband, it was that if you don’t have it, you don’t spend it. Why is that simple premise so disregarded by liberals? Do they not understand that when non-liberals fall, they also fall?

  • Renfrew Squeevil

    So the guys who want to tell women they can’t get an abortion until they sit and listen to the doctor tell her what an abortion is, and what happens and how, and even, in some states, the lie that abortion can harm her health over time, all those guys are liberals? Well, that’s good to know. I never thought of the state legislatures of, say, Texas or Georgia or Mississippi or Arkansas as being hotbeds of liberalism, but, hey, live and learn, right?


    as long as I can remember there were taxes on cigarettes and liquor.
    people used to bring cigarettes up from the Carolinas and bootleg them. made a good living off of it.
    people make a living off selling untaxed liquor.

    In Pennsylvania many things are taxed so people travel to Delaware to buy them.

    Look how many people used to go to Mexico for medicine because it was more affordable.

    many people are hurting today and the choice of getting something cheaper because of no tax or paying more and the difference going to the government. People will buy untaxed

    People will do what they have to do to survive the number of people who will work ” under the table” will increase. If it is a choice of paying for things for their family or backtrack’s many vacations, backtrack loses

    We went to war with England over taxes.

  • sowsear1

    Disqus is working now

  • GeminiRising

    What happened to discus?

  • Dave L.

    President Idiot just announced cutting the military’s benefits, but not touching the civilian UNION employees benefits.

    • no_longer_a_democrat

      wow. so the military benefits gets cut, but the civilian federal forces gets no cuts?!

      not surprising from a man who has absolute disdain for the US military.


      “Obama: troops just airraiding villages and killing civilians”

      Yep, he sure hates the military personnel.