Taxing Whatever Moves – A Political Tradition

COMMENT: Your forecast on marijuana was fascinating. I assume it lined up with the Sovereign Debt Crisis starting in 2010 and therefore the economic pressure would cause the change by 2013. Very interesting.

GH

DJ1937-M Crash

REPLY: Yes, you are correct. This is why I say ABSOLUTELY EVERYTHING is 100% Connected. The introduction of the Marijuana Tax in 1937 was followed by 31.4 years until it was overturned by the Supreme Court and then 43 years from 1970 drug laws until the legalization process began in 2013. Everything has amazing order. This frequency appears in everything.

Note that the recovery out of 1932 lasted into 1937 and the crash thereafter. Roosevelt bragged how he turned the economy around at his State of the Union Address in January 1937. By March the market peaked and the crash began. Socialist claim Roosevelt reduced spending. However, they ignore of course the massive tax increases that caused the Crash of 1937 – including the introduction of the Payroll Tax.

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Roosevelt began to tax everything in sight. He imposed taxes on profits in silver trading after silver began to rally from its low in 1932. The Silver Tax stamps were used to pay the 1934-63 tax on the profit on transfer of silver bullion. It was the removal of silver in 1964 from the coinage that ended the tax.

Potatoe-Tax

There was the 1935 Potato Tax. The law restricted the export of potatoes and mandated that they be used instead to provide direct relief to those in need. Because of the federal government’s direct involvement in the economic affairs of American potato growers, this law was widely regarded as one of the most radical and controversial pieces of legislation enacted during the New Deal. The United States Supreme Court declared it unconstitutional in 1936.

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The United States had a tax on sales or transfers of stock from 1914 to 1966. They imposed the tax to pay for World War I. As always, once they tax something, they forget to get rid of it. This was instituted in The Revenue Act of 1914 (Act of Oct. 22, 1914 (ch. 331, 38 Stat. 745)), in the amount of 0.2% (20 basis points, bips). They then doubled the tax moving to 0.4% (40 bips) in 1932 despite the fact that the market fell 90%.

1966Crash-D

The stock transfer tax was repealed only after the Crash of 1966 in hopes of supporting the market. The 1966 Crash was devastating to mutual funds because they ere listed on the exchange and were bid up beyond their net asset value. Reform took hold and ever since funds do not trade that way any more but are based on net asset value.