When you own your property and control the private means of production you'll find income less important. The term living hand to mouth no longer applies to you.

Key Words
resisting market mood


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Verboten Publishing Ltd.

Resisting Market Mood Swings

How to enjoy the benefits of capital gains without the liability.










One has the right, tax free, to "device" which is to cultivate capital assets through design. Invent, compose, create new value reliably and then apply that value toward ones continued well being as you pursue a life's work. Ignore the spend happy financial sector with their income obsession. Instead, take a conscious shift in focus toward self reliance. Stand on your own production.

Capital gain

A capital gain refers to profit that results from a sale of a capital asset, such as stock, bond or real estate, where the sale price exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price. - Wiki

Consider for example an author who has written a book. There's no tax on capital gains for this asset placed snugly in the vault waiting for it's day to be published. Should the writer ever choose to do so. Some are quite content to leave their work post-mortis. Sometimes entire manuscripts are practice runs or just one piece of a larger construction. Let's mix a metaphor for fun. One can't tax a half baked cake without destroying the bakery.

It's been long established in law that income can be taxed, but device cannot. There are many reasons beyond keeping production firmly in the hands of the private sector to avoid the mistakes of past empires. There are practical considerations. Though one can clearly measure a sale, it's impossible to determine precisely without market exchange the point at which the capital value presents or might be spoiled. The only outcome one gets from taxing production directly is control over who gets to produce which inevitably leads to diminishing options in any marketplace.

Maintaining a production surplus is the key to long term prosperity.

As all capital's value is determined ultimately by its ability to contribute to economically useful work it requires at least one example of economic influence to minimally determine its value. What is the amount of market value for something which has never been to market? It might even take an auction to work it out. In the meanwhile its value for tax purposes is considered nil, though one might benefit from said asset in innumerable ways.

Incomplete works are worthless... or are they... there simply is no way to tell and risking premature marketing is to risk the destruction of the zeitgeist which helped form it. Likely reducing its return to a low yield one-off. As to the author, best to let them finish without interference for fear of the worst possible outcome... they choose to leave the work undone and refuse further production outright. The greatest loss is the endless potential gains never realized. Imagine if J.K. Rowling had stopped at one book... one chapter,.. or Tolkien... because they couldn't come to terms with publishers or state agents all too thirsty for their sip of sweet nectar.

Not so fun fact... the Soviet Union taxed production directly and then granted tax free status to artists willing to produce Soviet art. Millions of Ukrainians starved during an event called the Holodomor because they couldn't pay the taxes on their crops or even use the crops to feed their own communities as all production was taxed whether sold or not. The Nazis and Maoists also controlled production through taxation. You can always tell whether a country is truly Socialist by whether it taxes production directly or instead taxes income which affords producers the freedom to capitalize on natural opportunity.

In a capitalist society one will discover taxation is restrained to income related activity including capital gains on assets put up in a business venture. Trading for and collecting assets with commercial intent... ex. being used as collateral for a business loan will of course be taxed for capital gains because such a business is benefiting from the increasing market value both to borrow against and on the increased return during final sale.

So if you were in the business of buying run down properties, renovating, then selling you'd have to pay capital gains at the sale end. If you were in the business of owning buildings, renting them out, and borrowing against their increasing value to buy more assets then you'd likely have to pay capital gains any time an inspector increases the insurable value of an asset or you bring in income based on the asset. Art, jewelry, property, vehicles, anything. What matters is whether you made it or did you trade it. Until an asset is traded it's "defacto nonexistant".

If you were in the business of developing land, facilities, warehouse operations to create content of original composition then you're free to use your facilities to make anything you're able and you don't ever have to pay any capital gains on increasingly valuable assets or facilities though you still own them until you sell them. Any untraded asset or derivative you create grows your boodle tax free though later you'll still have market leverage. Sales and income taxes during market trade is the only burden you'll eventually bare.

If you think there isn't a significant difference between buying a renoed house and doing the hard work yourself then consider. You buy low, invest middle, then sell high. You include the capital gains tax (in Canada for example it's 50% of increase in value from last sale at marginal tax rate) in the price you sell at so the consumer eats the loss. If you're the consumer buying the renoed house you just paid maximum price.

When you sell it later you'll still have to pay tax on your own capital gains assuming it increased in value at all by the time you sell it. And while you might try to push that capital loss forward you'll discover that because the value only went up at near inflationary rate (since you didn't actually do any renoes or add new value) that capital loss is minimal... sadly because the capital gain is minimal, too.

Now on the other hand let's say you go into a public forest and find some fallen trees (which are often available for salvage to anyone willing to haul the wood away). You process them and build a boat... or a cabin... or any number of other assets you'd benefit from. Because you produced the assets you don't pay any tax beyond sales taxes on any remaining components you can't make yourself. The devised assets are yours even as they have obvious value greater than the sum of their parts, at least to you, yet you owe nobody anything for acquiring them. You've already paid the price in the creation.

In other words... the more you make the less you owe; the more you earn. It really is as simple as that. Now go out and see what various points of value in your life are being provided by taxable goods and services which you're paying at your loss when you could be creating those assets yourself to your gain. You'll discover that as you add more personal productive means to your capacity that in direct proportion you no longer concern yourself with toxic market fluctuations. Soon you can leverage available opportunities when it makes the most sense to you and not because you have to take what you can get and make do.


Author
Bill Hunting
Bill writes a lot about pioneering and production. A strong advocate of ones independent means of production.

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