Posted originally on Jan 15, 2026 by Martin Armstrong |  

People are often cheering class warfare for they fail to understand by imposing a billionaires tax in California on UNREALIZED gains of 5%, will necessitate dumping stock to raise cash to pay the tax. Those companies will in in shock and specs will jump in front and sell those companies knowing that massive liquidation will follow. Yet additionally, it will require EVERYONE to file to state under penalty of perjury that you are not a billionaire. The third disaster is they always get such taxes through promising a minimal tax rate. Then, at anytime in the future, they can just raise the rate whenever they need money. When the US Income Tax was installed, the rate on the hated rich was just 1%. That was minimal.

We can see that proposed 1% reach 77% for World War I and the 94% for World War II. The Democrats have shut down the government over Trump’s tax cuts and the top rate is 37%. But worse still, the play with the definitions to get more money.

They also have constantly changed the top tax rate. During World War II it stood at $5 million. Then it came down to $250,000. But it got worse. When the modern income tax was established by the 16th Amendment in 1913, it taxed individuals on their own income. There was no concept of a joint return for married couples.

The First Major Shift from individual to household income came with the introduction of the Joint Return (1948). This is the most significant change that moved the system toward considering household resources. If the husband was in a high income tax bracket, his wife, with even just a part-time job was now taxed at his rate. Many became to see this as a major reason there were stay-at-home-moms for it did not pay to get a simple job to stay busy.

Prior to 1948, they assumed passive income from investments could be shared with each spouse filing separately, reporting only their own income. This created a major disparity because residents of community property states (where income is legally considered jointly owned) could split income between two returns, lowering their total tax bill compared to identical-income couples in common-law property states. This drove the Democrats delirious. OMG, they could beat us out of some money.

Revenue Act of 1948 was intended to resolve this inequity or loop-hole and also to provide a benefit to married couples is how they sold the idea. Congress created the joint return. This allowed a married couple to combine their incomes, be taxed on the total, but use a tax schedule with brackets exactly twice as wide as those for a single individual. This is known as income splitting. It effectively created a “household” tax unit for married couples, though it was still an option (they could still file separately).

Consolidation of the “Household” Concept (Post-1948)
The 1948 law established married couples as a tax unit. Subsequent changes refined how different household structures are treated:

1969: The “marriage penalty” emerged. To address the fact that two single individuals could sometimes pay less tax than a married couple with the same combined income, Congress created a new tax schedule for single filers that was less favorable than half the married brackets. This formally established different tax treatments for different household/filing statuses (Single, Married Filing Jointly, Married Filing Separately, and later Head of Household).

1970s onward: The introduction of provisions like the Earned Income Tax Credit (EITC) in 1975 truly brought “household income” to the forefront. Eligibility for many credits and deductions (like the EITC, Child Tax Credit, IRA contribution deductibility) is based on Modified Adjusted Gross Income (MAGI), which is often calculated on a household basis (e.g., combining income of spouses and sometimes dependents) for the purpose of phase-outs.

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Today, the U.S. system is best described as a hybrid:

The Tax Computation Starts with the Individual: You are taxed on your individual income. Filing status then determines the rates and brackets applied to that income.

Household Structure Determines Filing Status. In other words, your household situation (single, married, with dependents) dictates your filing status (Single, Married Filing Jointly, Head of Household, etc.), which applies different tax rates and standard deductions. I know elderly people who got married simply because of the taxes.

Many Benefits are Household-Income Tested. For example, key benefits, subsidies (like for the Affordable Care Act), and deductions phase out based on the total income of the tax household (e.g., combined income on a joint return).

Around 2015, a group of clients asked me to join in buying a bank in Switzerland. They wanted me to design a gold-backed bank which did not lend in an unsecured manner. I designed the bank and how it would eben issue a credit card and allow Giro Banking (transfers between accounts) all based on cash as well as precious metal deposits. The idea was not to avoid taxes, it was to avoid possible banking failures. Between 2009 and 2016, about 45,000 U.S. taxpayers, had taken advantage of IRS tax amnesty programs to pay more than $6 billion in back taxes and related penalties for having offshore accounts to avoid taxes.

Switzerland already has an International Wealth Tax which is a levy on the total value of personal assets, including bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts. You have to declare everything you own around the entire world. Then, because Switzerland is part of the CRS, they will share that with every other country. Typically, liabilities (primarily mortgages and other loans) are deducted from an individual’s wealth.

The Common Reporting Standard (CRS) is a global standard for the automatic exchange of financial account information between tax authorities, designed to combat tax evasion. It was developed by the Organisation for Economic Co-operation and Development (OECD) in 2014, it has been implemented by over 100 jurisdictions worldwide. Unlike previous systems that required specific requests, CRS mandates the routine, annual exchange of financial information. In other words, if you were under investigation, they would request all info on you. Today, they transfer data on everyone just in case.

There was a legal case that became the seminal beginning of the American Revolution known as Entick v. Carrington and Three Other King’s Messengers (1765), reported at length in 19 Howell’s State Trials 1029. This case was the start of the American Revolution and was also based upon abuse of the king’s agents. The action, dated November 1762, was for trespassing and interfering with the plaintiff’s dwelling by breaking open his desks and boxes and searching and examining his papers.

After George III became king in 1760, by February 1761, Parliament enacted the Writs of Assistance that was challenged in court in Boston, Massachusetts. These were writs that empowered the king’s agents to search anything they suspected, like the NSA today at their discretion. The defending lawyer James Otis (1725-1783) pronounced these writs as “the worst instrument of arbitrary power, the most destructive of English liberty, and the fundamental principles of law, that ever was found in an Englishlaw book.” Otis warned that the king placed discretion in the hands of every agent to act as he desired. Nothing has changed, for our current government can do whatever it desires today, and it is always the burden of the citizen to prove he has any rights whatsoever.

John Adams (1735–1826; 2^nd President 1797–1801) was in the audience at that hearing that day, and the four-hour speech of James Otis so moved him that he declared:

“Then and there was the first scene of the first act of opposition to the arbitrary claims of Great Britain. Then and there, the child independence was born.”

The CRS and the US version of FACTA were inspired by this very same distrust of the population. Everyone is a criminal and the Writs of Assistance allowed the King’s agents to enter your house and rummage through everything to see if they could prosecute you for something. This is the very same issue. You have money that they want and they are out to get it for we are all criminals and just economic slaves to support the state.

Needless to say, I declined because of the wealth tax. I was told its minimal – progressive but very low (0.1% to 1.0% effective). If it is so minimal, then why bother? The problem is always clear. It may be minimal but so was the Income Tax proposed to be 1% in 1913 and rose to 94% by 1945. This taxed UNREALIZED GAINS, and with war on the horizon, it was far too dangerous to get involved. They can say you house is worth whatever and you now must pay a wealth tax on it in Switzerland even though it is on the beach in Florida.

Hoe do you ever retire voluntarily or because of health? Then you still must pay taxes on its value and if the market is in a downturn, you may not be able to sell it to pay all the taxes every government is demanding.

Just as the billionaires are fleeing California which was demanding a 5% one-time tax, this illustrated these Progressive Democrats do not understand the economy and would be the impact of forcing these people who may be billionaires on paper (NOT CASH) to start dumping shares to pay the tax. We have the MOST incompetent herd of politicians worldwide. After dealing with governments around the world for nearly 50 years, I can honestly say it certainly appears to be a conspiracy to inject the worst possible candidate globally.

I get people asking is there a conspiracy theory from elites to utterly destroy the United States and turn it into a Marxist Utopia like Europe? I cannot confirm that nore deny that. I have dealt with many politicians over my years. I have found that the decline and fall has been systemic on a global scale. It does make one ask yourself, home man coincidences does it take to make a conspiracy. I have tried my best to open the door where LIBERTY and JUSTICE for all actually exists.

We will do an update to forecasts for the 2026 Midterm Elections. Many have written in and asked I have offered advice to the Trump Administration/Republicans. I believe there are plants in some of these people’s staffs and they are deliberately giving bad advice that does not support them for the 2026 midterms. It just appears very strange. As far as the Trump Administration directly, I believe there are some players who actively try to prevent me from offering advice.

So, is this all a coincidence or a deliberate conspiracy? The LEFT is in a battle to take no prisoners. Going into 2028, we should expect a most aggressive attempt to seize power. This idea of the LEFT where individual liberties is just an illustion. Since the Day of Sparta, and the Thucydides Trap which is a concept in international relations that describes the heightened risk of conflict when an emerging power challenges an established ruling power. This is what is playing out on a global scale. We are at great risk of war internationally as well as civil war domestically as there is no compromise. This is all about one side suppressing the other.

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