If you’re old or sick and have a lot of money, I suggest taking a trip out of the country, away from your heirs, until January 1, 2011. And don’t tell them where you’re going. On that date, the death tax for rich folks goes from the current 0 percent to 55 percent. So your heirs will get less than half of what they would have if you went to the Great Walmart in the Sky a day earlier.

Deep-sixing the death tax is part of the cancellation of most of President George W. Bush’s 2003 tax cuts. Republicans in the White House and Congress, in their Karl Rovian sneakiness, put a termination date on their otherwise sensible tax cuts. The reason is now clear: The tax increases are being used in campaigns against Democrats who won’t extend the tax cuts.

But wait, there’s more. In 2011, the top income-tax rate will rise from 35 percent to 39.6 percent. The capital-gains tax will jump from 15 percent to 20 percent, an increase of one third, choking off vital capital needed for an economic recovery. And unlike the income tax, the capital-gains tax is not indexed to inflation.

Individuals and businesses are taking profits in 2010 to avoid paying higher 2011 taxes. They will stop doing that on January 1. The tax increases will trigger the Panic of 2011, the second dip of the Great Recession.

Things are going to be worse than they were in the Great Depression. Back then, the country’s moral fiber was stronger. Far fewer people had mortgages. There were no credit cards. Since the 1930’s, the U.S. industrial base, which was still by far the world’s largest, has greatly eroded, and it soon will be surpassed by China’s.

For America’s industrial decline, my Chronicles colleague Tom Piatak blames free trade. I blame the lack of a gold standard, excessive regulations, and high taxes. I especially blame the 1971 “Nixon Shock,” which ended the $35 gold standard, and the ensuing inflation that jammed the middle class into upper-income tax brackets. But both of us want America to have strong producing industries.

continue… http://www.chroniclesmagazine.org/2010/08/30/the-panic-of-2011/