Governments begin with taxation as the easiest way...

Editor's note: ...to raise revenue, but persistent trillion-dollar deficits, now so large that interest payments rival defense spending, inevitably force them toward ever more intrusive measures: wealth taxes, unrealized capital gains taxes, exit taxes, and capital controls. As mobile high-net-worth individuals and capital flee high-tax jurisdictions like California, the burden shifts to those who remain who are getting hammered in taxes, triggering a vicious feedback loop that ends in financial surveillance, digital currencies designed for control, and the erosion of financial freedom. This spiral is not inevitable; it is enabled and prolonged by central banks, particularly the Federal Reserve, whose ability to monetize government debt and suppress interest rates removes all market discipline from reckless fiscal policy. The solution is clear: the current structure of central banking must be abolished entirely, and the power to create credit must be returned directly to the state so that government can fund itself without the endless accumulation of debt or the desperate hunt for trapped capital.
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From Taxation to Confiscation

April 20, 2026 | By Martin Armstrong

Governments always begin with taxation because it is the most straightforward and politically acceptable means of raising revenue, yet history has shown repeatedly that when deficits expand beyond control, taxation alone is never sufficient and the system begins to evolve into something far more intrusive. The United States is now running persistent deficits exceeding $1 trillion annually, with the Congressional Budget Office projecting deficits remaining above that level for the foreseeable future as interest payments alone approach or exceed defense spending, and once debt servicing becomes one of the largest line items in government expenditure, the pressure to find new sources of revenue intensifies dramatically.

At that stage, policymakers begin to explore alternatives that were once considered politically impossible, including wealth taxes, unrealized gains taxes, financial transaction taxes, and exit taxes, all of which are increasingly discussed in mainstream policy circles rather than on the fringe. Recent proposals in the United States have floated taxing unrealized capital gains for high-net-worth individuals, while globally we are seeing similar movements, such as Norway increasing wealth taxes and subsequently witnessing an exodus of wealthy residents, or France historically attempting wealth taxation only to reverse course after capital flight accelerated.

The people who control the largest pools of capital are often the most capable of relocating. IRS migration data has consistently shown that higher-income households are disproportionately represented in interstate and international migration flows, with states like California, New York, and Illinois experiencing net outflows of high earners, while lower-tax jurisdictions such as Florida and Texas continue to benefit from inflows.

Net Capital Movement

What emerges from this dynamic is a feedback loop that governments rarely acknowledge. As wealth leaves, the tax burden becomes more concentrated on those who remain, prompting further outflows, which in turn leads to additional policy measures aimed at preventing that capital from escaping. This is where exit taxes and capital controls enter the discussion more aggressively, as governments seek to tax unrealized gains at the point of departure or impose restrictions on the transfer of assets abroad. The United States already has a form of exit tax for individuals renouncing citizenship, and proposals to expand or tighten such measures continue to surface as fiscal pressures grow.

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