" One of the latest reports from the IMF discusses a super taxation of 10% on savings in the Eurozone. That would solve the debt problem in most sovereign countries. It would be an alternative of higher taxes or spending cuts.
The economists who wrote the paper hasten to say that it is a theoretical proposal. Still, it appears to be âan efficient solutionâ for the debt problem. For a group of 15 European countries such a measure would bring the debt ratio to âacceptableâ levels, i.e. comparable to levels before the 2008 crisis.
The report itself is embedded at the bottom of this article. In the last section of the report, on page 58, right before the appendices, it says:
The sharp deterioration of the public finances in many countries has revived interest in a âcapital levyââ a one-off tax on private wealthâas an exceptional measure to restore debt sustainability. The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair). There have been illustrious supporters, including Pigou, Ricardo, Schumpeter, andâuntil he changed his mindâKeynes. The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away (these, in turn, are a particular form of wealth taxâon bondholdersâthat also falls on nonresidents)
There is a surprisingly large amount of experience to draw on, as such levies were widely adopted in Europe after World War I and in Germany and Japan after World War II. Reviewed in Eichengreen (1990), this experience suggests that more notable than any loss of credibility was a simple failure to achieve debt reduction, largely because the delay in introduction gave space for extensive avoidance and capital flight â in turn spurring inflation.
The tax rates needed to bring down public debt to precrisis levels, moreover, are sizable: reducing debt ratios to end-2007 levels would require (for a sample of 15 euro area countries) a tax rate of about 10 percent on households with positive net wealth(*).
(*) IMF staff calculcation using the Eurosystemâs Household Finance and Consumption Survey; unweighted average. "
http://goldsilverworlds.com/money-c...a-super-tax-of-10-on-all-savings-in-eurozone/
The economists who wrote the paper hasten to say that it is a theoretical proposal. Still, it appears to be âan efficient solutionâ for the debt problem. For a group of 15 European countries such a measure would bring the debt ratio to âacceptableâ levels, i.e. comparable to levels before the 2008 crisis.
The report itself is embedded at the bottom of this article. In the last section of the report, on page 58, right before the appendices, it says:
The sharp deterioration of the public finances in many countries has revived interest in a âcapital levyââ a one-off tax on private wealthâas an exceptional measure to restore debt sustainability. The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair). There have been illustrious supporters, including Pigou, Ricardo, Schumpeter, andâuntil he changed his mindâKeynes. The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away (these, in turn, are a particular form of wealth taxâon bondholdersâthat also falls on nonresidents)
There is a surprisingly large amount of experience to draw on, as such levies were widely adopted in Europe after World War I and in Germany and Japan after World War II. Reviewed in Eichengreen (1990), this experience suggests that more notable than any loss of credibility was a simple failure to achieve debt reduction, largely because the delay in introduction gave space for extensive avoidance and capital flight â in turn spurring inflation.
The tax rates needed to bring down public debt to precrisis levels, moreover, are sizable: reducing debt ratios to end-2007 levels would require (for a sample of 15 euro area countries) a tax rate of about 10 percent on households with positive net wealth(*).
(*) IMF staff calculcation using the Eurosystemâs Household Finance and Consumption Survey; unweighted average. "
http://goldsilverworlds.com/money-c...a-super-tax-of-10-on-all-savings-in-eurozone/
