http://www.forbes.com/sites/timworstall/2013/10/23/why-the-imfs-10-wealth-tax-simply-will-not-work/
Think about it for a moment in the way that Frezza does: government has overspent so wildly that it’s now going to demand 10% of everything you’ve ever managed to save and or squirrel away. To put it mildly it’s not exactly an appealing prospect is it?
We discussed wealth tax in class, and were unable to choose a value beyond 1%. Do you feel this 10% is fair? Or is it needed by the government? Share your thoughts.
Think about it for a moment in the way that Frezza does: government has overspent so wildly that it’s now going to demand 10% of everything you’ve ever managed to save and or squirrel away. To put it mildly it’s not exactly an appealing prospect is it?
We discussed wealth tax in class, and were unable to choose a value beyond 1%. Do you feel this 10% is fair? Or is it needed by the government? Share your thoughts.
I am not really concerned about the fairness of the tax, but the feasibility. I don't see it being passed in any country because of the reasons mentioned in the article. It would not make sense to take so much wealth from people for any political party. Even those obsessed about redistribution would not do it.
ReplyDeleteThere's no way this would happen, and I think the article tells us why.
ReplyDeleteit's arguable i think. it is risky and might lead to another recession... so perhaps not?
ReplyDeleteOne problem with taxes wealth is how to value unique and long-held assets. Another is that people would have an incentive to hide their assets, even more than they do today. I wonder, however, if it is true that wealth is still a function of the life cycle? Most of the world's wealth. From the UN University's World Institute for Development Economics Research ("The world distribution of household wealth" by James B. Davies, Susanna Sandstrom, Anthony Shorrocks, and Edward N. Wolff, UNU-WIDER 5 December 2006): "there is extreme inequality in wealth distribution in the world as a whole, both across countries and within countries. Also, the distribution of personal wealth in the world turns out to be much more concentrated than the distribution of personal income. According to the study, for the world as a whole the share of the top 10 per cent was 85 per cent in the year 2000 and the Gini coefficient (a measure of inequality between 0 and 1) equalled 0.892 at official exchange rates." I would imagine that the ratio is higher today. If you could only tax the wealth of these folks.........
ReplyDeleteA larger wealth tax would definitely help the government collect more money, and many of us were proposing larger wealth taxes on Tuesday night. Do you think that, one day, if any of us ever have that much money we will still be advocating for larger wealth taxes? Or will we simply want to hold on to as much as our wealth as possible?
ReplyDeleteI think that this is definitely worrisome. While it may foster some form of income equity, I think that it would be far more detrimental for the economy as a whole. It would be a huge disincentive to savings.
ReplyDelete