IMF proposes a private 10% temporary refund adjustment in Eurozone

C

Caput Lupinum

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The sharp deterioration of the public finances in many countries has revived interest in a "capital levy" a one-off tax on private wealthas 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, anduntil he changed his mindKeynes. 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 taxon bondholdersthat 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 flightin 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.
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http://www.imf.org/external/pubs/ft/fm/2013/02/pdf/fms2.pdf
 
The thing that has got me is you work hard your whole life, go without a lot of things, skimp and save while others spend every cent they have, borrow, get govt handouts and are totally useless. Then it is a case of "you have money so you can pay for it" while those who have pissed it all away sit back and go that is a great idea, they have got heaps off money saved they should pay for it.....

Is it me or is that just plain crazy, reward poor behaviour and punish people who try and get ahead.......
 
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