Sunday, March 17, 2013

Why not a one off wealth tax to save the world?

I think like everyone else this morning, switching on the news it was at first shocking to hear about the tax on savings accounts in Cyprus.  

I am less sympathetic to those with £100k plus in savings but the tax will include British troops and those with retirement nest eggs. There is also the risk of a widespread run on the banks but thinking about it, could this be the solution to austerity? 

I am reminded of this post I did last year (see link here) here about a report by the Boston Consultancy Group (BCG).  The report recommended an international wealth tax to wipe the debt slate clean and end the recession. 

Now the BCG are hardly bleeding heart liberals. Their plausible argument is that we have written off debt in this way before and a tax is actually in the interest of the wealthy.  Since instead of years or even decades of austerity, if this was to work and the world economy would grow then their assets would soon rise by more than they would have lost.  

A one off tax would also be much better to wealthy savers who are currently earning interests rates below inflation, so it would make sense for them to have a one off hit than lose more in real terms.

This could be progressive solution and even poetic justice since many of the wealthy made money from the debt bubble. Yet taking savings from the poor and vulnerable as they are in Cyprus is just wrong. This should be a tax on wealth (and not just bank account savings).

.By coincidence this came up at a recent pension meeting I attended where in a discussion about what we can do about the recession, I asked our advisers if they had heard of the report? (They hadn't) and this morning it is one of my top 10 of "Most Poplar" posts!
Post a Comment