International Monetary Fund Lays The Groundwork

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International Monetary Fund Lays The Groundwork

The International Monetary Fund Lays The Groundwork For Global Wealth

Confiscation

Forbes

The International Monetary Fund (IMF) quietly dropped a bomb in its

October Fiscal Monitor Report. Titled Taxing Times, the report paints a

dire picture for advanced economies with high debts that fail to

aggressively mobilize domestic revenue. It goes on to build a case for

drastic measures and recommends a series of escalating income and

consumption tax increases culminating in the direct confiscation of

assets.

Yes, you read that right. But dont take it from me. The report itself

says:

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). 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. 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. (page 49)

Note three takeaways. First, IMF economists know there are not enough

rich people to fund todays governments even if 100 percent of the

assets of the 1 percent were expropriated. That means that all

households with positive net wealtheveryone with retirement savings or

home equitywould have their assets plundered under the IMFs

formulation.

Second, such a repudiation of private property will not pay off Western

governments debts or fund budgets going forward. It will merely restore

debt sustainability, allowing free-spending sovereigns to keep tapping

the bond markets until the next crisis comes alongfor which stronger

measures will be required, of course.

Third, should politicians fail to muster the courage to engage in this

kind of wholesale robbery, the only alternative scenario the IMF posits

is public debt repudiation and hyperinflation. Structural reform

proposals for the Ponzi-scheme entitlement programs that are

bankrupting us are nowhere to be seen.

If ever there were a roadmap for prompting massive capital flight and

emigration of productive citizens toward capitalisms nascent frontiers

in Asia, this is it.

The IMF justifies its tax increases by highlighting trends in income

inequality along with a claimed decline in the progressivity of most

income tax regimes. Using perceived equity (otherwise known as envy) as

the key metric motivating tax policy, the report intentionally

conflates tax rates with tax revenue, lamenting a decline in the top

marginal income tax rates paid by the highest earners. Never mind that

these high earners have been forking over more money, a higher

percentage of their gross income, and a larger share of aggregate

national tax revenue in recent years. It also ignores the Laffer Curve

effects that are clearly visible in the data. As for incentive, the

report pays no heed to the idea that wealth and income can only be

taxed if someone is motivated to create it.

The reports most chilling aspect is the clinical manner in which it

discusses how to restrict the mobility of the rich, along with the

inconvenience of factoring in their well being. Again, to quote the

report:

Financial wealth is mobile, and so, ultimately, are people. There may

be a case for taxing different forms of wealth differently according to

their mobility Substantial progress likely requires enhanced

international cooperation to make it harder for the very well-off to

evade taxation by placing funds elsewhere.

A revenue-maximizing approach to taxing the rich effectively puts a

weight of zero on their well-beingcontentious, to say the least. What

then if some weight is indeed attached to the well-being of the

richest? Figure 19 provides a way to think about the trade-off between

equity and efficiency considerations in setting the top marginal rate

in that case. If one attaches less weight to those with the highest

incomes, the vote would be to increase the top marginal rate.

Yes, this is where the bankruptcy of the modern entitlement state is

taking us capital controls and exit restrictions so the proverbial four

wolves and a lamb can vote on whats for dinner. Thats the only way to

keep citizens worried about ending up on the menu from voting with

their feet. Again, straight from the report:

There is a surprisingly large amount of experience to draw on, as such

levies were widely adopted in Europe after World War I.

And we all know how well that worked out.

http://www.forbes.com/sites/billfrezza/2013/10/15/the-international-monetary-fund-lays-the-groundwork-for-global-wealth-confiscation/