The coming wealth tax a recurrent theme with the IMF flavour

September 2011 the BCG or the Boston Consulting Group came up with an interesting paper called  “Back to Mesopotamia” suggesting that governement should study a global “Wealth Tax” in order to get off the hook of the cripppling debt overhang. See the following link : http://www.bcg.com/documents/file87307.pdf

Icecap Management brings us a good overview about the “progress” made and now the IFM is also coming with such suggestion.

http://www.icecapassetmanagement.com/uploads/documents/IceCap%20Asset%20Management%20Limited%20Global%20Markets%202013.10.pdf

Arbitrary asset confiscation is already a reality as Poland recently did  by confiscating the private pension funds: see here: https://relativemoney.wordpress.com/2013/09/10/poland-and-the-private-pension-funds-or-the-blue-print-for-massive-private-asset-confiscation/

The question is…. is such wealth tax really feasible? and if yes… which countries will be best to shield you assets off.

I think that we can expect about anything from despaired governements and banksters lobbies who just want to persue policies which serve their self interests. The problem with such wealth tax is how… it will be implemented and what kind of reactions it might create. Will it be a mandatory transfer ownership to the governement?  We could be surprised  because the wealth concentration is so concentrated  that a growing majority of the “new poor middle class” would not give much importance to such decision. The other side of the middle class which is still relatively well because it has worked hard and lived within its means will strongly oppose such arbitrary decision and gvt should really take care about that because this group has always been the one (small and mid-size business owners) which have the most contributed for the wealth creation process.  The upper rich… will try to use their closer gvt relationships to change the course of such decision in their favour but…. it will be hard.

I am not saying that this is coming tomorrow but there are signs you need to  observe like increasing capital controls measures beore it happens. I addition, not all countries will implement such measure and if implemented… in the same manner.  Asset prices have been also sustained by monetary policies (QE etc..)  since asset price inflation has been responsible for a good part of the credit bubble (in non productive asset) so… this equilibrium might prove too fragile to be targeted by such decision..  Decision should be also taken about  the level  from which such tax could be charged (USD 5 millions networth?)

 

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