The International
Monetary Fund Lays the Groundwork for Global Wealth Confiscation
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 don’t 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
wealth—as 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 pre-crisis 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 today’s governments
even if 100 percent of the assets of the 1 percent were expropriated. That
means that all households with positive net wealth—everyone with retirement
savings or home equity—would have their assets plundered under the IMF’s
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
along—for 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
capitalism’s 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 report’s 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 “wellbeing.” 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-being—contentious, 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 what’s for
dinner. That’s 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.
Comments
Obama is just as likely to sign an agreement
with the IMF to levy a 1% global tax on US citizens and send it to the IMF or
UN or Iran or George Soros.
Norb Leahy, Dunwoody GA Tea Party Leader
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