A Global Wealth Tax?
December 11, 2013
A tax on wealth grows likelier by the day, says Romain Hatchuel, managing partner of asset management firm Square Advisors, LLC.
The International Monetary Fund (IMF) recently released a Fiscal Monitor report, which argues in favor of taxing the wealthy in order to generate revenue to deal with public debt. Already, economies across the developed world have increased their top tax rates, at an average of 8 percent. The United States recently saw the highest income tax bracket increase from 35 percent to 39.6 percent due to the expiration of the Bush tax cuts.
- The IMF calculates that raising top rates toward 70 percent in the United States would yield the most revenue -- around 1.25 percent of gross domestic product (GDP).
- They made this recommendation while admitting that their approach to maximize revenue does not take into account the well-being of earners or businesses.
- For the euro zone, the IMF suggests a 10 percent tax on households' net worth in order to bring public debt levels down to where they were before the financial crisis.
- Such a tax, Hatchuel writes, is not unheard of: in Cyprus earlier this year, individuals with bank accounts above 100,000 euros were taxed at 100 percent of their savings above that threshold.
Japan has a public debt ratio that is over twice what Cyrpus' was at default, so it should be particularly worried about these types of measures. Japan has yet to take aim directly at top earners, though it has begun to increase taxes on individuals.
Source: Romain Hatchuel "The Coming Global Wealth Tax," Wall Street Journal, December 3, 2013.
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