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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Fri Oct 11, 2013 10:51 am 
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Of Systemic Importance

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metalmike wrote:
And equally this is an argument why the confiscation/levy approach will never fly in an environment controlled by German policy.

They don't mind, as long as it's not their savings being confiscated. See Cyprus.

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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Fri Oct 11, 2013 11:42 am 
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sorehead wrote:
http://content1d.omroep.nl/urishieldv2/l27m7b201c4004c905a4005257bb89000000.7dcd08113495c32c928f5e5c98f67d16/nos/docs/101013_supertaxrapport.pdf

Here's the original IMF piece

Code:
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.
1
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). There have been illustrious supporters,
including Pigou, Ricardo, Schumpeter, and—until he
changed his mind—Keynes. 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 (these, in turn, are a particular
form of wealth tax—on bondholders—that also falls on
nonresidents).

There is a surprisingly large amount of experience to
draw on, as such levies were widely adopted in Europe
after World War I and in Germany and Japan after
World War II. Reviewed in Eichengreen (1990), this
experience suggests that more notable than any loss of
credibility was a simple failure to achieve debt reduc-
tion, largely because the delay in introduction gave
space for extensive avoidance and capital flight—in turn
spurring inflation.
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

Oookay, so the illustrious supporters are all long-dead and at latest from the age of totalitarianism...

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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Fri Oct 11, 2013 12:39 pm 
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Property Magnate

Joined: Oct 6, 2010
Posts: 577
There are many things to worry about, but this is not one.

We are protected by the constitution, in at least that they would have to pass a law to do it as opposed to a smash and grab - giving us all time to move cash to the USA.


ARTICLE 40
3 1° The State guarantees in its laws to respect, and, as far as practicable, by its laws to defend and vindicate the personal rights of the citizen.

2° The State shall, in particular, by its laws protect as best it may from unjust attack and, in the case of injustice done, vindicate the life, person, good name, and property rights of every citizen.

ARTICLE 43
1 1° The State acknowledges that man, in virtue of his rational being, has the natural right, antecedent to positive law, to the private ownership of external goods.

2° The State accordingly guarantees to pass no law attempting to abolish the right of private ownership or the general right to transfer, bequeath, and inherit property.

2 1° The State recognises, however, that the exercise of the rights mentioned in the foregoing provisions of this Article ought, in civil society, to be regulated by the principles of social justice.

2° The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good.

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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Fri Oct 11, 2013 1:01 pm 
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Homeless

Joined: Oct 10, 2013
Posts: 24
A few observations one could make:

Some peoples savings are their pension funds - so therefore if they take 10% of savings pot per year they should also take 10% of pension pot per year.

There is already a tax on household savings - its called dirt tax.

Finally, you could argue that if they tax one form of asset - your home - with an annual tax, they should do the same with your next egg.


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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Fri Oct 11, 2013 1:18 pm 
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nespotm wrote:
There are many things to worry about, but this is not one.

We are protected by the constitution, in at least that they would have to pass a law to do it as opposed to a smash and grab - giving us all time to move cash to the USA.

We are not remotely protected by the constitution. If we were there would be no pension levy.

There would be an emergency sitting of the Dail when the banks are closed, just like with the bank guarantee. All that's required is for the TDs to "reconcile their exercise with the exigencies of the common good".

Relating to ex-Patrick's "pick your haircut" argument, this is relevant:

Dark inventory, death of a city edition
http://ftalphaville.ft.com/2013/10/10/1 ... y-edition/

"There is actually a lot to the idea that we are living in an inevitable age of bubbles, and that such bubbles will not disappear until savers and capital owners acknowledge that they must be haircutted on the misvalued section of their wealth (the savings glut). Only this would stop it from disruptively and flightily flowing from one speculative asset class to the next because as soon as it anchors anywhere for too long its real (depreciated) value is exposed."

That article really deserves a separate thread though, I haven't digested it yet.

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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Fri Oct 11, 2013 1:40 pm 
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I think the undercover economist book had a section about taxes which have the least impact on behaviour . The once off tax was it - though I think it was in the context of income tax- apparently some economist came up with it about 2 decades ago IIRC.

Obviously in reality one couldn't trust the Irish authorities to not think it was a great idea and repeatedly do it - while protecting themselves - but I can see how it works when a "one time event" happens - such as revolution/world war/independence etc.


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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Fri Oct 11, 2013 1:42 pm 
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Eschatologist wrote:
Dark inventory, death of a city edition
http://ftalphaville.ft.com/2013/10/10/1 ... y-edition/
I'd agree with much of that article.

I wonder is a bank deposit 'bail in' or whatever just the gentler way to pay off the bank bailouts that occurred? I mean, if the banks throughout Europe had been allowed to fail with all parties burned, would the effect overall on the deposit base have been something like -20% to -30%, allowing for some overshoot because the fallout and cross contamination from failing banks would've meant absolute carnage for a while.


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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Fri Oct 11, 2013 2:04 pm 
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Ireland's 'official' debt to GDP is c. 125% and our full annual deficit is +7% (all government costs)

About 20% of Ireland's GDP is an accounting transaction (i.e. likes of Google routing revenues offshore on which we earn no tax)
http://www.independent.ie/business/irish/google-pays-17m-in-corporation-tax-here-as-revenue-hits-155bn-29620300.html

There is lots of analysis on the web what Ireland's 'true' GDP is but Seamus Coffey did a simple comparison.
The league table alone (with Luxembourg), will show you.
http://economic-incentives.blogspot.ie/2013/04/gdp-and-international-comparisons.html

Ireland's true like-for-like debt to GPD is c. 155% and annual deficit c. 9% (i.e. worse that Greece).
The troika know this and that is why they are so hardcore' regarding Ireland maintaining its austerity targets.
(After all, at 125% Ireland's debt is no worse that Italy who is undergoing less forced austerity than our coming budget).

Ireland made an amazing recovery in 1990 from a debt to GDP of c. 120%.
At that time the country was materially underleveraged (bottom of the Euro league table in consumer indebtedness).
The leveraging up of the Irish consumer (i.e. the true Celtic Tiger) led to dramatic GDP growth and killed the debt.

Not so sure the same feat can be achieved now that the consumer if very indebted (top of the Euro and World league tables).
Some how, one way or another, this will have to be paid for.

The ordinary consumer maxed out and the Germans are awake to Google (and others) in getting Euro revenues gross to Bermuda.
Property taxes, wealth taxes - i.e. taxes on those who have it are the only credible way out (and even that will take time).


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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Sun Nov 03, 2013 4:09 pm 
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Varadker was on Marion this morning and stress tests came up. He was asked if the banks failed where would the money come from, after a bit of stuttering and mumbling, some one else mentioned the dreaded Bail in. Varadker was about as re assuring as the Chairman of a Football club whose manager has lost the last 15 games, total confidence then your fired. :(


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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Sun Nov 03, 2013 5:14 pm 
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Nobody with an ounce of sense has any more than their monthly cashflow in an Irish bank since the night of the bank guarantee. Was there not a monster thread here about where best to stash the cash? I presume the consensus was in as many non-Irish baskets as practicable.

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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Sun Nov 03, 2013 5:40 pm 
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Quote:
Nobody with an ounce of sense has any more than their monthly cashflow in an Irish bank since the night of the bank guarantee


Most of the people I speak to and maybe its those I hang around with still have varying amounts of money in Irish Banks, if I speak about this issue I am met with "Sure twill be grand"


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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Sun Nov 03, 2013 6:27 pm 
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coc wrote:
Nobody with an ounce of sense has any more than their monthly cashflow in an Irish bank since the night of the bank guarantee. Was there not a monster thread here about where best to stash the cash? I presume the consensus was in as many non-Irish baskets as practicable.


Had our stash out foreign in Keytrade Belgium since returned it to Irish shores as figured the worst was over and "twould be grand" :oops: now.

Looks like the safest place for it is in property or big pharma shares and to think I used to laugh at my Grandfather and his mistrust/dislike of banks.

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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Sun Nov 03, 2013 8:15 pm 
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Rimbaud wrote:
Looks like the safest place for it is in property or big pharma shares and to think I used to laugh at my Grandfather and his mistrust/dislike of banks.

Surely the risk of (say) a 20% haircut on state-guaranteed savings (which would cause a huge political shitstorm) is lower than the risk of losing 20% on property or pharma stocks (which would result in no one batting an eyelid)?

Also, I'm not sure I'd want to be holding property in a country where there are savings haircuts and capital controls. How is Cypriot real estate doing?

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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Sun Nov 03, 2013 8:26 pm 
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It seems obvious but Diversification is the answer. A bit here, a bit there. Just need to stop procrastinating......

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 Post subject: Re: IMF calls for a tax on household savings
PostPosted: Sun Nov 03, 2013 9:05 pm 
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Eschatologist wrote:
Surely the risk of (say) a 20% haircut on state-guaranteed savings (which would cause a huge political shitstorm) is lower than the risk of losing 20% on property or pharma stocks (which would result in no one batting an eyelid)?


Good chance property/share prices will rebound over the medium term,with a haircut is like those radio ads...when its gone its gone.

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"In a nation ruled by swine, all pigs are upwardly mobile—and the rest of us are fucked until we can put our acts together: not necessarily to win, but mainly to keep from losing completely. We owe that to ourselves and our crippled self-image as something better than a nation of panicked sheep."
—Hunter S Thompson-The Great Shark Hunt, 1979


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