Wouldn't this be a hoot!

KTP · #1 (**permalink**) 08-24-2009, 09:09 AM

This is not a political thread.

I saw this article today titled "Will the US Adopt a wealth tax to avoid default"

Will The US Adopt A "Wealth Tax" To Avoid Default?

How fun would that be! Imagine living cheaply and thrifty, saving a nestegg for many years and then the Government imposes a wealth tax on your savings account, in effect double taxing your money and penalizing you for saving. What a great idea!

I realize that this was just a thought put out there by the writer of this article, perhaps a scare tactic, but it does make one think about moving a bit of one's nest egg offshore...

Joan.of.the.Arch · #2 (**permalink**) 08-24-2009, 09:55 AM

"Article" implies to me journalism. I think what you linked was a blog commenting on another blog.

But to the point-- the issue being addressed in the blog is not ordinary savings built up with money that has already been taxed as income. It is about money being hidden away from the knowledge of the IRS by putting it in secret overseas accounts without reporting the initial income to the IRS. That is tax fraud. I imagine these blogs were spurred by the 5,000 or so UBS customers who are getting their info reported to the IRS, customers who thought they had a safe place to hide their income from the IRS.

So I don't think this is about doubly taxings anyone's savings. It is about taxing income at all in the first place.

KTP · #3 (**permalink**) 08-24-2009, 10:15 AM

Sorry Joan, but I don't think you are correct this time.

See the definition of "Wealth Tax":

Wealth tax - Wikipedia, the free encyclopedia

Several countries (France, Switzerland, India) tax the accumulted net worth of an individual each year. Granted, it is not a huge tax percentage...seems to be around 1% or so. Still, this is a tax on money and assets that have already been taxed, not an effort to find tax evading people (that activity is already illegal and there would not be a need to "enact" anything to legally go after them).

I think the blog or article was saying, "Would the US ever go this route also?"

Broken Arrow · #4 (**permalink**) 08-24-2009, 11:28 AM

Just my opinion, but as a general rule, I do not agree with a wealth tax. Doing so basically discourages saving and investing. I lean more towards some kind of consumption tax. That way, spending is discouraged, rather than saving and investing.

Of course, that's just a general rule of thumb, and the details as well as certain exceptions can be made.