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Ken Rogoff Warns Wealth-Taxes Aren't Enough

Tyler Durden's picture


Over 2 years ago when we first discussed the fact that "muddle through" had failed, BCG noted that "there were only painful ways out of this mess." The most painful truth, they suggested, was that "the only way to resolve the massive debt load is through a global coordinated debt restructuring... which will have to be funded by the world's financial asset holders: the middle-and upper-class' who will have a ~30% one-time tax on all their assets to look forward to as the great mean reversion finally arrives and the world is set back on a viable path." However, given the delay (and worst progression), Ken Rogoff warns that temporary wealth taxes may well be a part of the answer for countries in fiscal trouble today, and the idea should be taken seriously; but they are no substitute for fundamental long-term reform to make tax systems simpler, fairer, and more efficient.


BCG's Original "Muddle Through has failed" discussion... which addresses the inevitable need for a wealth tax



And why that won't be enough...

On The Shortcomings Of A One-Time Wealth Tax,

Authored by Ken Rogoff, originally posted at Project Syndicate,

Should advanced countries implement wealth taxes as a means of stabilizing and reducing public debt over the medium term? The normally conservative International Monetary Fund has given the idea surprisingly emphatic support. The IMF calculates that a one-time 10% wealth levy, if introduced quickly and unexpectedly, could return many European countries to pre-crisis public debt/GDP ratios. It is an intriguing idea.

The moral case for a wealth tax is more compelling than usual today, with unemployment still at recession levels, and with deep economic inequality straining social norms. And, if it were really possible to ensure that the wealth levy would be temporary, such a tax would, in principle, be much less distortionary than imposing higher marginal tax rates on income. Unfortunately, while a wealth tax may be a sound way to help a country dig out of a deep fiscal pit, it is hardly a panacea.

For starters, the revenue gains from temporary wealth taxes can be very elusive. The economist Barry Eichengreen once explored the imposition of capital levies in the aftermath of World Wars I and II. He found that, owing to capital flight and political pressure for delay, the results were often disappointing.

Italy’s armada of Guardia di Finanza boats would hardly forestall a massive exodus of wealth if Italians see a sizable wealth tax coming. Over- and under-invoicing of trade, for example, is a time-tested way to spirit money out of a country. (For example, an exporter under-reports the price received for a foreign shipment, and keeps the extra cash hidden abroad.) And there would be a rush into jewelry and other hard-to-detect real assets.

The distortionary effects of a wealth levy would also be exacerbated by concerns that the “temporary” levy would not be a one-off tax. After all, most temporary taxes come for lunch and stay for dinner. Fears of future wealth taxes could discourage entrepreneurship and lower the saving rate.

In addition, the administrative difficulties of instituting a comprehensive wealth tax are formidable, raising questions about fairness. For example, it would be extremely difficult to place market values on the family-owned businesses that pervade Mediterranean countries.

Wealth taxes that target land and structures are arguably insulated from some of these concerns, and property taxes are relatively underused outside the Anglo-Saxon countries. In theory, taxing immobile assets is less distortionary, though taxes on structures obviously can discourage both maintenance and new construction.

So what else can eurozone governments do to raise revenue as their economies recover? Most economists favor finding ways to broaden the tax base – for example, by eliminating special deductions and privileges – in order to keep marginal tax rates low. Broadening the income-tax base is a central element of the highly regarded Simpson/Bowles proposals for tax reform in the United States.

In Europe, efficiency would be enhanced by a unified VAT rate, instead of creating distortions by charging different rates for different goods. In principle, low-income individuals and families could be compensated through lump-sum transfer programs.

Another idea is to try to raise more revenue from carbon permits or taxes. Raising funds by taxing negative externalities reduces distortions rather than creating them. Though such taxes are spectacularly unpopular – perhaps because individuals refuse to admit that the externalities they themselves create are significant – I regard them as an important direction for future policy (and I intend to suggest other ideas along these lines in future columns).

Unfortunately, advanced countries have implemented very little fundamental tax reform so far. Many governments are giving in to higher marginal tax rates rather than overhauling and simplifying the system.

In Europe, officials are also turning to stealth taxes, particularly financial repression, to resolve high public-debt overhangs. Through regulation and administrative directives, banks, insurance companies, and pension funds are being forced to hold much higher shares of government debt than they might voluntarily choose to do. But this approach is hardly progressive, as the final holders of pensions, insurance contracts, and bank deposits are typically the beleaguered middle class and the elderly.

There is also the unresolved question of how much the periphery countries really should be asked to pay on their debilitating debt burdens, whatever the tax instrument. Although the IMF seems particularly enthusiastic about using wealth taxes to resolve debt overhangs in Spain and Italy, some burden sharing with the north seems reasonable. As the economists Maurice Obstfeld and Galina Hale recently noted, German and French banks earned large profits intermediating flows between Asian savers and Europe’s periphery. Unfortunately, arguing over burden sharing creates more scope for delay, potentially undermining the efficacy of any wealth tax that might finally be instituted.

Still, the IMF is right – on grounds of both fairness and efficiency – to raise the idea of temporary wealth taxes in advanced countries to relieve fiscal distress. However, the revenues will almost certainly be lower, and the costs higher, than calculations used to promote them would imply. Temporary wealth taxes may well be a part of the answer for countries in fiscal trouble today, and the idea should be taken seriously. But they are no substitute for fundamental long-term reform to make tax systems simpler, fairer, and more efficient.


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Mon, 11/04/2013 - 20:16 | 4120738 gibbs
gibbs's picture

I'll give you three guesses where you can put your wealth tax idea(s)......

Mon, 11/04/2013 - 20:19 | 4120745 Newfie
Newfie's picture

first two guesses don't count

Mon, 11/04/2013 - 20:26 | 4120761 unununium
unununium's picture

Only inflation can impose a tax that broad based.  All holders of fiat-denominated instruments will suffer.

Mon, 11/04/2013 - 20:32 | 4120770 CH1
CH1's picture

The thieving comes first, the justifications second.

Mon, 11/04/2013 - 20:41 | 4120792 RafterManFMJ
RafterManFMJ's picture

All Fiat devalues against gold, by agreement, over a long weekend... GOT GOLD, BITCHEZ?!

Mon, 11/04/2013 - 20:45 | 4120805 Fredo Corleone
Fredo Corleone's picture

In which Cayman Islands financial institution does Rogoff have his millions secreted ?

Mon, 11/04/2013 - 20:48 | 4120815 LetThemEatRand
LetThemEatRand's picture

Exactly.  If they did a one time 30% tax on the world's billionaires -- most of whom are responsible for this mess --  it would not affect their lifestyles one bit, and it would have the same effect as taking a substantial chunk from the "middle and upper-middle" classes which would affect them substantially.  Tax the King of Saudi Arabia and the Kings and Queens all over the world.  And the Rothschilds etc.  But of course that would be wrong.   They get to keep theirs while they tell us we must part with ours to save their system.

Mon, 11/04/2013 - 20:56 | 4120839 kaiserhoff
kaiserhoff's picture

Temporary tax is both a damned lie,

  and an oxymoron.

Mon, 11/04/2013 - 20:57 | 4120848 LetThemEatRand
LetThemEatRand's picture

I'd go along with a permanent tax on the Kings, Queens and oligarchs who inherited their wealth from their ancestors who stole it.  

Mon, 11/04/2013 - 22:02 | 4121098 Running On Bing...
Running On Bingo Fuel's picture

Don't tax me brah.


Mon, 11/04/2013 - 22:19 | 4121156 Manthong
Manthong's picture


I thought his time it would be different..

.but I guess it’s just the same old sh*t.

Tue, 11/05/2013 - 00:00 | 4121547 Honey Badger
Honey Badger's picture

The problem with a wealth tax is the wealthy will find a way to not pay it.

Tue, 11/05/2013 - 03:18 | 4121934 stacking12321
stacking12321's picture

i support the wealthy, as well as the poor, not paying any taxes.

the last thing i need is for the psychopaths in washington to get more money to start more wars, to spy more on our citizens, to harass and intimidate journalists and whistleblowers, etc.


Mon, 11/04/2013 - 21:09 | 4120885 seek
seek's picture

And of course the 30% one time tax on anyone does zero to fix the problem. It may make the books balance now, but without spending = revenue, the problem persists. And as long as the problem persists, no one with wealth will trust a government again in their lifetime.

The only people the one-time tax helps is those that are holding debt that would otherwise default. And guess who that might be?

Let the fuckers keep their system, and let us move on to something new.

Mon, 11/04/2013 - 21:16 | 4120908 LetThemEatRand
LetThemEatRand's picture

There will be no new system for the rest of us unless we take the fuckers' money back that they stole.  They are the system and the system will remain so long as they control our money.

And if the fuckers weren't skimming from the top (Fed, MIC, etc), we would have a functioning society and no account deficits.

Mon, 11/04/2013 - 21:38 | 4121002 bobert727
bobert727's picture

30% wealth tax on billionaires will do nothing to help the debt in the US.
There are approx. 412 billionaires in the US. Lets say that instead of a 30% tax we just take everything they have. Take Gates, Buffet, Ellison, Waltons, and the other 400+ billionaires down to a net worth of ZERO.

Guess how much you would end up with?

About $1.3 trillion or about what the US Federal Government will OVERSPEND this year.

That still leaves the $17+ trillion debt load alive and growing

Mon, 11/04/2013 - 22:35 | 4121201 LetThemEatRand
LetThemEatRand's picture

I'm not talking about those guys.  I'm talking about the Rothschilds and the Kings and Queens and princesses all throughout the world.  How much do they have?  You don't know, do you.  And they aren't on the Forbes list for a reason.  And they sure as hell didn't earn it, nor did their great, great grandparents.  They stole it.

Mon, 11/04/2013 - 22:48 | 4121245 EARLPEARL
EARLPEARL's picture

if you took all the money from all the billionaires it would not make  a the math....takes one thousand billion to make a trillion...all the billionaires together would barely make 1 trillion...

Tue, 11/05/2013 - 00:14 | 4121597 Poor Grogman
Poor Grogman's picture

Taxes are one of the best control mechanisms that the fiat system has.

Even by simply talking about more taxes the PTB can cause panic among the sheeple and change society's behaviour, in significant ways.

It will never occur to most, that taxes themselves are not really even needed. Your friendly central Bankers could conjure all the tax money needed, into existence with a couple of mouse clicks.

Why don't they do this, you ask?

They don't do it because people may just choose to stop using the currency thus created. The government forces you, by threat of penalty, to pay tax. Therefore you must get your hands on some FRNs or face jail. This means that even if you don't need FRNs to pay back borrowed debt, you are still forced to acquire them by trading your labor in order to pay your taxes.

If there were no taxes and you had no debt, you may conceivably (using human ingenuity) be able to live outside the monetary system using a combination of barter networks and non fiat money (NFM).

If a group were able to do this successfully, then state controlled fiat money might be toast.

Wouldn't it be good!

Oh I forgot to mention. Tax the Fed ....its for the children!

Tue, 11/05/2013 - 02:37 | 4121885 bonin006
bonin006's picture

the top 45 billionares from 2012 are worth $1.008T

Tue, 11/05/2013 - 04:34 | 4121985 Escapeclaws
Escapeclaws's picture

There's probably at least $20 trillion sitting in offshore tax havens. That and real tangible assets is where "they" stash their "earnings". For instance, Ted Turner owns a big chunk of Tierra del Fuego.

Better than a wealth tax, which only hits people alreadiy drowning in tax and is manifestly unfair--consider that you could very well be forced to pay on the present value of any retirement funds you have, you call this anything other than confiscation?

Better than TPTB fiinding "solutions" for us (they always have our best interests at heart), consider that a 1% WALL ST FINANCIAL TRANSACTIONS TAX could easily raise the triions called for without putting us useless eaters in harms way. "Communism for the little guy" seems to be the Rogoff/TPTB mantra.

Here's a little secret I will let you in on: Randy Credico, the hidden-by-the-media candidate is on the New York ballot for mayor. Bring your magnifying glass and you will see his name near the bottom of the list, probably scrunched in between two candidates with Thai last names. Credico is running on a TAX WALL ST platform.

Invite Wall Street to the party!

Tue, 11/05/2013 - 07:12 | 4122087 StandardDeviant
StandardDeviant's picture

"There's probably..."?  Right, that's some good, useful data right there.  Thank you for your contribution.

Also, before trotting out the stupid Tobin tax idea again, why not read up a bit on how well that's worked in the past?  (You could start with Sweden.)  If you think markets are broken now, just bring in one of these, and watch your liquidity flee.

Tue, 11/05/2013 - 09:30 | 4122257 Escapeclaws
Escapeclaws's picture

I've seen the 20 trillion mentioned several times, including a documentary by the BBC on the city of London where this figure was given, but I can't locate the documentary at present. This establishes that I did not, in any case, pull the number put of a hat.

Regarding the one percent transaction tax, that was proposed by Webster Tarpley at The idea is to exempt accounts having less than a million dollars in capital. I think this is a good idea because it would kill HFT and really put a hole in the profits of GS and JPM, as well as The hedge fund hyenas (Tarpley's expression). Currently, Wall St pays virtually nothing in tax.

I don't expect the least thing to be done to put the brakes on our parasitic financial system. Gradually, the rest of the world will decide they've had enough and that will bring down Wall St.

Mon, 11/04/2013 - 21:53 | 4121066 booboo
booboo's picture

The NSA is all about tracking money crossing wires, these well to do Manhattanites and wine and cheese crowds poo pooing the "conspiracy nuts" and "their rantings" about fascism are going to get it full bore when they find out there is a target on their backs from the same guy that was wooing their dollars during the election. Usefull fucking idiots, the lot of them.

Mon, 11/04/2013 - 20:54 | 4120838 nmewn
nmewn's picture

It never ceases to amaze me C.

Governments run up insurmountable debt with their cronies, when everyone with half a brain is screaming at the top of their lungs to stop, then turn and say we need ANOTHER TAX to fix this whole mess they created.

No...fuck you Lagarde, you leather-faced bitch, YOU drop 30% of YOUR assets into the meat grinder of the statism you built to show us how its really done...FIRST. Then we'll move on to every elitist prick, monarch, prime minister, staffer, meter maid & senator who entered your miracle of central planning from the middle class and is now a millionaire or "well to do".

Do this...and then we'll have a serious discussion about all your salaries & pensions and why you have them in the first place for bringing it to this stage and then...AND ONLY THEN...will we entertain "helping" you.

Otherwise, molon labe.

Mon, 11/04/2013 - 22:33 | 4121196 lewy14
lewy14's picture

Fears of future wealth taxes could discourage entrepreneurship and lower the saving rate.

For the ruling class, these are features, not bugs.

Tue, 11/05/2013 - 09:38 | 4122396 StandardDeviant
StandardDeviant's picture

That line was the biggest understatement of all in the article.

If anything will instantly breed an "us vs. them" mentality on the part of the embattled middle classes, it'll be a government that announces suddenly (and it must be suddenly, as the IMF report explains) that it will steal a significant portion of whatever little they've been able to save after already confiscatory taxation -- only to continue borrowing and spending as before.

Far from simply discouraging entrepreneurship and lowering the (already vanishingly small) saving rate, it will lead to capital flight, tax evasion, an underground economy, demand for hard and portable assets, barter, etc., all on a massive scale.  Cyprus is only the most recent example.

It's also astonishing that there is absolutely nothing in the Rogoff article about reducing government expenditures.  Granted, that's not the main topic; but surely it's relevant enough to warrant at least a line or two.

(Not sure what you mean about features vs. bugs, though.  How is reduced entrepreneurship and saving in the interests of your "ruling class", however you define it?  If you're holding some cartoonish vision of feudal serfs and barons, that's certainly not in the interests of the wealthy any more than it is of the middle class or the poor.)

Tue, 11/05/2013 - 20:00 | 4124818 lewy14
lewy14's picture

Fair question.

Discourage entrepreneurship -> acquire the best people at reduced prices. Fewer people taking the bait and starting their own venture. Less disruption of existing rent seeking structures. In a confiscatory tax environment, big connected corporations will be able to provide in-kind enticements that entrepreneurship will not. (Consider that this is how employer provided health insurance got started in the wake of crazy tax rates post WWII).

Reduced savings: Read Izabella Kaminska at the FT. The new ruling class holds that savings are an immoral hoarding of claims against future production; your duty is to consume in the present. The state vacuums up all excess earnings and spends more into existence. No need for savers; savers are in fact the cause of the instability and crisis. 

Financial rentiers are to be euthanized. The rent extracted by producers of actual stuff will be protected and enhanced. Wealth as a portable set of claims against future production will disappear. Don't need it due to "radical abundance" provided by technology.

This is all freedom-destroying ideological lunacy of the first order and the worst kind to be sure, but my read of what the "smart set" is saying these days indicates to me that this is what they're thinking.

Feudal, yes, cartoonish, no. Recall feudalism started in the wake of Diocletian's monetary "reforms" which essentially destroyed money and freedom in the Roman empire. The middle ages started well before Rome fell for good. The destruction of wealth is essential for the destruction of freedom.

"Freedom" for this new ruling class is a terrible thing, it allows terrible people to exhibit all sorts of terrible, selfish behaviors. No wealth - no freedom - problem solved. In their view, Keynes's "economic problem" is about to be solved for good, so "capital" (wealth) is redundant and toxic.


Mon, 11/04/2013 - 22:44 | 4121229 LetThemEatRand
LetThemEatRand's picture

Don't let them fool you.  When they talk about a tax on the middle and upper-middle class, it does not include the ruling class.  The ruling class have all the money.  Take it back and let the people who earned it keep theirs.  They love it when people talk about how taxation of inherited wealth is evil.  They -- the Rothschilds, the King of Saudi Arabia, etc -- have all the wealth.   

Mon, 11/04/2013 - 20:18 | 4120743 nmewn
nmewn's picture

"Still, the IMF is right..."

Go do something anatomically impossible to yourself.

Mon, 11/04/2013 - 20:33 | 4120774 fonzannoon
fonzannoon's picture

for those guys it's actually possible

Mon, 11/04/2013 - 20:42 | 4120801 NoDebt
NoDebt's picture

What?  Pulling their heads out of their asses?  No, that's quite impossible for them, I assure you.  They've been up there for so long their spine has fused in that position.


Mon, 11/04/2013 - 20:45 | 4120804 TheFourthStooge-ing
TheFourthStooge-ing's picture


for those guys it's actually possible

Hmmmm... alrighty then. Ken Rogoff, go fuck your face in the ass.

Mon, 11/04/2013 - 20:51 | 4120831 fonzannoon
fonzannoon's picture


Mon, 11/04/2013 - 20:58 | 4120850 nmewn
nmewn's picture

Fonzi, I'll supply the lube my brutha ;-)

Mon, 11/04/2013 - 20:34 | 4120775 Carl Popper
Carl Popper's picture

I dont think anyone would believe it to be a one time thing if they were suddenly surprised by a "wealth tax overnight and woke up to 10 % liens on real property and ten percent taken from all their savings and investments.

It would lead to revolution, such a naked brazen disregard for law.

If they debated it openly and then passed a law giving everyone plenty of warning I cannot imagine the havoc that would create too.

Might be fun to watch though, provided it happened somewhere else.

Mon, 11/04/2013 - 20:42 | 4120800 RafterManFMJ
RafterManFMJ's picture

If a 10% lien puts your even close to underwater, stop paying.

If you get tossed out, return some dark and moonless night, and BURN IT TO THE MOTHERFUCKINGMOTHERFUCKING GROUND.

At some point, even a retard will actively oppose this fascist BS. Your boiling point is a function of your IQ and experience.

Mon, 11/04/2013 - 21:25 | 4120941 GeezerGeek
GeezerGeek's picture

I can see quite a few willing to give the bastards 100% of all the lead they've acquired. Well, that would be one way to ensure that no incumbents got reelected to office.

Mon, 11/04/2013 - 22:57 | 4121273 Which is worse ...
Which is worse - bankers or terrorists's picture

"It would lead to revolution, such a naked brazen disregard for law."


It's much easier in the context of a war or major market shock. Like the confiscation of gold in 1934, for example. 

Not that any government would undertake any kind of false flag action like that. 

Mon, 11/04/2013 - 20:20 | 4120748 therevolutionwas
therevolutionwas's picture

Starve the state. 

Mon, 11/04/2013 - 20:25 | 4120758 johnQpublic
johnQpublic's picture

why is the answer never to stop spending so much?

reading this made me want to punch my monitor in the face

Mon, 11/04/2013 - 20:38 | 4120782 NOTaREALmerican
NOTaREALmerican's picture

Re: why is the answer never to stop spending so much?

Because, 60+ years of spending too much brought un-imagined bling to Western nations.

Who doesn't love bling?    You can't expect people who lived through bling utopia bought with borrowed money wouldn't expect it to keep working.   Hell, it still IS working for the top 10%.  

Mon, 11/04/2013 - 20:37 | 4120785 CH1
CH1's picture

why is the answer never to stop spending so much?

Because they want the money, and because the suckers always pay what they ask.

Mon, 11/04/2013 - 21:29 | 4120958 GeezerGeek
GeezerGeek's picture

Why stop spending when all you have to do is borrow more?

Besides, you can't buy votes with austerity.

Mon, 11/04/2013 - 20:29 | 4120766 0b1knob
0b1knob's picture

"In Soviet Union, state starves you!"    Jackoff Smirnoff

Mon, 11/04/2013 - 20:26 | 4120757 centerline
centerline's picture

Fun to see more idiots promoting the deflationary implosion of the global economy.  Got to hunt down that evil capital huh?



Mon, 11/04/2013 - 20:38 | 4120781 Carl Popper
Carl Popper's picture

When there are no good solutions and no escape governments get desperate and do crazy things.

Mon, 11/04/2013 - 20:26 | 4120759 0b1knob
0b1knob's picture

Wealth taxes aren't enough.    Only lifetime slavery can support the state.  Pack your bags for the FEMA camps.

Mon, 11/04/2013 - 20:30 | 4120767 centerline
centerline's picture

Only if you promise we can name the camps, facilities, etc. after bank CEOs, politicians and other members of the elite social class.

Got to feel patriotic about all of this ya know!

Tue, 11/05/2013 - 02:27 | 4121871 trader1
trader1's picture

only the climate change deniers, universal health care haters, and some other wackos will be sent there.  no worries if you're not in that demographic.

Mon, 11/04/2013 - 20:28 | 4120762 Confundido
Confundido's picture

Fucking IMF....DEFAULT IS "THE" TAX over those who were stupid enough to either directly invest in govt risk or indirectly leave their savings in the hands of pension fund managers and banksters. 

Mon, 11/04/2013 - 20:31 | 4120769 0b1knob
0b1knob's picture

Good idea.   Default of government bonds would transfer the loss to the stupidest part of the population.

Mon, 11/04/2013 - 20:34 | 4120776 sschu
sschu's picture

The moral and practical application of a wealth tax are so perverse as to make the idea absurd.  

Who will be in charge of collecting the tax and what assurances does anyone have that some people will know what is coming while many will not?

Will the state change its irresponsible and profligate ways once the tax is collected and the debt reduced?  What safeguards will be put in place to make sure this does not happen again?

I thought more of Rogoff than this really.  Boston Consulting Group, who are these guys anyway?


Mon, 11/04/2013 - 20:41 | 4120797 CH1
CH1's picture

who are these guys anyway?

I can answer what they are: Fully brainwashed, aparently.

Mon, 11/04/2013 - 20:50 | 4120823 NoDebt
NoDebt's picture

I thought the same thing, sschu.  Was expecting more from Rogoff than "here are the new taxes we should implement."  Turns out he's just another elitist/statist, I guess.  I'm done with the guy from this article.  He's on my shit list.

Mon, 11/04/2013 - 20:56 | 4120846 sschu
sschu's picture

Roghoff - I bought and read his book about it being different this time.  It was a painful read, but there was some decent information.

I guess he reached his royalty objective, now he can go back to being an elitist.  Maybe it really is not that different after all.  Confiscate the serfs property!  That's the ticket!


Mon, 11/04/2013 - 21:06 | 4120874 NoDebt
NoDebt's picture

He did just about everything short of saying "Ha, ha!  Tricked you!" and then rip off his mask to reveal he's actually Cass Sunstein or something.

Tue, 11/05/2013 - 07:18 | 4122090 StandardDeviant
StandardDeviant's picture

Me too.

By the way, it seems that the new is, though with an even less useable web site.  If anyone wants the original "Back to Mesopotamia", in a simple, readable PDF file, it's on the BCG web site here.

Mon, 11/04/2013 - 21:32 | 4120971 RaceToTheBottom
RaceToTheBottom's picture

"The moral and practical application of a wealth tax are so perverse as to make the idea absurd.  "

Exactly, only little people pay taxes.  Why would anyone expect that to voluntarily change?  Never.  And they don't yet have the data/processes to find it...

Mon, 11/04/2013 - 20:35 | 4120777 NoDebt
NoDebt's picture

Ah, so once again the problem we're faced with is one of government revenue generation, huh?  I see.  Let's focus only on that.

"Another idea is to try to raise more revenue from carbon permits or taxes. Raising funds by taxing negative externalities reduces distortions rather than creating them. Though such taxes are spectacularly unpopular – perhaps because individuals refuse to admit that the externalities they themselves create are significant – I regard them as an important direction for future policy (and I intend to suggest other ideas along these lines in future columns)."

I'm really looking forward to it, Ken.  It will once again present me the opportunity to tell the truth:  ALL ACTIONS HAVE EXTERNAL CONSEQUENCES.  Government actions, by their broad and sweeping nature, have the MOST externalities.  

Then, I will take one of your phrases and turn it back on you:  'because GOVERNMENTS refuse to admit that the exernalities they themselves create are significant.'

And I'll finish by saying something like: 'Bruce, you ignorant slut.  You've thought about this for so long through the lens of government and ivory-tower elitism you can't see any solutions that don't involve it consuming more resources to solve problems they themselves are the primary cause of.  You ask only what new tax should be implemented.  I say you are asking the wrong question.'

Mon, 11/04/2013 - 20:38 | 4120779 centerline
centerline's picture

(golf clap)  Nice.

Mon, 11/04/2013 - 20:38 | 4120778 Constitutional ...
Constitutional Republic's picture

History tells us that tax is theft from the many for the profit of the few, ie whoever controls government, whether that be a monarchy, a feudal lord or the Fed.

U.S. national income tax was introduced with the founding of the Federal Reserve Board, owned by private shareholders, in 1913. It was a sort of wealth tax only to be applied to the richest. It was expanded to tax everyone on everything.

A 'wealth tax' today goes nowhere near clearing any significant over-spending by a bloated government that is out of control; taxation without meaningful represention.

One example: one in four U.S. children rely on food stamps, and the program was cut by $4 billion this week. Meanwhile, that foreign country Israel gets $4 billion per year from the American taxpayer, and Congress recently voted to increase that foreign country's yearly gift by half a billion dollars.

Who owns Congress? Who does Congress serve first? Foreigners or the American people? 

Mon, 11/04/2013 - 20:41 | 4120790 NOTaREALmerican
NOTaREALmerican's picture

Re;  Who does Congress serve first?

Those who make the most campaign "contributions".   It has always been so.

Mon, 11/04/2013 - 20:56 | 4120845 Constitutional ...
Constitutional Republic's picture

I know you are not a real American by your incessant trite ignorant comments. A real American of your sort would usually stay in their comfort zone: sports, celebrity news, the meeja. But you insist on displaying your ignorance. Best you leave the issue of serious American business to your betters, dear.

Mon, 11/04/2013 - 20:47 | 4120817 Carl Popper
Carl Popper's picture

Congress clearly serves the tribe.

The amazing part is that the foreign aid to israel is then laundered thru various organizations and a percentage is sent back to congress in speaking fees, political contributions, book deals, post political career opportunities, consulting fees and business sales to congressional allies and family.

Omg the tribe is really smart. Bribing politicians with our own money.

Mon, 11/04/2013 - 21:30 | 4120968 GeezerGeek
GeezerGeek's picture

And how much was it GS just threw in Hillary's direction for two speeches?

Mon, 11/04/2013 - 20:37 | 4120786 F0ster
F0ster's picture

Janet Yellen's plans on negative interest rates sound like the plan thats not being talked about in public yet. Freeze eveyrones bank deposits one Friday afternoon (give insiders time to wire out their funds first of course) and charge a 'one-time negative interest rate' of say -10% over the weekend leaving you with an a$$ raping balance of 90% (inaccessablie of course). Then to prevent a system-wide run on the banks, they'll declare a limit on future transactions (Cyrpus style) for the next 5 years. During which time they'll apply more 'one-time' charges to our deposits until there is nothing left or until which time as the people have revolted violently.

My guess this is is being considered as a solution to not increase QE to QE5.



Mon, 11/04/2013 - 20:45 | 4120803 Constitutional ...
Constitutional Republic's picture

A recent street protest sign in Ireland:


The IMF and the Bank of England have already detailed how a one off 10% tax on all accounts will relieve bank stress, and can be sold as a temporary measure.

Remember: The U.S. un-Federal no-Reserve Board is a creation of the Bank of England, the Queen who owns 1/6 of all land and her hofjuden. The Bank of England has legal title to more U.S. assets than Congress is willing to admit.

Mon, 11/04/2013 - 20:44 | 4120806 CH1
CH1's picture

But since no one has real money in savings acounts anymore, they'll be going after brokerage accounts soon enough.

Mon, 11/04/2013 - 21:03 | 4120833 Constitutional ...
Constitutional Republic's picture

Everything will be confiscated at a minimum rate of 10% for any savings, brokerage accounts etc. That is the plan of the IMF and Bank of England, well known to those who keep a close eye on the small detail of these global tax consumers.


That silent thief inflation will be unleashed by the Fed to feed its own task masters, and lumber the many with rising food and fuel costs, and business with rising input costs that will exceed their output. Such is the way that the old money men of Britain and the monarchies rule, viciously.

Mon, 11/04/2013 - 20:40 | 4120788 WelfareFTW
WelfareFTW's picture

When the Zombies come calling with this form of Morality "The moral case for a wealth tax is more compelling than usual today..." the only just response is a quick bullet to the head of those who would come for what belongs to us.

Mon, 11/04/2013 - 20:48 | 4120816 U4 eee aaa
U4 eee aaa's picture

Isn't it amazing how important they tell us a piece of paper is? So important that we must bow down to it. They go ahead and spend this money against our will and then it is supposedly our fault when they default.

Paper burns! And often so do the hands that are fool enough to hold on to it while lit!

Tue, 11/05/2013 - 01:19 | 4121780 agent default
agent default's picture

Don't mention to them that the first one to come with such an idea was emperor Nero.   That would be populist and other things they yap about when they run out of "arguments".

Mon, 11/04/2013 - 20:41 | 4120791 disabledvet
disabledvet's picture

"muddle through"? what Wall Street is that guy looking it? They're printing revenue like it's never been printed before. That doesn't even include the energy "super boom." you could argue all these fines against the banks are in effect a "wealth tax"...but state and local finances which rely overwhelmingly on property and sales tax revenues have been really harmed by all this QE nonsense and it inability to create recovery. ONLY Wall Street (bubbles?) are paying the bills? hard to see actual recovery until QE is ended once and for all and "the real recovery comes forth." as far as the Fed is concerned the only question really is "will it be non-inflationary?" and obviously i think the answer would be should they stop the QE "yes" per what happened this summer. it hasn't stopped equities from posting one new high after another or tax receipts from coming in at all time highs. the dollar might sell off. then again oil production might double and natural gas go up even more. a million bucks for 500 sq feet in Santa Monica? paid for in cash? Tesla up 12% today? I'm mean i'm no homeowner in LA or roaring around in my "all electric off the grid everything" but i'd still say "go for it."

Mon, 11/04/2013 - 20:42 | 4120795 Burticus
Burticus's picture

Before even suggesting more, more, more taxes, taxes, taxes like a typical career public serpent would do, for starters, slash n' burn gubbermints down to 5% of their current size, repudiate all gubbermint debt, publicly execute all current & past politicians and their top minion enforcers, make the money-center banks pay back all their bail/handouts in gold then shut 'em down, get rid of central banks and imprison the 5-6,000 individuals (the biggest peckers in the pecking order) who ultimately control the banks who own the central banks until they cough up all the gold & property they've robbed with their counterfeit currencies, eliminate all gubbermint handouts and "free" everything to deadbeats, etc., etc.

Voila, you will find you don't need no stinkin' taxes!

Mon, 11/04/2013 - 21:13 | 4120902 Carl Popper
Carl Popper's picture

You make a compelling case. I'm in.

Mon, 11/04/2013 - 20:46 | 4120807 U4 eee aaa
U4 eee aaa's picture

First off, we can cancel the Fed and the debt they hold. They are not a person, they will not suffer. Burn the institution to the ground.

Secondly, in order for lenders to start lending responsibly in the future, at least 50% losses will be crammed down their throats. Once we complete those two actions we will look at the books. If more is needed then fine

Mon, 11/04/2013 - 20:46 | 4120814 Holleyman
Holleyman's picture

Who is John Galt?

Mon, 11/04/2013 - 20:57 | 4120844 yomama
yomama's picture

In conclusion, prepare for increased 'donkey punching'.  That is all.

Mon, 11/04/2013 - 21:02 | 4120857 IndyPat
IndyPat's picture

Yeah no thanks. I know how that one time tax thing works. Like I'm just going to eat one Oreo....or just shoot one syringe of smack.
Notice he doesn't suggest a 30% annual Corp tax. Hey, if they are treated as individuals vis a vie the current election laws, why not tax the freeloading fucks as individuals?

Mon, 11/04/2013 - 21:02 | 4120860 khakuda
khakuda's picture

There is a wealth tax already, it's called inflation via money printing.  It's called punishing savers for a decade with ZIRP.  There are also property taxes, capital gains taxes unadjusted for inflation, there are income taxes, sales taxes, various fees and fines, VATS, etc, etc.

Impose wealth taxes (aka blatant outright theft) and you have abolished any semblance of property rights.  What kind of wealth gets taxed and how do you tax illiquid wealth.  Do you tax my financial assets, real property, art, my car, my education?  Why work?  Why save?  May as well get a gun and steal like the government.

Instead of getting government spending under control, these guys continue to propose the dumbest ideas to stay in power.

Mon, 11/04/2013 - 21:03 | 4120865 gnomon
gnomon's picture

If they ever get our firearms, this stuff will fly.  We have more power than we think, (and they know it).

Mon, 11/04/2013 - 21:03 | 4120868 khakuda
khakuda's picture

I worked in a state with no income taxes 25 years ago that used to run without deficits.  Now, they have some of the highest tax rates in the country and their per capita debt levels is at the very top.

Higher taxes do not cure deficits.  They grow government.

Mon, 11/04/2013 - 21:11 | 4120890 Walt D.
Walt D.'s picture

The problem with wealth taxes is that once the wealth is gone it is gone, unlike income taxes, which you can keep on collecting every year.

You can't have your cake and it it too. And you risk killing the goose that lays the golden eggs.

The real problem is that the government is still spending over $1 trillion a year more than it takes in. Even if the debt were to magically disappear, we would be back owing $17 trillion dollars within the next 20 years - they would find a way to piss away any money they retained as a result of not having to pay interest on the debt.

Mon, 11/04/2013 - 21:21 | 4120917 Constitutional ...
Constitutional Republic's picture

Precisely, Walt. Government spends more dollars for every dollar raised. Fact. 

There is a structural problem with current government, and people like Rogoff who gain from the status quo.

"It is difficult to get a man to understand something when his salary depends upon his not understanding it."

(Upton Sinclair)

Mon, 11/04/2013 - 21:16 | 4120912 Fiat Burner
Fiat Burner's picture

More theft. Fuck these crooks.  This needs to stop now.

Mon, 11/04/2013 - 21:18 | 4120919 Nobody
Nobody's picture

A little math:
Farmland in America runs around $4000/AC
30% is $1200
Very few crops gross $1200/AC a year let alone net
Agriculture grinds to a halt, the only export business worth a damn in the US
Depression ensues.
Good luck with that
Debtor prisons anyone?

Mon, 11/04/2013 - 21:25 | 4120939 Constitutional ...
Constitutional Republic's picture

The globalists calculate that GM crops and manufacturing abroad will entitle them to greater riches, no matter how many Americans are brought down to the lowly level of feudal, totalitarian states elsewhere.

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."

(Thomas Jefferson)

Mon, 11/04/2013 - 21:32 | 4120970 FieldingMellish
FieldingMellish's picture

As the former Soviet Union has shown, collective farming under central control can lead to a communist utopia... or something like that.

Mon, 11/04/2013 - 21:34 | 4120983 Constitutional ...
Constitutional Republic's picture

:-) wry understatement.

or something like the death of millions of kulaks; the harmless hardworking owners of private land which fed themselves and their communities.

Mon, 11/04/2013 - 22:17 | 4121154 FieldingMellish
FieldingMellish's picture

All too real for me as my family lost about 500 acres of top Ukranian farmland and forest thanks to them but yes, it was meant as a wry understatement with a large dose of /sarc.

Mon, 11/04/2013 - 21:24 | 4120936 ZH11
ZH11's picture

Given the explosion in sovereign debt was merely a transference of bank debt/liabilities wouldn't the simple answer be to get it back from those entities that have now alledgedy recovered?

Why should banks and other such financial institutions receive the benefit of not going bankrupt, receiving the sole benefit of ZIRP/NIRP and never see a cost for this?

Banks are global entities with highly (if not purely) digitised records of assets, liquid or fixed, and thus very easy targets to implement such a worldwide tax against. In fact in such a country as the UK the major banks are still owned by the government/people thus such action would denote direct action politics, all very revolutionary. It is clear that if there is to be any conclusion to the whole host of problems that 2008 enleashed from Pandora's Box one of the most populist actions would be getting the banks to pay. Let the yoke fall upon the necks of those who are the architects of the problems and those with the ability to pay.

As an alternative 'negation' of the above why not completely think differently and look at a mass cancellation of national debts which are in the hands of the bailed out banks.

Why should a bank, that through it's own negligence lost it's required capital base get the ability to take the fruits of national debt issuance (money capital) to reestablish itself as an solvent entity, then later pay nothing for the priviledge for further money capital (ZIRP) which get resolved in the fictitious capital of sovereign debt as purely interest-bearing/rent seeking.

The scrubbing of this debt acts as a means of restitution and thereafter forces the banks to do something truly helpful, facilitate loan capital etc into the production sphere which is required to boost GDP and employment in an honest fashion in lieu of the current banking model where everything hinges on speculation first and foremost.






Mon, 11/04/2013 - 21:30 | 4120962 Constitutional ...
Constitutional Republic's picture

The private banks are allowed to privatise their profits and socialise their losses. No amount of pontificating from academics can hide that fact, although academics do like their tenures, so continue to rationalise this great injustice; the plunder of the USA and other lands.

Mon, 11/04/2013 - 21:31 | 4120966 evernewecon
evernewecon's picture



Shiller On R/R:


Jurow on Shiller:

(but Jurow's only saying that how it happens

to fall when MSM financial TV uses an index

that happens to be helpful to the person who

wants to portray a view of bubble successfully

reflated, though some go further and call it




Mon, 11/04/2013 - 21:32 | 4120975 Dr. Gonzo
Dr. Gonzo's picture

...and that's why I've got about $150 in the system right now. I don't owe anybody jack shit and I don't trust these mother fuckers with my money and I ain't working 55 hours a week so I can get ripped off by them in future. NO TRUST. NO CONFIDENCE. I WON'T PLAY. 

Mon, 11/04/2013 - 21:38 | 4120993 Constitutional ...
Constitutional Republic's picture

Smart man. One morning, people will wake and the world will be a different place. While they were sleeping, their means of survival was stolen in a click...or should I say a clique.

Mon, 11/04/2013 - 21:36 | 4120984 RaceToTheBottom
RaceToTheBottom's picture

Exit stage right, if that happens....

Mon, 11/04/2013 - 21:49 | 4121019 Constitutional ...
Constitutional Republic's picture

Pack your bags. It will happen: a 'one off' 'wealth tax'.  The mechanism is already written into law. The only question is the timing.

I would suggest you stay if you are in the U.S.A. Everywhere else will be much worse off, and anyone with an American accent will be blamed.

Rather like the peaceful Indian sign of a swastika was turned into a symbol of hate by the international financiers and their Hitler project. They are intent on ruining the U.S.A. and its traditiions as the last hurdle to their Internationale, for their own vs everyone else. Must demoralise all before assuming totalitarian supremacy.

Mon, 11/04/2013 - 21:36 | 4120987 Dr. Gonzo
Dr. Gonzo's picture

I thought everything got fixed by the money printing and ZIRP. Green shoots and bubble stock market and all. You mean it's all just an illusion? The hell you say!

Mon, 11/04/2013 - 21:38 | 4121007 Kina
Kina's picture

A 30% wealth tax will crash demand everywhere...and throw countries into even deeper recession..... well I guess that is coming anyway.


For decades the globe grew on credit, then credit growth, and then accelerating credit growth.... until it slammed into a brick wall and CB money printing tried to pick up the slack.  


The current world is structured on the premise ever growing credit growth...which aint gonna happen anymore. No amount of printing money and waiting around is going to fix this... only real wealth growth will do this....and that wont happen until debt is destroyed...populations delevered and demand recreated...


They can let it fall, hyperinflate in panic...then everything crashes to below where it would have been....and the long journey back starts for the next generation.


Mon, 11/04/2013 - 21:47 | 4121029 Constitutional ...
Constitutional Republic's picture

Any talk of a 30% tax is straight out of Orwell's book 1984 whereby rations are cut, then reality proves to be slightly better, and people are grateful that the worst didn't happen...all while the bank/government private cartel steal with impunity.

They hope you will be grateful or applaud a mere 10% tax on all nett 'wealth' as a one off 'emergency' tax.

Mon, 11/04/2013 - 21:47 | 4121046 viator
viator's picture

They are going to seize the money and keep on doing what they do. Tell other people how to live "moral" lives. Debt trends will not drop one iota.

Mon, 11/04/2013 - 21:54 | 4121069 Vidar
Vidar's picture

No amount of taxes will ever be "enough".

The state is a parasite that must grow or die.

The only solution is to kill it as soon as possible. As long as people remain under the delusion that statism is a "nessecary evil" or that human beings are unable to manage their affairs without a small group having a monopoly right to use aggressive force aginst the rest of the population the problems will continue. The current state system is gourging itself to death will die soon enough, but another will replace it if people do not wise up to reality.

The current system could still do massive damage to the species with nuclear war, but the next go-around will be worse if we let it happen. Rejecting statism is a nessecary condition for the long-term survival of the human race. As technology improves, the ability of a small group with power and money to kill millions will only improve.

Mon, 11/04/2013 - 21:59 | 4121089 sbenard
sbenard's picture

That's just coveting and stealing on a societal scale!

Mon, 11/04/2013 - 22:00 | 4121092 sbenard
sbenard's picture

Temporary taxes are never temporary!

Mon, 11/04/2013 - 22:07 | 4121122 justsayin2u
justsayin2u's picture

My God these guys are all effin geniuses...  You mean we cant tax our way to prosperity???  What if we just take everything they have and then enslave them and then turn them into soap and sell that when they die???  Wait.  How about learning from the pros and lever up on the rich's deadbeat asses.  We can repo and reverse repo on em in and endless financial circle-jerk and get rich.  I may need another drink tonight.

Mon, 11/04/2013 - 23:08 | 4121298 Constitutional ...
Constitutional Republic's picture

Made me chuckle. Have another drink. Cheers, and g'night. Tomorrow is another day...

Mon, 11/04/2013 - 23:25 | 4121388 joego1
joego1's picture

Taxes are like cancer.

Mon, 11/04/2013 - 23:27 | 4121394 gnomon
gnomon's picture

So they want to rip both our arms off so we can continue with the pleasure of their company, their exalted presence coupled with their unparalleled expertise in the management of the affairs of men?    If these sniveling, corrupt, whoring, pockfaced bastards (and bitches) want to end up hanging from lamp posts let them try this in the U.S., even now, (ten per cent, thirty per cent, don't matter which).


Tue, 11/05/2013 - 02:28 | 4121873 trader1
trader1's picture

the four horrseman documentary was pitching debt cancellation as one cure.  

now, how to get that done...

Tue, 11/05/2013 - 03:12 | 4121929 GernB
GernB's picture

It's impossible to take seriously the idea that a wealth tax would be a one tme thing. The concept that if would be one time only defies all logic.

Tue, 11/05/2013 - 05:46 | 4122033 pondview28
pondview28's picture

"and with deep economic inequality straining social norms"
This is a topic on which the elite keep harping, but carries little water. Most lower income earners just want to live a decent life and have no concern whether a rich guy is worth five million or five billion. "Rich" is anyone making over 70K. Who is being "strained" is not the poor, lower, or middle income earners - it is the upper middle and lower upper who realize the system is rigged and that they will never be rich. They know that they will pay the bulk of any new tax. This "straining the social norms" talk is just to scare the actual tax payers into anteing up yet more to avoid discord.

Tue, 11/05/2013 - 05:52 | 4122038 Escapeclaws
Escapeclaws's picture

Lest we forget, there s such a thing as odious debt. Repaying odious debt is what Rogoff et al have in mind to for their confiscation. They call it confiscation of "wealth" which cleverly misleads the unwary (Christine Lagarde defines "wealth" to mean being "net positve"). But consider that after they include the present value of your retirement funds, perhaps even social security and projected medicare expenditures (at least this is not beyond their duplicity), due to this tax you could easily find yourself unable to pay what would undoubtedly become non-dischargeable debt; your cash flow would become negative, forcing you to borrow to pay the tax! Either that or off to debtors' prison with you!

Rather than call it a "wealth tax" , call it a "Widows and Orphans Pittance Confiscation Scheme".

Tue, 11/05/2013 - 06:19 | 4122062 LookingGoodBillyRay
LookingGoodBillyRay's picture

It's fairly difficult to take Rogoff seriously now that it's proven he can't do math.  Perhaps, rather than making Cypriots of us all, little Rogoff should stick to his chess game and worshipping his Morlock Masters through a serious of incantations expressing his overwhelming desire to....  

Oh wait, that is what he's doing.


Tue, 11/05/2013 - 06:59 | 4122078 SmallerGovNow2
SmallerGovNow2's picture

Exactly... How about FUCK YOU banks, eat your fucking T Bills or shove them up your ass.  We default on your bullshit ass and you can pound fucking sand...

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