Capital Levy Solution For Government Debt

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    Governments with out-of-control debts could plunder wealth using a mix of much higher taxes and outright confiscation, says ‘Taxing Times,’ a report by the International Monetary Fund (IMF). Pointing to the rising levels of government debt, as well as increasing income inequality, it outlines ways to deal with their debt. Two that are mentioned include “repudiating public debt” – in other words, defaulting on government bonds – or “inflating it away” by having privately owned central banks create more fiat currency. However, the IMF preference for dealing with the debt problems appears to be to confiscate the wealth more directly. “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 report says. “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 behaviour (and may be seen by some as fair).”