Product Code Database
[[Image:Capital Levy - Asquith - Punch cartoon - Project Gutenberg etext 16394.png|thumb| The Conscientious Burglar.
Paisley humanitarian. "If I could only be quite sure that I shouldn't be discouraging him from saving."
A capital levy is a tax on capital rather than income, collected once, rather than repeatedly (regular collection would make it a wealth tax). For example, a capital levy of 30% will see an individual or business with a net worth of $100,000 pay a one-off sum of $30,000, regardless of income. Capital levies are considered difficult for a government to implement.
Some economists argue that capital levies are a disincentive to savings and investment, and cause capital flight, but others argue that in theory this need not be the case. The latter view was popular in the World Wars; in the 2010s, it has also gained some acceptance as more heavily indebted nations struggle to raise revenues.
The Economist, a British publication, opposed capital levies, but supported "direct taxation heavy enough to amount to rationing of citizens' incomes"; similarly, the American economist Oliver Mitchell Wentworth Sprague, in the Economic Journal, argued that "conscription of men should logically and equitably be accompanied by something in the nature of conscription of current income above that which is absolutely necessary".
In 1999, Donald Trump proposed for the United States a one-off 14.25% levy on the net worth of individuals and trusts worth $10 million or more. Trump claimed that this would generate $5.7 trillion in new taxes, which could be used to eliminate the national debt. "Trump proposes massive one-time tax on the rich". CNN. November 9, 1999.
The Cypriot government levied 47.5 percent of Bank of Cyprus deposits over one hundred thousand Euros in July 2013. In October 2013, the International Monetary Fund released a report stating, "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 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."IMF Fiscal Monitor: "Taxing Times" Oct 2013, p.49 The next year the Bundesbank proposed that Eurozone countries should attempt a one-off levy of bank deposits to avoid bankruptcy.
A February 2014 report by Reuters showed the idea had gained traction in the European Commission, which will ask its insurance watchdog later that year for advice on a possible draft law "to mobilize more personal pension savings for long-term financing".
In the United Kingdom, a report published by the Wealth Tax Commission in December 2020 recommended the introduction of a one-off wealth tax in case the government chooses to raise taxes in order to address the challenges for public finances posed by the COVID-19 recession.
Without taking a stance on specific exemption thresholds or tax rates, the estimations presented in the report imply that a well-designed 5% one-off tax on individual net wealth above £500,000 could raise as much as £260 billion. The recommendations set out in the report were subsequently discussed in the Treasury Select Committee. The chair of the committee, Mel Stride, suggested that the proposal of a one-off wealth tax is “probably nearer the end of the spectrum of the possible-stroke-question mark-desirable than an annual wealth tax.”
21st century
The Italian government of Giuliano Amato imposed a 0.6 percent levy on all bank deposits on 11 July 1992.
See also
Further reading
|
|
