Is There a Wealth Tax on the Way?

I’ve raised the prospect of state-sponsored financial tax confiscation many times in the past. It’s becoming a more common government grab than you may have noticed. It happened in Argentina in 2008 and Cyprus in 2012. And last year, Poland followed suit.

Could an act of financial tax confiscation happen in America? Could your hard-earned retirement funds forcibly be transferred to federal control to enable more politicians’ out-of-control government spending?
The guarded answer is, yes.

President Obama, in his 2010 State of the Union address, floated the idea of forcibly redirecting 10% of private-pension savings into U.S. Treasury bonds. By his 2014 State of the Union that bad idea had morphed into “MyRA” accounts that would allow people to invest in U.S. Treasury bonds. Patterned after the Roth IRA, contributions would not be tax-deductible, but earnings would be tax-free when withdrawn. But what would happen if the government guarantee went bad?

Eighteen months ago a report (called Fiscal Monitor: Taxing Times) was released by the International Monetary Fund (IMF) giving big spending lawmakers from deeply indebted countries a ready-to-go plan to extract ever larger tax revenues from anyone with any level of wealth.

Though the IMF language was couched in faux-objectivity, the underlying message was shockingly clear: Many developed nations, especially the United States, have abundant opportunities “to raise revenue from the top of the income distribution,” using a variety of methods including the direct confiscation of personal wealth.

The reality is that the threat of official theft of your retirement savings is always a possibility. Governments the world over have been trying to spend their way out of economic downturns for decades. This has failed and the result has been a massive increase in public debt with little economic growth.

With Republican Party control of the U.S. Congress, I now think that any immediate U.S. wealth tax is highly unlikely.

So far as we know, there is no existing statutory authority for the U.S. government to confiscate American personal and corporate financial accounts or other assets based on an official determination of an economic or debt emergency.
But this and one other IMF report last year advocating what amounts to a wealth tax on every financial account are glimpses of a possible future. The IMF has no taxing powers. Each country’s government would have to adopt such a tax by law and decide its scope. What form that would take is anyone’s guess but I think all domestic financial accounts would be targets.

Such a radical tax proposal would generate massive opposition in America. I cannot see this happening in the U.S. so long as the Republicans control the Congress.

But should it ever come to an attempt to impose such a U.S. tax (or bank “bail-in” as in Cyprus), it would be far more difficult to harm you if your assets are located in foreign countries such as Uruguay, Switzerland, the Cook Islands, or Singapore.

These countries, unlike the U.S., where the PATRIOT Act allows financial confiscation without notice or immediate appeal, do not automatically surrender private funds on request from the U.S. or any other government, requiring due process and a hearing before ordering compliance, if at all.

The long distance, greater privacy protections, and more equitable legal procedures all confirm the wisdom of prudent people having some part of your assets located in an established offshore haven.

Considering valid questions today about a confiscatory wealth tax is proper. That is why I advocate that individuals consider making plans to meet any such possibility—while they still can.

Editor’s Note: To assist you to start making those plans, Bob Bauman put together a guide called, Where to Stash Your Cash Legally. In it, he’ll introduce you to the top havens worldwide where you can protect your wealth, grow your income, and cut down on your tax bill—easily, legally, and securely.


Your email address will not be published.