"Money in the Bank"..dangerous?

[Cyclone]

I'm not sure that taxation is inherently unfair... A rather philosophical question though.

 

Indeed, it's definitely a knee jerk reaction to an immediate requirement for cash.

[Anna B]

This tax is no more theft than is any legally imposed tax. You might as well call PAYE income tax or VAT theft.

 

 

 

 

 

No, calling it a tax is simply an attempt to give it an air of legitamacy, as is calling it a 'levy'

 

People put their money into a bank specifically for safekeeping.

 

Phrases like 'As safe as the bank of England' 'as safe as money in the bank' etc now take on a whole new meaning.

 

To contravene this simple truth is pure plunder, and changes the rules for ever.

[Cyclone]

It happened in Italy in 1992, so maybe the rules were changed two decades ago...

[Eater Sundae]

I have an idea for the Cypriot people, but perhaps an economist on here could tell me if it's a bad one.

 

I don't think the Cypriot banks are afraid of a bank run in this situation, in fact they might well be counting on one. If the Cypriots withdraw their savings, the Central Bank can flood the Cypriot banks with money equivalent to the withdrawls on the gamble that over the next five years or so the savers will gradually return the money they've withdrawn to the same banks and so the money leant out can be returned to the Central Bank.

 

In the meanwhile the Cypriot banks have a huge new injection of cash that they can lend out on short term, reasonable return investments thus making the money to pay back the interest on the Central Bank loans and making some profit for themselves.

 

If the Cypriots were really smart, rather than returning their savings to their bailed out banks, they would put their money into accounts that aren't related to the Central Bank debts, let them take the loss (a loan is always a gamble), let their bailed out banks go under and then rebuild a new banking system in a decade or so when the new banks aren't tied to the debts of the old banks and so don't need to be repaid. The Cypriot economy doubles as their debts are reduced.

 

A bank run when your currency is tied to gold is a disaster, a bank run on 'made out of fresh air' fiat currency is a tool that can be manipulated by all parties.

 

A loan is always a gamble. Those people who loaned their savings to Cyprus banks were taking a gamble.

 

---------- Post added 19-03-2013 at 13:16 ----------

 

This tax is no more theft than is any legally imposed tax. You might as well call PAYE income tax or VAT theft.

 

Letting the banks go bust might be best for Cyprus (although I doubt it), but I expect that it would be a contagion disaster for the rest of Southern Europe.

 

---------- Post added 19-03-2013 at 09:39 ----------

 

 

Additional money that is given to you. It's income, inflation is irrelevant.

 

But just to clarify in this situation, they are not proposing to tax interest, they are proposing to tax capital.

[L00b]

But just to clarify in this situation, they are not proposing to tax interest, they are proposing to tax capital.

I think that's well understood in this case.

 

Technically, it's no different from taxing any other form of capital as a form of wealth taxation, e.g. houses, cars, yachts, art, etc. Plenty other EU countries have such forms of taxation already, btw (whether explicitly so, or not: e.g. I get taxed €2 or so a month in France for the privilege of having a bank account, so long as it's in the black (by at least €2). They just call it something completely unrelated, like the "Generalised Social Contribution", supposedly to help plug the black hole that is the NHS(- French equivalent) budgetary deficit. Point is, they can't take it if you don't have a bank account to take it from - exact same principle as Cyprus, only trivial in amount/scale ).

 

The issue with Cyprus, is more the sudden and opportunistic character of the measure, than the measure itself (which they could -and should- have brought in gradually, on the quiet, slowly-boiling-a-frog -like as many other Gvts have).

[Anna B]

Now a suggestian that those with under £20,000 should be exempt, but the Russians, who have been using Cyprus as a new tax haven, are kicking off because they could be liable for billions.

 

Rich and poor against each other again?

 

---------- Post added 19-03-2013 at 13:31 ----------

 

I think that's well understood in this case.

 

Technically, it's no different from taxing any other form of capital as a form of wealth taxation, e.g. houses, cars, etc. Plenty other EU countries have such forms of taxation already, btw (whether explicitly so, or not: e.g. I get taxed €2 or so a month in France for the privilege of having a bank account, so long as it's in the black (by at least €2). They just call it something completely unrelated, like the "Generalised Social Contribution" - point is, they can't take it if you don't have a bank account to take it from - exact same principle as Cyprus, only trivial in amount/scale ).

 

Once again after the initial shock people calm down and rationalise it, so that's OK then.

 

What's the matter with them?

 

I wonder how much of their hard earned savings they are prepared to contribute to the fund to pay for the general mismanagement and ****-ups of the banks and ruling classes before they get angry and say 'No More!'

[Cyclone]

A loan is always a gamble. Those people who loaned their savings to Cyprus banks were taking a gamble.

 

---------- Post added 19-03-2013 at 13:16 ----------

 

 

But just to clarify in this situation, they are not proposing to tax interest, they are proposing to tax capital.

 

That doesn't alter the legality of it. We are considering a tax on capital here in the UK (the mansion tax).

 

---------- Post added 19-03-2013 at 14:31 ----------

 

Now a suggestian that those with under £20,000 should be exempt, but the Russians, who have been using Cyprus as a new tax haven, are kicking off because they could be liable for billions.

 

Rich and poor against each other again?

Sounds more like an argument between the rich and the richer to be honest.

 

Or does having <20k euro's in the bank mean you are poor now?

 

---------- Post added 19-03-2013 at 13:31 ----------

 

 

Once again after the initial shock people calm down and rationalise it, so that's OK then.

 

What's the matter with them?

 

I wonder how much of their hard earned savings they are prepared to contribute to the fund to pay for the general mismanagement and ****-ups of the banks and ruling classes before they get angry and say 'No More!'

The alternative being that they lose all their money because the banks collapse....

[L00b]

Once again after the initial shock people calm down and rationalise it, so that's OK then.

That reads like a criticism of the point in my post (fair enough), but addressed to me personally (in which case, got me completely wrong: I was providing a real-life alternative example, not 'defending' or 'justifying' the principle at all).

 

FWIW, I'm not OK with it at all: I pay that €2 CSG tax pm only because having that account is worth more to me than that.

 

You're right to be offended. I'm just well past that stage and too cynical by now.

[Supertramp]

I thought everyone on SF loved a tax on wealth?

[truman]

I thought everyone on SF loved a tax on wealth?

 

So long as there's no possibility of it ever happening to them