In Cyprus, perhaps not! If you have not been following the latest financial saga of the bankrupt Cyprian economy, you should be. Cyprus may be a very small European country but the “rescue plans” for Cyprus being negotiated have serious implications for all of us.
Under the first plan, the government of Cyprus was going to confiscate up to 10% of all the money individuals had in Cyprus banks. Apparently the European Central Bank and the IMF will not loan the government of Cyprus more money until they rob their local banks. They announced the plan at the beginning of a holiday weekend when the banks were closed. No one would have to wear a mask, no one would need to “crack the safe,” they would simply move the private citizens money from the depositors account to the governments account. European central bankers must have been reading about Willie Sutton and took to heart his will known response when asked why he robbed banks for a living. Willie answered: “because that’s where the money is!”
The Cypriots’ Parliament voted the plan down, fearing a revolt from bank depositors who were going to be robbed. Those who crafted the plan quickly ran for cover saying it wasn’t really their idea. The author of the plan must have been that ubiquitous character named “Anonymous.”
If governments are going to take more money from their citizens they should announce their plan in advance so that people can plan accordingly. But this type of raid, on private assets, announced retroactively, is frightening. My friend Adam suggested I write about this and asked me if this sort of thing could happen in the U.S?
Well Adam, it already has. The state government of California raised the income tax rate in November of last year (no surprise there), but the shock was that it is being applied retroactively to January 1 of last year. Conceptually not a lot different than what the government of Cyprus was trying to pull off. When politicians use language such as “giving someone a tax break” it demonstrates that they honestly believe that all assets belong to the government, and they get to decide how much of our hard earned dollars we get to keep.
It’s perverse when you think about it. Governments exist to provide services paid for by taxpayers. If they want more funding they should have to ask taxpayers and not assume they can spend whatever they like. Confiscating “private assets” to pay for excess spending is immoral in a country based on the simple concept of the right to own “private property.” Sometimes I fear our government is moving us slowly away from that basic right.
5 responses to “Is It Really Your Money?”
For the Federal Gov’t, you can look back to 1986 (TRA86) where the code was revised and individuals who had made their investments based upon the IRC as it had existed (and historically had always been “grandfathered” in) lost those deductions which killed, economically, real estate (among others) whose purchases had been predicated upon the then law.
Former Sen Bill Bradley famously and cavalierly opined, in response to a query about the fate of those investors who had relied upon the law: “well, they should have made better investments!”
That pretty much sums up our representatives’ view of the electorate!
I’m afraid this where our government is quietly going, inch by inch. They feel they can change the laws to suit their needs and reckless spending habits. Americans better wake up. All these entitlements are going to brings us down and quickly.
Pefect analogy Dan. California is indeed doing pretty much what they have apparently now decided to not do in Cyprus. And you are being polite to the elected officials we’ve had for the past forty or more years in this country … they have been very steadily, and not so slowly, diminshing our rights to own and use private property.
Edmund Burke called it. “Evil prevails when good men fail to act”. Maintain the outrage Dan!
Thanks for the blog Dan! Once again your insights and practical speak provides a thought provoking perspective.
The accountant in me roots for the cost cutting trend that you discuss in your sequester bog to take hold – however I can’t help but to think my govt has already spent my personal bank account along with the squandered public trust fund