Is It Really Your Money?

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.