The International Monetary Fund has the reputation of being a responsible and reliable, even conservative, organization. So it upset the well-heeled of the world when, some months ago, it proposed a tax on their wealth. Admittedly, the times are unusual, and call for exceptional remedies. The developed countries are hardly growing; their public revenues are stagnant. Social expenditure on old people, medical care and education has preempted much of their revenue; there is little left for support of the unemployed. The countries that are in an advanced state of stasis have been running up their debts. The crises that Greece has run into every few years are a symptom of this disease. But Greece is only an advanced case; many rich countries are suffering from the ailment to a greater or lesser extent.
That has been one of the concerns of the fiscal outlooks periodically put out by the IMF; it was in the context of the crises that it advanced the idea of a one-time levy on wealth. The wealthy, even fifth-generation ones, think that their bounty was hard-earned whenever it was; so the subversive idea of the IMF caused no end of unrest. Wealth tax is associated with desperate or combatant nations; its use by normal countries is virtually unknown. But there is an alternative. Most countries levy income tax; with it goes an administration which would make it easy to raise it. The well-to-do would grumble about a rise in income tax as well; but they are more used to income tax going up or down, so they would get less of a shock.
The idea has no doubt occurred to many progressive politicians. The first one to mention it was François Hollande, who is now president of France. Luckily for his rich patriots, his time and attention have been taken up by more important affairs. Sometimes he is so busy that he has to grab a helmet, leap on the back seat of a motorcycle and rush to a nocturnal rendezvous, and repeat the steps in reverse in the morning to resume control of affairs of the State. So his idea of a 75 per cent marginal rate of income tax remains unattended. But meanwhile, the government in the United Kingdom looks increasingly fragile; the possibility gets stronger that the Labour Party will win the next elections. That has focused its mind on the State finances, and the idea has been floated within it of raising the maximum rate of income tax to 50 per cent. Now that the idea has crossed the channel, there is no reason why it should not leap across the seas. India’s finance minister shows avarice for revenue. He also travels often to meet fellow travellers. It is to be hoped that he does not get infected by the progressive disease.