In reaction to the levy on deposits proposed and rejected in Cyprus a Missouri Congressman has submitted a bill in the House that would prevent the Congress from taking such a step here:
The measure from Rep. Billy Long (R-Mo.) was inspired by the banking crisis in Cyprus, which sent shivers through the markets this week when it considered assessing a levy against all bank deposits to help pay for a bailout of its major banks.
On Tuesday, Cyprus’ parliament rejected the idea of taking money from depositors, which some say could result in a quicker collapse of its banks.
Long said Wednesday that his resolution, H.Res. 129, was introduced to ensure the United States never considers a levy on deposits.
“The government should not tax people’s private savings accounts, which they have already paid taxes on, especially for the purpose of funding more bailouts,” Long said. “I was shocked by the news that some countries might be considering these kinds of taxes, and I think Congress should say that this kind of tax won’t happen in America.”
In my view this is solely a bit of political posturing, a useless and unnecessary waste of time. That, unfortunately, makes it very consistent with much of what the Congress does.
Let’s assume, just for the sake of argument, that the Congress is bound by the Constitution. I realize that’s a stretch. The Congress’s powers of direct taxation are actually quite limited under the Constitution, in Article I, Section 9:
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.
amended by the Sixteenth Amendment:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
The Congress may also levy customs duties, excise taxes, and fees. Customs duties refer to imported goods. Excise taxes are collected at the time of sale as are fees, as when you purchase a stamp at the Post Office. Taxes on bank deposits don’t fit comfortably under any of those categories. I also think that such a tax would run afoul of the “Takings Clause” of the Fifth Amendment:
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
If, on the other hand, you hold to the view that the only limitation on the powers of the Congress are those of the imagination, the Congress could do anything it cared to, not only including a graduated levy on bank deposits but also ignoring prior laws against such actions. In either case the law would be meaningless.
With the Wickard v. Filburn ruling, the use of one’s property is not a right.
With the Kelo v. City of New London ruling, the ownership of one’s property is not a right.
The way to do it in the US would be through the regulatory agencies. Assess the bank a fee based upon the deposits, and the bank can pass it along. Blaming the evil bankers is a bonus.
Really, you think the Constitution is a sufficient barrier….wow….
In reality what would happen is that once such legislation passed the House, Rand Paul would filibuster the bill by reading and commenting on all of his favorite Rush songs, long enough for every American to withdraw their savings and place it under a mattress.
In either case the law would be meaningless.
Laws made by man, are also subject to be not followed, altogether broken, or totally changed by man. It all depends on who is in power, what their perspective and implementation is, and how willing the people are to follow their mandates and interpretations of the law.
The Kelo Decision, cited by Tasty, is a perfect example of how legal interpretations can change, over time.
“With the Kelo v. City of New London ruling, the ownership of one’s property is not a right.”
You don’t need a Kelo for that. A lot of, if not most of, the land for the Keystone Pipeline will be taken by imminent domain, or sold under the threat of. Of course, that’s “different”.
See, Judge Upholds Eminent Domain for Pipeline in Texas
That’s “eminent domain”…
@sam
The Kelo case was about the limits of eminent domain. The city took property from one private owner and transferred it to another private owner. One of the justifications was that it would increase city revenue from taxes. Your city could take your house and transfer it to another owner because the new owner would make improvements that would increase the property taxes.
The government usually had invoked eminent domain for land it needed for public works (schools, roads, etc.). Another taking would be for right-of-ways (power, telephone, gas, cable, etc. lines), but these are usually regulated. This is what the Keystone Pipeline is using. I am not comfortable with either of these two, but I think reasonable guidelines would prevent abuse.
There are a lot of cases where Kelo is being used to transfer property, but they get little attention. Usually the owners do not have the resources to fight, and nobody really cares.
I never thought I would see the day when foreign terrorists captured on foreign soil would be afforded the constitutional rights of an American citizen, and an American citizen would be denied his constitutional rights. This occurred within days of each other, and there was little notice of the connection. In order to be afforded the rights of citizenship, one must renounce one’s citizenship.
I don’t think Kelo is relevant to Dave’s argument here. He’s saying that if the government took property in the form of bank deposits, the Constitution would require the government to reimburse the value of the property. In other words, it would be a complete waste of time to take money that the government would have to reimburse (assuming that the deposits constitute private property within the meaning of the “Takings Clause”).
Kelo didn’t allow government or its designees to avoid paying for the property it took. I think it was a situation where the homeowners valued their home more than its economic value, and they particularly resented losing their home for a private benefit. Land grabbers will tell you (and they are probably right) that holdouts want more than the market value of the land, knowing that the last piece of a multi-parcel development has very high value to the developer.
Anyway, I agree with TastyBits’ last point, the government would have to do this through indirect means, such as imposing a fee on federally insured deposits. I just don’t think it would work unless it could be done spontaneously.
Rand Paul would filibuster the bill by reading and commenting on all of his favorite Rush songs
Would he analyze them in alphabetical order, chronologically, or based on how much he liked them?Because I’m just dying to know what a US Senator thinks of “The Analog Kid” or “Red Barchetta”.
the Constitution would require the government to reimburse the value of the property. In other words, it would be a complete waste of time to take money that the government would have to reimburse (assuming that the deposits constitute private property within the meaning of the “Takings Clauseâ€).
Two thoughts:
First, they could take the “cash” in exchange for bonds to be repaid on some absurdly long basis.
Second, they could just call it an insurance premium to cover the safety of the rest of a depositor’s money in the bank. And we all know that the government has the constitutional authority to do that! They just call it a tax before the courts, state that someone HAS to buy the insurance or they will be taxed up and down their alimentary track with federal income tax penalties.
Thank God for Chief Justice Roberts!
I think he’d start with “Anthem,” off of probably the only album ever dedicated to “the genius of Ayn Rand”:
Live for yourself — there’s no one else
More worth living for
Begging hands and bleeding hearts will
Only cry out for more
Well, I know they’ve always told you
Selfishness was wrong
Yet it was for me, not you, I
Came to write this song
Assuming the Constitution is upheld in that regard and there isn’t some other way of getting around the issue as well.
…that in the end provided zero benefit to pretty much anyone private or public.
FIFY.
From the Kelo decision…
And what happened to that land….it is now barren. Nothing is there.
So, the city government comes up with some half-assed scheme and the boobs sitting on the Supreme Court go along with it and say, “Okay, take that land.”
In fact, it is almost surely the case that the city ended up losing money in its Fort Trumbull development plan.
So much for the Supreme Court…maybe they need to rename it to the Compliant Court…
My purpose in citing Kelo was to answer @Dave’s question: Could it happen here. Yes.
Few will notice, and those who do will be dismissed as kooks.
I know there are those who do not believe inflation is a serious issue right now, but the stealth Cyprus is occuring right under your noses right now. I’d be happy to pass along a John Mauldin piece through Dave for your inspection.
But don’t lose sight, people, if you have $20MM and inflation is 5% after gross investment returns, and purchasing power down 8% after taxes you just lost $1.6MM this year. Keep doing tghe math.
This is all by design and our govt and its officials should be prosecuted.
If you think RE has stabilized, buy the biggest house you can and borrow the most you can at 3% or whatever. Its free money and the only hope you have. Helicopter Ben is should go to jail.
I know there are those who do not believe inflation is a serious issue right now, but the stealth Cyprus is occuring right under your noses right now. I’d be happy to pass along a John Mauldin piece through Dave for your inspection.
But don’t lose sight, people, if you have $20MM and inflation is 5% after gross investment returns, and purchasing power down 8% after taxes you just lost $1.6MM this year. Keep doing the math.
This is all by design and our govt and its officials should be prosecuted. Savers hosed; borrowers, like government, bailed out.
Helicopter Ben should go to jail.
I agree with Drew’s cautionary words. People tend to draw comfort from the largess of the United States’s economy, it’s world power standing and the fact that the dollar has international world currency status. However, all of these assets sit upon a propped up foundation, which is slowly eroding and consequently undermining what we continue to view as our strengths.
The economy, as large as the infrastructure may be, is floundering under our current divisive political policies, weakening the culture and prohibiting any real means of needed long-term economical growth. Mobility, from being able to easily transit from poor to rich by one’s work ethic, is also shrinking under the taxing burdens of over-regulation. Even the populace’s desire for success and prosperity is being replaced by a more docile, unquestioning and costly dependency on government programs.
As for the dollar, it is stagnate to slowly declining, with more countries showing signs of wanting to shed dollars for something more substantial and sustainable — that appears to be gold at the moment. And, inflation does seem to be the path of least resistance in paying off the mountain of debt we are allowing to grow annually, without any measurable means to make a dent in decreasing it. The supposed sequester has ironically been the only imposition placed on us so far to even address such a deficit/debt reduction adventure.
Regarding being a world power, we’ve had Obama’s leading-from-behind style of governance, his dealings with ME instability expansion, lopsided military arrangements made with the Russians (i.e. SMART Treaty), cover-up and inaction in the Benghazi incident, having a cumulative effect of downgrading respect from other nations leading to an overall lessening of our world influence. In fact, Obama is seen in less favorable terms, abroad, than even Bush was during his last days in office.
But, as long as we wrap our sliding fiscal problems into quantitative easing cotton, printing money to hold a Jello-like economy together, aided and abetted by adjusted UE stats, and a stock market that seems to have no structural basis, the fantasy of recovery will continue — until it is not — and then we will have the echoes of “What happened?” filling the airwaves.
From the NY Post:
Think it can’t happen here? It already has.
Its worse, jan. The index has weightings. And so it depends on what you buy. Housing came down, depressing the measure. Oh, great, my asset values are declining. But look at medical care, food, fuels……..things people buy for day to day living. Its a mess.
I know people probably think I’m a cynic, but they need to understand I know investment and finance – and have seen all the tricks – like the back of my hand. The issue isn’t really that complicated. There are too few rich to tax to solve the ficcal imbalances, and we just saw what could be extracted. Bupkus. And politicians don’t dare touch the middle class. So they borrow………but refuse spending reform. That leaves one avenue: inflate away the debt, and in the process screw everyone who played by the rules.
steve has gone on and on about greedy bankers taking undo advantage. I wonder if he ever stops to consider that the government is in the process of the greatest fraud and wealth destruction in history.
No need to answer.
I think there’s a qualitative difference between the situation here, the consequence of quantitative easing, and the levy that was proposed in Cyprus. The basic issue is consent.
Here people are, essentially, paying the banks to hold their money for them. In Cyprus the proposed levy was to take place without any prior consent by account holders and, if the banks were closed temporarily as is my understanding was the case, possibly despite account holders’ objections
There are too few rich to tax to solve the fiscal imbalances, and we just saw what could be extracted. Bupkus. And politicians don’t dare touch the middle class.
I know you said there was no need to answer, Drew, but I’m a woman, and having another chance to respond is an innate tendency with us.
Yes, there are too few rich to exact the monies needed to make up revenue shortages — especially since the uber rich know all the tax shelter angles, applying them without conscience or fearing a cost to their politically correct reputations, when they are dems.
However, the middle class is insidiously being screwed by the inflationary blow back happening when simply purchasing mere staples, as well as stagnating wages and low interest rates on savings. All those avenues and associated behaviors, which financial experts said were helpful in getting ahead, holding your own, securing one’s future and saving for retirement, are being impacted by this economy and those who run it.
The ACA, IMO, will also have terrible consequences as people age and seek more medical care that we currently take for granted in this country — having timely Dr. appointments because of adequate staffing, above average care, and oftentimes, state-of-the-art facilities.
We are leeching the good out of our country for short term gains, borrowing more than we should, and calmly cajoling people, who know no better, that all is right with the world.
The basic issue is consent.
Consent is a technicality, IMO. Yes, people in the US know that the banks are holding their money for almost nothing. But, what other avenues do they have? Whereas, in Cyprus, the banks are strong-arming their people, with threats of an open tax on savings. But, at least the people realize they are being strong-armed. Here, we are experiencing a soft and subtle blow to our earnings. But, it all has the same endpoint, here or in Cyprus — people being subjected to paying for the mistakes of their government — either voluntarily or involuntarily.
I’m laughing looking at the headlines today. Cyprus has decided to seize 40% of all bank deposits over 100,000 Euros. Who’s happy? Leftists, because they hate rich people and people that trade in major European bank stocks, because fuck Cyprus, the banking sector investors cannot POSSIBLY be allowed to lose money.
It’s the perfect storm. I wonder if any Marxist has written a thesis on how Leftists and the investment class would get together to fuck over the proletariat for shits, grins and profits?
Fuck the Revolution, bring on the Apocalypse.
Here people are, essentially, paying the banks to hold their money for them. In Cyprus the proposed levy was to take place without any prior consent by account holders and, if the banks were closed temporarily as is my understanding was the case, possibly despite account holders’ objections.
I think this is a bit bogus. People use banks and such because it’s damned near impossible to do anything in this country otherwise. Cash a check and then drive around to all the people you need to pay bills to and pay THEM in cash? Not happening, not for the vast majority of people. Especially because the government and the corporations love tracking every last little transaction.
There’s no more consent here for how the financial sector is being run than there is in Cyprus. Well, except for the billionaires. That’s the problem in Cyprus, they don’t have enough (native) billionaires on the island, or you can be goddamned certain The Big Haircut wouldn’t be coming. As it is a bunch of crooked Russians are about to get fucked in the ass to benefit a bunch of even more corrupt Eurocrats and their backers in the EU finance industry.
Thomas Sowell speaks to the “Can it happen here?” question: