Euro Countries Should Levy Wealth Tax, Bofinger Tells Spiegel

Indebted euro-area countries should implement wealth taxes as a way to generate funds to offset future bailouts, an economic adviser to German Chancellor Angela Merkel told Der Spiegel magazine.

Peter Bofinger, a member of the German Council of Economic Experts that reports to the chancellery, said a wealth tax would be an alternative to a deposit levy, according to an interview with Spiegel published yesterday.

“The rich would for example have to give up a part of their wealth over a 10-year period,” Bofinger told Spiegel. A wealth tax would be more suitable than levying a charge on deposits over 100,000 euros ($131,000), since such depositors can move their accounts to banks in northern Europe, he said.

The proposal comes amid a debate about wealth differences among the 17 member states of the single currency following an April 9 European Central Bank report that showed higher median net wealth levels for indebted countries. Households in Cyprus, the fifth and latest recipient of a euro bailout, are the second richest in the monetary union, the figures showed.

The report justifies Germany’s “hard” stance with respect to indebted nations, economist Lars Feld, another member of the advisory board, told the magazine. Foremost is the ability for such countries to raise the tax, he said.

“If there were tax laws that don’t exist only on paper, even Greece would be able to remove doubt on the sustainability of its debt,” Feld told Spiegel.

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