Things just keep getting rougher for average citizens in Europe. Some have faced government seizure of accounts to help fund government operations and requirements that they explain withdrawals to their banks. Now, the European Central Bank (ECB) is imposing a negative interest rate on banks for their deposits. So, you can keep your money under your mattress or put it in a bank where the bank will use it to earn money while charging you for the pleasure. This is of course the central bank which directly relates to individual banks as opposed to individual depositors. Those banks will now pay to park their money and those costs will be passed along to depositors. Banks are likely going to try to hide the fact that the interest rate is now negative through fees and other measures.
The ECB cut the rate on its deposit facility for banks from 0 percent to minus 0.10 percent. It also cut its main interest rate to from 0.25 percent to 0.15 percent as well as cutting the rate on its marginal lending facility by 35 basis points to 0.4 percent from 0.75 percent.
It is an interesting situation where banks will now be treated as solely a safe place for holding your money but you will pay for the service as a fee. Much like the airlines where aspects of what was once viewed as the basic service are being converted into fees, banks will now be treated as akin to a safety deposit box. However, unlike airlines or safety deposit boxes, the banks are making money off the deposits. It is a fundamental change in function of banks.
I have long been critical of the tax increases and measures in Europe that will likely have displacement impacts on investments and movement of citizens and businesses. In this case, I would expect people to look for alternatives from Internet banks to foreign banks.
“interest rates” was supposed to be “tax rates.”
paulette:
“If “The vast majority of wealthy US citizens are self made…,” how could they have acquired so much wealth if they’re taxed to death?”
I’m glad you brought this up. CA has the highest tax rate in the nation, with a combined rate of about 52%. And that just keeps getting higher. Other states have lower interest rates. Wealthy citizens not tied to the state just leave. We recently had a brouhaha where a golfer complained bitterly about his taxes. Plus, you have to add on international taxes as they apply.
Since we are self employed, we pay additional costs like payroll tax, work comp, etc. It’s shocking sometimes how many fingers are in the pie. We also have astronomical property taxes because real estate is so expensive here.
So how do people grow wealth? They go to states with lower taxes. Or they fork over more than half their income every year.
We had to enact Prop 13 here in CA because as real estate got more expensive, property taxes kept getting reassessed. People were getting driven out of their homes. They could afford the mortgage but found their property taxes sometimes doubling from year to year. So Prop 13 sets the property tax rate at the purchase price, with limits on how much it can increase from year to year.
Liberals keep pushing to get rid of Prop 13. The most recent effort would get rid of it for commercial properties. So business owners, employers, would face astronomical increases in property taxes from year to year, giving yet another hurdle for running a business. There never is the money for any of their programs, so they keep squeezing instead of getting rid of programs that didn’t work or were ineffective. It’s always spend more, spend more! We’ll just tax the rich and business owners! And it is so EASY to pass taxes on “other people.”
http://www.nytimes.com/2013/02/07/us/millionaires-consider-leaving-california-over-taxes.html?_r=0
killing everyone would be stupid. Billionaires aren’t stupid.
davidm2575 ~ “If every American functioned like the Kochs, the economy would be running full steam, poverty would be non-existent, and government would have so much money we won’t hear anything from them for awhile about needing to raise taxes.”
That’s because we’d all be dead from the poisoned air and water.
cum hoc ergo propter hoc fallacy
paulette wrote: “That’s because we’d all be dead from the poisoned air and water.”
Ridiculous assertion. You have to look at history and experience. When government controls industry completely, such as in a communist regime, what happens? We get air and water quality like China has. Last time I was in Beijing, I noticed that was not working out too well for them. I noticed exactly the same thing in communist Vietnam. I could produce video for you documenting all this.
When industry is allowed more freedom, and government instead acts as a watchdog of industry, we end up with a better environment. When government gets too big and too cozy with big corporations, then we will drift toward a system more like China. That is not a good thing for the environment.
Karen, Don’t you love getting business advice from a government worker!!
If “taxing the rich to death” has only succeeded in making them richer than ever, then why would the rich want anything but more of this “death-inducing” taxation? Some “death.” Some “taxation.” Believe me, I’ve looked around for evidence of the rich committing suicide by the thousands because of their “excessive” marginal tax rates, but I can find no evidence of any such behavior. Somehow, despite their awful plight, the rich have managed to scrape up enough cash to buy the entire U.S. Government; and that “government” in turn enacts the tax laws that the rich — through their legions of paid lobbyists — submit to them for rubber-stamp approval.
But since the rich as a class didn’t commit suicide under President Ronald Reagan because of their 75% marginal tax rate, then it hardly seems surprising that they don’t commit suicide in droves today with a rate less than half of that (and falling). So let them die if they can’t live on what they’ve plundered from the rest of American society. Somehow I just can’t get my eyes to weep torrents of tears for the greedy b*st*rds.
Hey Man,
They may be Bustards but their our Bustards. Tears? No I think not. The very idea is far beyond ludicrous; bordering on derangement.
These guys are just getting wound up though. In a minute they’ll dive straight into which race will be the first victims of their genocide and which of the government concentration camps they should use to hold the slave labor. Right now they are being kept in corporate work-houses but when they break loose and start goose stepping it will be a whole New World Order. Oh No! I mentioned a Conspiracy theory. Sometimes the Right-Wing-nuts around here will run and hide in fear and loathing if you mention a Conspiracy Theory. But hey; I’m just a “Simple Country Philosopher”. What do I know?
Karen,
It is indeed horrible that you are taxed to death. I suggest you sell your business immediately. I hope it will provide you with the relief that you seek.
The Furies pursued you. Which translation do you have where Furies danced?
Mike – you are dead wrong on 1 and 2. Unless you are in a communist or socialist system and the United States in neither, yet. On 3, the functions of government were clearly laid out in the Constitution until FDR got his socialist hands on it. On 4, if you are dead wrong on 2, how can we debate it.
Did anybody ask why the interest rate was lowered?
Well, since you all asked….
Marketplace Money suggests it is because the regular banks are not making any loans. It is hoped that the neg interest rate will encourage them to start lending.
Lending sorta helps get an economy running. Remember?
so, if we raise the top tax rate to 90% the kochs might move to belize?
there’s a down side in there somewhere? maybe we can buy our democracy back.
and karen, if they raise the top tax rate to 50% then they can afford to lower the middle class rate. like it used to be.
Pete wrote: “so, if we raise the top tax rate to 90% the kochs might move to belize? there’s a down side in there somewhere?”
Yeah there is a downside. You lose all the tax money they pay, which is much more than probably what you make and all the people you know who draw Social Security. So how do you plan to make that up? Also, they employ 60,000 people in the United States, so you lose those jobs. Are you going to start paying the salary for these people? They have invested $65 billion dollars, so you have to start taxing everybody else to make up the difference. Furthermore, it is completely undemocratic of you wanting to take away the vote of successful and great people like the Kochs. If every American functioned like the Kochs, the economy would be running full steam, poverty would be non-existent, and government would have so much money we won’t hear anything from them for awhile about needing to raise taxes.
Karen ~ If “The vast majority of wealthy US citizens are self made…,” how could they have acquired so much wealth if they’re taxed to death?
I lament the ominous inegalitarian future.
Thanks for going fishing, Darren!
Can my earlier post be found?
david:
That is a great analogy.
I am sharing somebody else’s illustration here:
================
How Taxes Work . . .
This is a VERY simple way to understand the tax laws. Read on — it does make you think!!
Let’s put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men — the poorest — would pay nothing; the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man — the richest — would pay $59.
That’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement — until one day, the owner threw them a curve (in tax language a tax cut).
“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” So now dinner for the ten only cost $80.00.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six — the paying customers? How could they divvy up the $20 windfall so that everyone would get his “fair share?”
The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat for free.
But once outside the restaurant, the men began to compare their savings. “I only got a dollar out of the $20,” declared the sixth man who pointed to the tenth. “But he got $7!”
“Yeah, that’s right,” exclaimed the fifth man, “I only saved a dollar, too . . . It’s unfair that he got seven times more than me!”.
“That’s true!” shouted the seventh man, “why should he get $7 back when I got only $2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “We didn’t get anything at all. The system exploits the poor!”
The nine men surrounded the tenth and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLARS short of paying the bill! Imagine that!
And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.
Where would that leave the rest? Unfortunately, most taxing authorities cannot seem to grasp this rather straightforward logic!
david:
Studies show that Democrats statistically believe that paying high taxes is compassionate giving that equates to charity.
Help! Lost a post!
The UK had a 95% tax rate. Do you know what happened? Amazingly, the wealthy left in droves (including the Beatles), taking their tax money with them. France has huge taxes, and is trying to implement a similar income tax. Amazingly, the wealthy are leaving in droves, taking their tax money with them.
So . . . if the wealthy (and trust me, making $200,000/year won’t get you as far in CA as it will in Minnesota) already pay 2/3 of the income taxes in CA, and let’s say we hit them with a 95% tax rate. Hmmmm . . . let’s think . . . what would they do?
The vast majority of wealthy US citizens are self made. That means they strove and worked and sacrificed to get where they are. We own a small business. My husband almost lost everything when he first started it, before he met me. He’s worked huge hours, putting a lot of effort into building his small business. It’s an accomplishment to be proud of. (And he DID build that!) It was his money and his risk that started it and kept it afloat. And yet, people (who would faint if they saw what we pay on our taxes) think it’s unfair that he makes more than others. That he’s a boss.
I can tell you that as a business owner, when costs go up, either through taxes, operating costs, or labor costs from increasing wages by $6/hour, an owner has these limited options:
1) pass on the cost to customers (which won’t fly in a competitive industry)
2) take a pay cut himself (and many business owners only make $30,000 to $65,000 their first 5 years in business according to small business organizations)
3) layoff employees or reduce hours and downsize his business
That’s pretty much it. There is no magic money tree that springs up overnight to pay for each and every one of these schemes. There will always be consequences. It depends on the situation and % increase on how much those consequences will hurt.
Karen, I retrieved your comment at 5:30.
AngryManSpeaks wrote: “Congress was completely negligent and this is just one reason I see little difference between the Parties as time brings about crises.”
Negligent? Congress was the main driver of it. They are more guilty than Wall Street. The Democrats had the noble vision for all Americans to live the American Dream and own their own home, but rather than teach individual responsibility and hard work, they thought the way to make that happen was to redistribute the wealth in Wall Street to the people who wanted to borrow money to buy a home. So they propped up Fannie and Freddie, insured mortgages, and bought high risk loans.
If any of you Democrats want to do an experiment in what happened with this wealth redistribution policy, withdraw as much money as you can from your own bank account, walk to the downtown area of virtually any major city in America, and just hand out your cash to the homeless people there. Just watch how long it takes for them to spend it all and come back with their hand out again. One reason wealthy people are wealthy is because they know how to handle money. If they didn’t, they would not be wealthy. One of the first jobs of compassion is not only giving money to the poor, but helping them learn how to manage it. That takes real sacrifice and real compassion, not this phoney Democratic compassion of making government do all the giving for you.
The people who currently have millions of dollars are able to handle the money much better than the poor. The middle class and poor benefit from the millionaires having all their money. You can buy their vehicles from ten years ago for between $50,000 and $200,000 less than the rich paid for them. Even when a middle class person buys a car for $30,000, in ten years a poor person might pick up that same car for $3,000. This is called trickle down economics, and yes, it is a very real event despite all the Democratic demonization of the principle. It is how people who do not work but draw only Social Security and Food Stamps can have a Mercedes sitting in their driveway while the working man has a Ford truck. It is how the poor have cell phones, microwave ovens, heating and air conditioning, refrigerators with automatic ice makers, automatic washers and dryers, televisions, computers, and internet access. The poor in our country live better than the middle class in most other countries, especially better than those in communist countries. If you took away all the millions from the millionaires and gave it to the poor, everyone would become poor, and the poorer would become much poorer without the trickle down economics at work.
You are incorrect in your assertion that giving millions would impoverish everyone. Any money given to the poor in the form of wages; food stamps or most other payments is immediately returned to the wealthy who own all of the products that the poor need this money for. THAT is how our economy keeps functioning. We are supposed to pass the money around. When the wealthy stop sending money down the line to the poor; the economy does what it has done in the past twelve or so years; it declines; it slows; it begins to die.
Trickle down economics is a long disproven philosophy designed to assuage the guilt of the wealthy over hoarding the very money that the poor and middle class need to use so badly.
*”It is how people who do not work but draw only Social Security and Food Stamps can have a Mercedes sitting in their driveway while the working man has a Ford truck.”*
Much like Mitt Romney; when you begin to speak; you reveal yourself to be completely out of touch with the world that the poor and middle class live in. I Know many people who have at one time or another needed assistance. I have never seen a Mercedes worth calling by that name in my neighborhood. The only way these folks could ever afford such a vehicle was after one guy like you dirtied the ashtrays and then sold it to another guy who drove it like a race car and four wheel drive and then sold it to another guy who didn’t change the oil for ten years; left it sit in the rain and snow and salt and then sold it to my friend who then bought it hoping beyond hope that because it was a Mercedes it might last long enough for him to keep a decent job; if he could find one. But alas; the Mercedes; that fine piece of German engineering can still only take so much abuse before it gives up the ghost; which it did in the middle of US RT40 while taking his daughter to school so that the children on the buses passing and his daughters friends got to have a good look at them broken down and she then had to bear the jeers and insults about what shitty car they owned and why doesn’t your Daddy buy a good car from the children of guys just like you.
This is a true story. It isn’t the only one I know by any far stretch of the imagination.
I myself am collecting a Social Security Disability Pension.
I can’t afford to by a tricycle; much less a Mercedes and neither can any of the other people who are on Disability that I know. All we can manage is keep body and soul together. If I wasn’t living in a mobile home that was given to us by my in-laws when they bought a house; we would likely be making choices between eating and sleeping indoors so don’t you even have the audacity to suggest that trickle down economics is working now or ever. That is a sick lie and it offends me that you would even suggest such a thing.
Also; please don’t equate Social Security Disability with Food Stamps; Welfare; or any other program for those who haven’t worked themselves into an early heart attack and a bad back after thirty five years of working for Wealthy corporate and small business owners.
http://www.forbes.com/sites/danalexander/2014/03/07/california-leads-all-states-and-all-but-2-countries-with-111-billionaires/ Looks like the rich are getting richer in California.
paulette:
My family is middle class, small business owners. We are taxed to death.
Why does living within our means, not wasting taxpayer money, and not taxing the rich out of existence inevitably engender the whole “you do not care about the poor” retort? It’s absurd.
The rich already pay the freight. The top 40% pay 85% of our taxes. Here in CA, where Southern CA tract homes go for $1 million and up in some areas, those earning over $200,000/year pay about 2/3 of the state’s income taxes.
http://www.sacbee.com/2010/03/31/2648102/californiataxes.html
So you’ll have to excuse me when I fall off my chair at the myth that the rich “don’t pay their share.” I’m middle class and I’m taxed to death. We have relatives that are better off, and they’re taxed to death. Why bother owning a business?
The lack of concern for your fellow man paying huge taxes is sad.