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You would have to tax cross-border capital flows in order to prevent people from taking their capital abroad to avoid the domestic tax on capital.

However, reintroducing capital controls in the form of taxes on cross-border capital flows would go a long way towards making currency crises of the 1997-8 sort (and the current Icelandic and looming Eastern European crises, too).

Unfettered cross-border capital flows are a bad idea. Just look at the financial crises of the last 30 years, worldwide.

The brainless should not be in banking. — Willem Buitler

by Migeru (migeru at eurotrib dot com) on Wed May 20th, 2009 at 06:25:16 AM EST
[ Parent ]
Migeru:
would go a long way towards making currency crises of the 1997-8 sort less likely


The brainless should not be in banking. — Willem Buitler
by Migeru (migeru at eurotrib dot com) on Wed May 20th, 2009 at 06:53:00 AM EST
[ Parent ]
You could even subsidise imports to the tune of the entire exit tax amount, to render it trade-neutral.

Of course, the subsidy would only be paid out at such time as the actual physical goods arrive in the country. Pure paper transactions wouldn't get this kind of refund, or it would be too easy to scam.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed May 20th, 2009 at 07:05:39 AM EST
[ Parent ]

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