Dalton, Matthew.<\/p>\n
The sovereign-debt crisis has forced euro zone leaders to come up with creative ways for governments to reduce their budget deficits and cut their debts.<\/p>\n
So why not a wealth tax? While probably not politically feasible given that center-right governments now hold power throughout much of the euro zone,\u00a0thinking through how\u00a0one might work illuminates some interesting aspects of the debt crisis.<\/p>\n
Here\u2019s one way to do it: Tax the net financial assets of households. That includes mainly bank deposits, stocks and bonds. It doesn\u2019t include houses.<\/p>\n
How much revenue could you raise? Take a look at two countries that are the subject of fiscal worry, Belgium and Greece. Belgian households at the end of 2010 had net financial assets of \u20ac734 billion. The country\u2019s total financing need at the end of April for the rest of 2011 is \u20ac28 billion, requiring a tax of just 3.8% on financial assets to erase the country\u2019s need to access financial markets for the rest of this year.<\/p>\n