Wealth confiscation occurs when a government or public authority seizes assets from individuals. It differs from legal actions such as a fine in that wealth confiscation is not meant to necessarily be a punishment that is proportionate to a crime that an individual committed.
It can happen under many different circumstances but is normally based on the assumption that the individual whose wealth is being confiscated has accumulated it either unfairly or illegitimately.
The ability for a state to confiscate wealth is one of the primary things that make the government a more powerful entity. When compared with the class of wealthy individuals who may otherwise wield greater economic power. At least in proportion to votes garnered or other narratives that legitimize government power.
States have used the practice for thousands of years, with Roman law having channels for the emperor to seize private property from individuals he chose. It is used by a variety of ideologies in the modern world.
At times, governments who are otherwise friendly to commerce and the private accumulation of wealth may temporarily seize someone's assets. If they have failed to complete a relative process such as filing with customs correctly or declaring ownership. Some governments however are overtly hostile to such accumulation and instead confiscate all wealth accumulated over a certain level.
Why do governments confiscate wealth?
Governments may seize wealth for a number of reasons. Overtly hostile governments as previously mentioned tend to do so either under the ideological banner of socialism and wealth redistribution or instead as part of a kleptocracy.
The two motivations tend to have very different outcomes for the states involved. Under a socialist or even social-democratic government, those who have their wealth confiscated often make claims of class warfare being waged against them.
It is often followed by retaliation and civil wars. Such as after the Bolshevik revolution and widespread wealth confiscation in Russia, or the retaliatory coups such as with the Dictator Augusto Pinochet in Chile. Wealth confiscation repeatedly occurred as a response throughout history.
The wealth is often reinvested back into public services and infrastructure. It has led in the long run to huge rises in the standard of living for the relevant populations. Although many feel such actions are unfair to those who have been dispossessed. Whilst these governments confiscate wealth with the declared aim of economically aiding the majority of their population, there have been numerous incidents of:
Kleptocracies tend to make their confiscation of wealth more of a gradual process, and many of the wealthy remain unaffected. Ultimately, making retaliation by the richer classes less likely.
However, the impoverishment which these governments usually enforce on their populations in the long term means the wealth confiscation is little supported by either the formerly wealthy or the general population.
A wealthy class is still very much sustained by this form of government, although its members may change and they, in turn, will possibly have their wealth confiscated should a new government arrive.
Some governments may confiscate wealth on far less systematic levels. These governments are rarely trying to take a moral stance on wealth itself nor shape their country’s class structure. Instead, they ensure laws are being enforced and criminality prevented.
In the 1980s especially these governments saw a rise in interest in using crime as a crime prevention tool, primarily as concern grew over how best to deal with the growing problem of money laundering.
How to legally manage the fight against dirty money is an ever-evolving question. It is now legal in some countries such as the UK to confiscate criminal assets without having to prove that the property was obtained from criminal activity. These are still rarely used. For example, the United Kingdom only enacted 9 Unexplained Wealth Orders (UWOs) relating to 4 cases since their introduction in 2017. ()
Can the government confiscate your wealth?
Under what circumstances a government can confiscate your wealth depends on what country you live in. In most countries, at the very minimum, you will have to be suspected of being involved in criminal activity.
The restrictions can vary massively on when and how governments can seize property. Not just between countries but also between jurisdictions within countries. In some countries, confiscated wealth can be kept by the relevant government body until you prove that you purchased or acquired the confiscated goods legally.
This is sometimes even true if you’re not found guilty of being involved in a related crime. The proceeds may then be split between federal and state government bodies. It can also be partially redistributed to anyone who’s found to be a victim of a crime you’ve committed.
Many people also consider taxes a form of wealth confiscation. As you probably already know, the government is more than able to confiscate your wealth in this way. Some people only consider taxes to be wealth confiscation when they are either too high a percentage or when the sum being taxed is above a certain amount.
Can the government seize your investments?
Yes, however, there needs to be a good reason to do so. Governments are most likely to seize your investments if you have outstanding debts to pay but no available cash to pay them off.
Most governments are very reluctant to do this regularly or on a large scale as it sends a warning scale to capital that their economy is not a safe place.
Investment is a crucial part of economic growth and investing becomes far less likely when people who control wealth start to fear that their invested money will disappear into the coffers of a government rather than making them back.
Can the US government take your savings?
Although they are unlikely to do so, the US government has the ability to seize savings very easily. In a country so fearful of government regulation there is no shortage of voices that highlight just how few steps have to be taken to take an individual's savings.
Things vary hugely from state to state, of course, and there are a few protections in place that means the government must go through a few steps to take someone’s savings in most cases. However, when going after unpaid taxes or unpaid domestic relations support (eg child support), the federal government has the ability to act swiftly if they decide to.
Does the government have access to my bank account?
In one way or another, your government is likely to be able to get access to your bank account. We are in the age of Edward Snowden leaks, it’s hard for almost any government to deny that if they really want to, they can do what they like with your bank account without any consent or knowledge from you.
Most governments still have the means to access bank accounts. Especially if they have good reason to do so and follow proper procedures, in morally dubious instances
In tax havens or countries like Switzerland, there are sometimes no steps to be taken but an impenetrable wall that keeps out all unapproved parties from inspecting or extracting. This is why so many wealthy people choose to protect their wealth in these places.
For the vast majority of governments, however, accessing a bank account with good reason is not too difficult and by some accounts can usually be done even without that good reason.