There are a lot of taxation schemes being floated in the US and elsewhere to attempt to 'fix' the financial situation that primarily the US and European nations find themselves in. The problem relates specifically to banks that have grown so large that they rival the assets of some of the European nations they do business in. As with US Banks, they are deemed to be 'too big to fail'.
Taxation and banking secrecy in the same world (on the same planet) leads to a 'gray market' where capital moves for the sake of its own preservation to avoid the taxes governments levy. Where a nation's internal corruption reaches a tipping point - Greece, for example, you're bound to find a thriving gray economy. In fact, recent EU researchers point to 40% of Greeks claiming to work in the gray market. That means that they don't pay taxes.
A grey market or gray market also known as parallel market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer. The term gray economy, however, refers to workers being paid under the table, without paying income taxes or contributing to such public services as Social Security and Medicare. It is sometimes referred to as the underground economy or "hidden economy."(Wikipedia)The simpler and more reasonable the taxation system in any country, the more likely that it will be paid. Whenever one nation-state decides to pile taxes on the public, particularly the richer portion of that population, the quicker you will see that capital move to a more favorable taxation environment. This is why the present class warfare taxation scheme envisioned by US President Barack Obama will fail to increase revenue. Then again, he's using it as an election strategy, not as a method of increasing the flow of money to the government.
Taxes are rarely levied for the benefit of those who are taxed. As a result, through out democracies worldwide, lawmakers understand that taxpayers can be influenced to vote based on a strategy aimed at looting one sector of society. And the result will inevitably be that capital will either move or will enter a gray market scenario.
4 comments:
Tax those horrid rich! Make them suffer!
A sentiment that appeals to too many envious Americans.
Of course many of those folks will lose their jobs, or already have, based on the taxes or threat of taxes.
An excellent point that is often ignored. When the rules become too burdensome, it forces creative ways to get around them.
On a related note, I was researching a hippie group who holds a very large annual gathering in the US. One of the organizers (all are libs) compared the workers in their "community" with the freeloaders who just tag along for the fun and said that the group can only accomodate about 20% of the latter.
It is amazing how once these folks put thier awesome ideas into practice and then realize how necessary it is to minimize/eliminate handouts.
Slamdunk - Liberals only apply their egalitarian standards to others (the less enlightened).
Opus #6 - True, you need to take a step back and put it into perspective and stuff some of your class envy into your pocket.
You are right, with Obama its all about re-election now and not about sound economics. I added you to the sidebar list over at Defeat Obama in 2012
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