In recent years the issue of how much taxes corporations pay (and how much they should) has become extremely salient in Western countries. The attention to this issue has been mainly raised by news organizations on the corporate income tax paid by the subsidiaries of some major multinational (...)
Most of the literature on rent-seeking and the size of government expenditure has focused on the mechanisms through which policy-makers gather the necessary majorities to justify and expand the role of the state, and thus increase tax pressure.
By contrast, the authors of this paper examine (...)
The traditional literature on tax evasion frames taxpayers’ choices in terms of rather basic cost-benefit analyses involving the expected monetary return to tax evasion. Briefly put, individuals take action by considering the probability of being caught and the sanctions (...)
The Nobel-Laureate Douglass North passed away at the end of November. Though he didn’t specialise in fiscal questions, his analysis of institutions in early modern Europe reveals that actual fiscal choices about how to finance an army help to determine the fortunes and falls of European powers. (...)
Switzerland may be known for low taxes, but that does not prevent it from redistributing them; richer regions subsidise the poorer ones. Now at least one paying canton is starting to protest against the arrangement. There really is a big difference between how much taxpayers in different (...)
The UK government has been watching Jamie Oliver’s TV shows and now wants to implement his plans for a new tax on sugar. The Commons‘ Health Committee has reported its overwhelming support for the idea at the end of November. Other than arguments that such taxes are “good per se“ because they will (...)
At the beginning of October, England became the last constituent part of the United Kingdom to introduce a compulsory charge for plastic shopping bags (to be paid by the shopper), after similar taxes had been introduced in Scotland, Wales and Northern Ireland in previous years. The relevant (...)
"Fair tax(es)" is a beautiful idea everybody wants to subscribe to. Including, of course, modern EU politicians. Their idea of "fair tax", however, differs very much from the way in which people understood the concept in the past.
It is no longer about making sure the tax is fair to the (...)
The imagination of EU governments to come up with new kinds of tax is apparently inexhaustible. Tax on meat is now being prepared, as an answer to alleged “problems” with meat production and consumption. But taxes are generally bad solutions to “problems”, especially when those problems are created (...)
If it wasn’t obvious already, Greeks do their taxes differently.. They rely more than is customary in OECD on the less visible taxes of VAT and Social Security. Income tax revenue (from people and companies) is much less prominent. If they are risking a lot less, it time to try to actually lower (...)
New retail tax in Hungary discriminates big business, which just happens to coincide with the finance minister’s nationalistic interest. New retail tax in Czechia favours big business, which just happens to coincide with the finance minister’s business interest. Curious thing, (...)
You’ve heard of Bitcoin. Is it primarily a currency or a service?
Its users probably could not care less; for many it will be both. Yet a distinction is necessary. Why? Well, taxes, of course! What else?
If it is primarily a currency, buying or selling bitcoin (exchanging it for your (...)
Two recent stories from Greece reveal very different treatments of Germans paying taxes in Greece – depending on whether they are people or corporations.
So you thought you could have your cake and eat it. That you reduce tax on something which has benefitial implications for a disadvantaged social group, saves resources and is good for the environment. Think again, says the EU Court. Your young ones are, apparently, not a legitimate aim of (...)
In all epochs, exports were almost always considered good for an economy. That’s why modern governments have generally stayed away from trying to tax exports. Not so the current Greek government, however. By increasing the tax rate on a vital component of Greek exports it is hoping to raise some (...)
An age-old phenomenon: Some unemployment exists and politicians want to fight it by creating conditions for new jobs. The usual recipe involves expanding government spending and investment programs. Figures for OECD countries show that places with low taxation of labour tend to exhibit low (...)
UK might not get a single party government after next month’s election. Again. Moody’s are not worried about the consequences for government finances. They probably should be.
In the Middle Ages in the Middle East, merchants and travellers would sometimes have a proof of having paid their tax tattooed on their necks, to prove that they don’t have to pay again. Modern EU has devised a less painful alternative – a “Portable Document A1”. It is automatically recognised (...)
The impression from media is that companies pay “only” somewhere around 20-30% tax rate in the EU, if they pay at all. That’s only the headline figure for one tax they pay. Total tax rates are well over 40%, French businesses pay 2/3 of their profits in tax. What’s worse, the big economies of (...)
Businesses both pay taxes and collect them from others for the government. How administratively burdensome is this activity across the EU, North American and EFTA? We assess the evidence and identify, whether it is the frequency of filing or complicated tax returns that (...)
The European Court of Justice (ECJ) ruled last Thursday that e-books are not allowed to enjoy the lower VAT that “normal” books enjoy in some EU states, and that they have to be taxed at the standard (much higher) rate of other goods. The ECJ’s justification sounds strange and very (...)
If you are playing for time, you have to swamp your creditors with proposals how you are going to improve. “This time it’ll work, honest, guv.” So the Greek government is now proposing a secret tax police, where ordinary citizens would be wired with cameras and microphones to catch tax evaders. (...)
The French government is hoping to help consumers – and increase growth – by making it illegal to manufacture products with artificially shortened lifetime. We argue that proving such case will be nearly impossible in modern technology and the ban will act as a tax, with consequences even worse (...)
9 EU countries have not adopted the Euro, 19 have. Both groups include similar proportions of countries with high, medium and low levels of economic freedom. However, IREF’s investigation of what has been happening to economic freedom in the two groups reveals significant differences. While (...)
WP 2015-01 The Effect of Tax progressivity on the quality of entrepreneurship by • Mina Baliamoune-Lutz • Pierre Garello
Free movement of people, capital, goods and services across national borders. Those are, allegedly, the pillars of European integration. One of them, the free movement of capital, crossed swords twice this week with EU policy makers convened at the regular meeting of financial ministers. It (...)
"In order to prevent tax fraud, income tax withholding should be increased so that governments over-withhold and most taxpayers receive a refund." This is the policy prescription in a new research about to be published. We argue that this conclusion is wrong. The authors have not proven the (...)
Every month, the EU Commision starts dozens of legal actions against Member States for non-compliance with EU law. We evaluate the November crop of fiscally-related cases. While 2 such actions are generally a good idea, 4 are a bad idea, reducing EU citizens’ opportunities for an efficient and (...)
Tax cuts are pretty rare in the real world. When they do happen, they tend to be very partial, offering unjust advantages to a specific group. But even broader tax cuts can paradoxically do much harm. Using Italy as an example, this piece argues that when tax cuts lead to greater debt, they (...)
How do you pay for increased government spending on education, health care and social services? By lowering the tax rate, of course… Wait, what?! Oh indeed. A new report on Swedish fiscal developments over the last dozen or so years shows what’s possible to achieve when a country tries to shake (...)
It is becoming a pattern. Another weekend, another 100,000+ protest against a new tax. Only not Hungary and tax on the internet, but Ireland and “tax on water”.
At least that’s how many media are reporting it. ABC runs with the headline "Marchers Protest Ireland’s New Tax on Water Supply", RT (...)
Large demonstrations took place over the weekend in Hungary. Somewhat unusually, people were not protesting against spending cuts, but against a new tax. A targeted tax on internet traffic. The issue of taxing this new paradigm of our lives will not go away anytime soon. As a companion to your (...)
Germany’s minimum wage has been created at a pretty high level, higher than its equivalents in the UK or the US. Increasing the price and reducing the quantity of an economic activity it acts as a tax. A pretty unsocial one as it destroys jobs for the poor and punishes those who create them. (...)
In 2006, the EU outlawed the zero, banning it from VAT rates of member states. Within two years the zero struck back. It now rules supreme in at least three economic areas, but in the tax domain it continues to be banned. Any newcomers to the EU will be hit especially hard. Why would anyone (...)
Most companies were hit hard by the freezing up of financial markets after 2008. Governments responded selectively – by selective tax cuts and subsidies, but they could have more meaningfully “help” everyone, not just big companies, by lowering corporate tax rates. Did they? IREF investigates, and (...)
A famous economist, author of even more famous economics textbooks, is calling for an end to corporate taxation. Not because he has been bought by the corporate world and multinational companies, but because it makes economic sense. Perhaps most surprisingly – it should make sense even to (...)
The media world calls Summer “the silly season”. When politics takes summer break, it is time to roll out the “silly stories” to fill the media. Not this year. Politics strikes back and rolls out silly taxes on media. Hungary’s ruling party introduced a new tax on advertising revenues of up to 40%. (...)
Carrying keys on your person is dangerous if you are a Wimbledon champion, tax authorities will charge you heavily for such audacity. At least one EU government’s budget apparently relies on its citizens winning the Wimbledon. And it encourages envy. If successful sports-people representing (...)
Desperate times call for desperate measures. European governments cannot raise enough tax to cover their spending. Ireland has even been forced to adopt what economists generally consider the least distortive tax feasible. That is good (considering the alternatives), but its execution leaves (...)
Spanish government has just announced it will cut some taxes. The actual cut will not come until early next year, and just like a Spanish rodeo arenas, it has a sunny and a shady side to it. The sol is the riddance of tax breaks. The sombra, however, is ushered by the EU pressing for higher (...)
Stalin said: No man – no problem.
EU governments’ tax policies are following suit. Shifting taxes onto a man who does not (yet) exist is one way of solving problems. Are governments also subtly changing existing taxes into less visible ones? Is this a more humane form of “No man protesting – no (...)
Tax harmonisation in the EU is pursued in order to prevent competitive lowering of tax rates, an alleged race to the bottom. What race?, IREF asks. Taxes are an ever increasing (at best stable) portion of GDP, and have been for (...)
Prostitution is going to enter official Italian GDP figures, allegedly to help the government meet its fiscal targets... The story went viral.
IREF brings you the real story beyond the headlines. Prostitutes in GDP are perfectly normal, everywhere. It’s the way that we measure our governments’ (...)
How economics - and the fiscal cycle - affect voter turnout is a richly studied question. But what about the other way? Can turnout - how many or few voters turn up to vote - affect the fiscal situation in the following period? IREF investigates and finds that people simply going and voting can (...)
Voter turnout at the latest European Parliament election is much debated. Many countries saw further drops compared to last EP elections in 2009, fuelling concerns about widening democratic deficit. Beyond the general facade, IREF discovers an interesting geographic pattern in the turnout (...)
Nobody likes poverty. But how do we end it? Suppose we give everyone some money. This will automatically include the poor, we don’t have to identify them, problem solved. Is it doable? Will anyone still work, create new ideas, write poetry, love?
The answer depends largely on how basic the (...)
Suppose we had a society where the only difference among its members were their age. How unequally would wealth then be distributed?
The quality of the recovery remains questionable. In the meanwhile, banks must deal with new regulation and investors look for higher yields.
Ultimately, how to resist the Obamamania that is ruining the United States?
It is not forbidden to former socialist countries to reduce the weight of the state and drastically reduce taxes, especially on businesses. This was done in Sweden and Denmark, where unemployment is lower than in France .
The statistics tell us that recession is over. Yet, while this has triggered tapering in the USA, it has also prompted a new of ECB promises to keep interest rates low. In the meantime, EU authorities do not seem how to deal with the world of banking, which is far weaker than meets the (...)
GDP in the EU area seems to be growing, but at a very slow pace. Although financial market remain sanguine, the real estate sector presents a mixed picture, with bad news coming from heavily indebted countries. While waiting for better news, the authorities are devoting their attention to the (...)
This long-debated concept by policy makers and economists is coming back. That is because the Government believes that prosperity cannot be recovered without a strict “austerity policy”. But it actually means higher taxes only. Yet, the latest concerns of the French National Assembly on a (...)
As shown in the Report of the IREF on Taxation in Europe, many countries have lowered their corporate tax. The UK is among them. The corporate tax will gradually decrease: 23% in 2013/14, 21% in 2014/15 and 20% in 2015/16.
It must be an example for countries as (...)
1,130: here is the number of Americans who gave up their citizenship and left the US territory. Taxation made them leave.
Who said the US was a tax haven? It is true that tax pressure on individuals and companies is much lighter than in France. Furthermore there is a real tax competition (...)
WP 2013-07 The effects of fiscal decentralization on working hours: Does it matter which government level taxes and spends? by • Alexander Fink
Attacks against wealthy people are still going on in spite of the fact the Welfare-State is plundering taxpayers. In a recently published book, sociologists – I should say ideologists – Michel and Monique Pionçon-Charlot are criticizing those they call "deliquents". No, wealthy people are not (...)
The French Government supporting private companies thanks a system of financial assistance: what an economic heresy! Yet, over the last thirty years, it has become the creed for French Governments, whether conservative of leftist. Four figures are to be pointed (...)
Why would you stay in a country where there are more than 200 types of taxes? And in which taxes are piled up and never removed. If French President François Hollande and his government want to fight against tax havens, French taxpayers and entrepreneurs are battling against the daily tax hell (...)
Competitiveness is embedded in the private sector. Employment is created only the private sector. Wealth increases through the private sector. No public intervention can manage to replace the private sector, no Government know how to make business and money. As a consequence, the real economy (...)
In a recent post, Nicolas Lecaussin is pointing out that tax consequences can be studied as in a lab: some American States can be observed. Taxes were lowered in thirty States. If they gather only 20% of the US population, they have created 65% of US (...)
The new IREF paper of Stefan Lutz, from the University of Manchester, UK, and the Universidad Complutense de Madrid, Spain, points out that if it is apparent that companies do not welcome taxation, the main reason is that taxes reduce profits: shareholders are disappointed and the prospects for (...)
Here is a new and big campaign against tax havens. But tax exile will last as long as confiscatory and arbitrary taxes will last. It is the case in France. Should not a tax amnesty be proposed? The IREF is making the proposal that all sorting out that has begun this year should reach an (...)
Nicolas Lecaussin analyzed the French President François Hollande’s interview on March 28 on TV. Nothing has come out of it: no reform, no tax decreases, no incentives. On the contrary, as Nicolas Lecaussin pointed out, François Hollande "stubbornly continues on the path of tax hikes and proposals (...)
WP2013-01 Individual Responsibility and Social Preferences for Redistribution: An Experimental Study by • Sergio Beraldo • Massimiliano Piacenza • Gilberto Turati
Nicolas Lecaussin has pointed out in a recent article that, after Germany, the United Kingdom, Sweden and Finland, Denmark is also bringing down its corporate tax: 22% whereas France still is at 34.4%. But there is more: this measure is included in a “growth plan” aiming at giving more freedom to (...)
6 lines against 20! In Germany, the gross salary is taxed by only few contributions (tax on salaries, solidarity, pension fee, Church). It was understood that flexibility is much more efficient with a fiscal and regulatory simplification.
In France, it is the exact opposite. The French pay (...)
Gilles Hennesy, an LVMH director who is executive vice-president of commercial at Moët Hennesy, and Christophe Navarre, chief executive of Moët Hennesy, are both moving to London. Bernard Charlès, chief executive of Dassault Systèmes, declared that some Dassault’s top managers already from France to (...)
Diesel cars should eventually disappear in France. According to the French Court of Auditors (Cour des Comptes) the fact that gas oil is less expensive than regular unleaded gas causes a loss of 7 billion euros for the Government. Things must change. Yet, it is not that easy: 60% of the French (...)
Fighting tax exile: this is Yann Galut’s aim. This French Socialist representative is at the head of a Committee created in the National Assembly to think out measures against tax exile. The work of this committee should end up in bills introduced in the Parliament as soon as (...)
The IREF’s aim is to defend and promote economic freedom and fiscal competition. Our aim goes against the OECD’s last study that was commissioned by the G20 and called “Addressing Base Erosion and Profit Shifting”. It will be presented on February 15th at the G20 Summit in Moscow. The OECD claims (...)
By Alexandre Diehl, Lawyer and IREF research Fellow
For the past few weeks, and as Google has announced “bad” results on the financial markets, the media are gurgling with strange and technical news on a possible tax audit for the company. What is going on? Has Google broken the law, or are the (...)
A petition was submitted by French MPs to the Constitutional Council regarding the limitation on the wealth tax and the new regulations which were to take into account "virtual" incomes.
On 28 November 2012, IREF and the French Taxpayers Association addressed an argumentary (see attachment in (...)
Important determinants of multinational firms’ choice of location include, besides resource cost and infrastructure, the taxation regime through its effects on international pricing and profits. This paper investigates the effects of tax rates on firms’ profits and financing decisions by (...)
By Jean-Philippe Delsol
The fiscal frenzy which has seized the French socialists not only means that the economy grinds to a halt. It is attacking the very foundations of society by destroying entrepreneurship and responsibility. Taxes are raining on the people and the promised shelters (...)
At his press conference on Tuesday 13 November, François Hollande declared that, “Returning to a balanced budget essentially means looking to spending cuts rather than tax increases. Are we better off with 57 per cent of GDP of public spending, whereas it was 52 per cent five years ago?” He is (...)
The Taxpayers’ Alliance has launched a petition on its website (freezebusinessrates.org) to enable taxpayers to appeal to their members of Parliament on business rates.
Corporate taxation in the United Kingdom rose by 4.6 per cent in 2011, by 5.5 per cent in 2012. Yet the coalition government (...)
Our colleagues at the TPA have campaigned successfully against union subsidies. This means that the number of civil servants working for the unions at the taxpayers’ expense will now be reduced sharply. Currently, 0.26 per cent of the payroll in the Civil Service is spent on union (...)
Swedbank has calculated what Swedes already knew: taxes are by far the largest budget item for any household. An individual earning SEK 25,000 per month pays SEK 17,500 in taxes (of which SEK 6,100 to the municipality, SEK 4,300 in pension dues, SEK 3,380 to the health care authority and SEK (...)
As tax revenues are flooding into the Treasury, the German taxpayers’ association (BdSt) has asked the federal government to axe the "stealth" tax increases and to cut spending further. Current estimates show that tax revenues will be substantially higher than previously thought: a record 600 (...)