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All aboard the fiscal board. Are you bored?

Should fiscal policy be taken away from governments?
When governments are unable to take care of their finances, is it time to appoint them a guardian who will take care of that business and (co-)determine fiscal policy? When is such guardian irreplaceable and how could they help?


New EU members banned from zero

Dawn of Zeroastrianism?
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 institute a minimum tax anyway? Surely we need protection from a maximum, not a (...)


Fiscal assets and liabilities during a state divorce

With the Scottish referendum around the corner and other ones looming on the horizon, IREF investigates the accounts of states thinking about a divorce. What are assets and liabilities to be split? Is the currency such asset, for example?


Nobelist plays poker. For a pound.

Scotland’s coming referendum is offering the country “independence”. Politicians cannot agree about what exactly it would mean, especially what currency the new state would have. Now an economics Nobelist has added his voice to the debate. At face value the question of adopting another country’s currency is very simple, but closer scrutiny reveals deep fiscal connotations which complicate things. (...)


5 ways of responding to financial crisis

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 shows EU countries’ responses fall into 5 (...)


Textbook guru: “Scrap corporate taxation!”

Why is anyone against it?
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 left-leaning (...)


EU in bolshevik footsteps: the new GOELRO

A century later....
EU governments are increasingly subsidising electric plug-in cars. Many countries have “five year action plans” to electrify their roads, using tax money. Environmental benefits will actually decrease with e-car proliferation, and the governments are forcing us to pay for something we may soon not want.


Cumbersome German pension schemes: Pool them!

New IREF Policy Paper
A new IREF Policy Paper by Senior Fellow Alexander Fink analyses the colourful patchwork of various private pension schemes the government has created, and compares their inflexibility and other disadvantages to the US system. A “single pot” which would enjoy some of the currently individualized incentives would be a much better idea for everyone in Germany. And it may even contribute towards (...)


For whom the toll bells

So who would build roads without taxes?
A century after privately built and operated roads were either nationalized or closed down, a new private toll road has sprung up in England. It is popular with drivers, if not with the local government. Is it always wrong to charge for use of infrastructure built from tax money? Is it OK that many EU countries start charging for highway (...)


Naked truth about France

Government is blatantly nudist
Summer temperatures bring new wave of strikes to France (not that they’re seasonal…). Two concurrent current strikes involve nudity. Fiscally, though, they have very different implications. It does not depend on what you do with your clothes, it depends on who is your employer.


Caveat Venditor. Should governments compensate companies for embargos?

After many Occidental countries imposed sanctions on some Russian businesses, Russia has retaliated by restrictions on some Occidental ones. Trade wars rarely work. However, a new fiscal phenomenon has appeared: affected EU companies seek compensation from the state for loss of markets. Should they get (...)


Silly season of silly taxes

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%. This is terrible economics, but economics cannot compete with terrible (...)


If you’ve won Wimbledon recently, read this.

Key to post-Wimbledon life? Lose the key!
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 their countries want to help their fellow citizens, they should stop being (...)


Governments should not be able to blame courts for their deficits

Portuguese Constitution is too PC
Portugal’s Constitutional court joined the ranks of those European courts that have halted crucial welfare reforms by governments. IREF reviews the evidence and concludes that fiscal policy must, for better or worse, remain the sovereign responsibility of the government held accountable at the next election. Being able to blame the courts would pave the way for governments to court misery, the (...)


Strange property of property tax: an Irish tale

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 much to be desired. Strange incentives remain, and punishment for success is built (...)


The Sol y Sombra of one sombre tax reform by los sombreros

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 taxes.


The Invisible Tax Riseth

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 problem”? IREF (...)


Race to the bottom? What race?

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 years.


28 Shades of Grey

Gross domestic product is getting more gross
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’ indebtedness that is not (...)


Does turnout affect fiscal policy?

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 be good for fiscal freedom. At least a (...)


A New Ocean Discovered! - or just another subsidy?

Cypriot government has unilaterally “redefined” one of the conditions of its 10bn bailout package and lifted a ban on government officials traveling business class. Is this an exercise in customary opulent luxury or is it actually a hidden subsidy? And aren’t all governments guilty?


Geographic Distance from Brussels Matters

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 numbers.


What would be a “living wage” in the EU? The answer may surprise you.

The concept of Living wage is gaining popularity throughout the EU. The social pressure of its advocates probably stands behind the recent proposals to increase substantial minimum wages. Closer scrutiny of the proposed levels of living wages by the IREF reveals, however, that the relationship between Living wages and Minimum wages is quite (...)


Swiss referendum on minimum wage and the EU

LLL: Location, Largess and Lessons
If the Yes campaign wins today, Switzerland will have by far the biggest minimum wage on this planet. We analyse this trend in a wider context of contemporary European popular movements. We suggest that the Swiss Minimum wage proposition has actually very little to do with the traditional concept of "minimum wage". Lessons for the EU go much deeper than the standard effect of minimum wage on (...)


Wealth and growth: Mr. Piketty’s fallacious statistics

The misadventures of a new scientific materialism
In his new Capital in the 21st century, as forbidding as his previous work on High Wages in France in the 20th century, Thomas Piketty presents a mass of data on asset growth in several European countries and the United States. This information improves the knowledge of our society’s relationship to capital and the divide between the richest and the poorest. Except that the author abuses these (...)


Basic income is not so basic after all

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 basic income is, as we (...)


Woes of Wolf of Wallstreet

The latest Scorsese blockbuster is still making the headlines for its novel artistic work with timelines. Does the Wolf, however, have anything whatsoever to say about Wall Street? Very little, and it may actually work to strengthen and entrench any bad practices that remain in the financial world!


Are Members of European Parliament Smart or Dumb?

European elections are upon us. In a series of articles, IREF is helping to inform voters’ decision. Last week we analysed attendance rates by voters at elections and reasoned that European elections may be bad for democracy. It’s now time to turn the tables and consider attendance rates of parliamentarians at the EP. What does the record reveal about their attitude to (...)


The useless reshuffle : another French exception

Following lacklustre performance at local elections, the French President has appointed a new Prime Minister. Is it a good tactic, and will it change anything?


The fallacious statistics of Mr. Piketty

Book review
In his new book Capital in the 21st century (Belknap Press, April 2014), French economist Thomas Piketty presents a mass of data on asset growth in several European countries and the United States. This information improves the knowledge of our society’s relationship to capital and the divide between the richest and the poorest. Except that the author abuses these data, following 19th century (...)


Are European Elections Bad for Democracy?

Where have all the voters gone....
“Nothing to see here, move on.” So goes the “apology” for low turnout rates in European elections as penned by many European analysts and commentators. “The US have them just as low at mid-term elections, so why worry?” Closer analysis of individual country data by the IREF, however, reveals that the “European turnout deficit” is actually worryingly high in many places, adding to existing concerns (...)


Government’s Fiscal Monopoly: Mono or Poly?

European nations’ fiscal authorities must be doing an excellent job if people are willing to pay hundreds of thousands of euros for the privilege to pay taxes to them… Or is there something else behind the new market for EU citizenship?


The Butch Dutch

They want to be taxed.. or so they say.
Government’s mortgage interest subsidy, besides creating a lot of social costs, benefits almost solely the rich, yet it’s precisely the rich who boldly claim to want to scrap the programme. What’s going on?


Dutch Disease, 2nd edition

… And Then There Were Three…
Ladies and Gentlemen, please welcome to the stage Dutch Disease, 2nd edition. This time it’s not natural wealth that makes you poor, it’s a natural consequence of a poor policy.


Odd Odd-Number Experiment Has Odd Consequences. What Are The Odds?

Only those Parisians whose licence plates end with an odd number could drive their cars down the Boulevards last Monday. It was the 17th, an odd number. This is no solution to a real underlying problem which exists because of a lacking market.


Anti-Pollution Measures: A Third Of Abuse Of Power, A Third Of Mismanagement And A Third Of Demagoguery

And maybe even a fourth third of “electoralism” in order to win the hearts of green voters! In fact, the executive power has nothing but contempt for users, taxpayers and citizens.


The Precautionary Principle Against Science

The culture of the single transgenic maize (MON810 , produced by Monsanto) approved by the European Union has been banned from France. It is the third time since 2008 that genetically modified corn is banned from the French territory. The decree (...)


Just How Unequal Would We Still Be If We Were All Equal?

Distribution Of Wealth Over The Life-Cycle And Inequality
Suppose we had a society where the only difference among its members were their age. How unequally would wealth then be distributed?


Matteo Renzi And The Reform Challenge In Italy

Of all the shortcomings of the Italian economy, youth unemployment (40%) is the most worrying. The new Prime Minister, Matteo Renzi, took up this issue through labor law reform since it was outdated and harmful. Will he succeed where Mario Monti failed? Yet what happened at Fiat’s may be hopeful.


Obama The Ultimate Survival Guide

A Book By Wayne Allyn Root (Regnery, 2013)
Ultimately, how to resist the Obamamania that is ruining the United States?


France: Away From Global Economy?

"Made in France" produced and exported: it is indeed a very popular program, but it can only be achieved if companies want to stay in or move to France. However, they are escaping from this fiscal and regulatory hell. Abroad, corporate taxes are much lower than in France and the legal framework is stable and (...)


European Energy Policy Is a Failure

Security supply is not guaranteed, energy cost will increase and CO2 emissions will not be reduced. This is an obvious failure that Jean Pierre Riou, President of Mont Champot, has clearly seen. The IREF support his analysis.


Corporate Tax: Northern Good Practices

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 Word “Profit” Falls Into Oblivion in François Hollande’s Economic Liberalism

Here is a relevant remarks from Professor Florin Aftalion: the word "profit" has disappeared from the public debate to be replaced by the word "margin". This semantic shift is not trivial: the profit goes to CEOs and shareholders while the margin is under Government control!


Knowledge and Power

A little more than 30 years ago, George Gilder published a book titled: “Wealth and Poverty”. This book became a worldwide bestseller. As a researcher, an economist and an investor, the author showed that government intervention cannot reduce poverty, but economic growth and economic development can only achieve this (...)


The U.S. Economy Is Getting Better Thanks To The Stimulus. Really?

It seems logical: economic growth resumed in the United States, and since the United States used an economic stimulus thanks to budget deficits, it could be believed that public spending lead to recovery. Indeed, but… it is in the sectors that did not benefited from the Federal money that new companies and new jobs were created. And in States that have reduced their public spending (as in some (...)


More Taxes, Less Revenues

The Laffer Effect Has (Also) Arrived In France
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 substantial fall of tax revenues for 2013 raise the question again: has France reached the top of Laffer’s (...)


Government Caring For Youth: The Path To Failure

France hosted in the November 15th week a summit dedicated to the "Fight Against Youth Unemployment." This is an excellent initiative for a country where the 16-25 years-old population reached a 26.1 % unemployment rate. Yet, France should be doing what is being done elsewhere, especially in Germany, where the rate of youth unemployment is three times lower than in France: 7.7 (...)


France: A Free-Trader President After Hollande?

According to the Harris Interactive poll for Le Figaro daily and LCP television, French President Hollande would not be reelected in 2017. His fiscal policies are highly criticized and would cost him his reelection. It seems that Holland is discovering this principle : the more taxes, the less votes. Yet, if he is not reelected, what would be (...)


Violence and Absurdity of French Anti-Wealth Ideologists

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 offenders or delinquent. They are above all those who create (...)


The Stimulus Does Not Work

The crisis of the world economy since 2008 has encouraged various governments to increase the share of public spending. This increase was a general phenomenon among the OECD countries and contributed to an unprecedented debt hike. An IREF study comparing the development of key economic indicators over the recent period (1997-2011) for some 30 OECD member countries makes it possible to update (...)


Working Hours : When France Forbids, Germany and Sweden Allow

And in France, there is a high level of unemployment whereas it is low elsewhere. And elsewhere, there is no Labor Code, no unions, no judges, and everybody is satisfied with the freedom of work, as reported by IREF European contributors.


Germany : Less Welfare State, More Electoral Victories

Reforming is a path for reelection: German Chancellor Angela Merkel privatized, deregulated, capitalized. She did not reflate nor accepted deficits : she reduced taxes. For sure, there are some lessons to learn for France.


Dutch King Willem Alexander Ends The Welfare State

John Galt in The Netherlands?
"A nation with a small but strong government which gives people the space they need": this what Dutch King Wilhem-Alexander wants for his people. And it has become a domestic policy on September 17th, 2013. The King has a life-time in front of him to consider the social, economic and political evolutions of society. Unlike an elected President, he does not have only a handful of years (...)


A Greek Tragedy, Act III

While Ireland may exit its bailout program at the end of this year, Greece is far from getting out of it. Around 10 to 11 billion euros ($13.1-14.4 billion) from the second half of 2014 will be needed to keep it going next year and in 2015. This will be the Third Act of the economic tragedy unfolding in Greece. Jeroen Dijsselbloem, Dutch Finance Minister, confirmed to the European Parliament (...)


Anti Free Trade: A French Obsession

This is the transaltion of an article published by Nicolas Lecaussin on August 14th, 2013 What is the common point between Socialists as Claude Bartolone, President of the French National Assembly, Pierre Moscovici, the Finance Minister, MP Jérôme Guedj, Conservatives as Xavier Bertrand, Health minister during the Sarkozy Presidency, Environmentalists as European MP Daniel Cohn-Bendit, (...)


Better Be Insured Than On Welfare

This is the translation of an op-ed published by Jean-Philippe Delsol on August 24th, 2013 in the leading French newspaper “Le Figaro”. In France, during the last 30 years, social spending went from 21% to 33%. It is the sign of an ever growing Big Government that is out of control and unbearable. Thus, as German Chancellor Angela Merkel pointed out, Europe “gathers 7% of the world population, (...)


Bailing Out Greece For The Third Time: Useless and Illegimate?

"There will have to be another program in Greece," German Finance Minister Wolfgang Schäuble said bluntly on August 20th. The two previous bail-outs amounted to about 240 billion euros but that was not enough. According to the International Monetary Fund, one the Troika member, the estimated uncovered funding needed by Greece for 2014-2015 may amount to 10.9 billion (...)


5 Billion Euros: The Cost of Subsidized Jobs

“The youth is the utmost priority of my mandate”. Thus spoke François Hollande on January 23, 2013, when wishing a happy new year 2013. “Happy” may not have been the right term, “subsidized” should have been better. Indeed, when saying that 500 000 young people below 25 years-old do not have a job, that 25% of them are unemployed, the French President does not think that entrepreneurship is the (...)


The IREF in The Economist

Nicolas Lecaussin was quoted by The Economist (July 6th - Juy12th, 2013) about a report written with Lucas Léger on French high school economic textbooks. "The IREF study last year" said the Economist, "showed that, in one tome’s 382 pages, only (...)


Who Pays If Banks Fail

European Union finance ministers failed to reach a deal last week on this controversial issue. Germany and France are at odds about costs distribution. The Banking Union is at stake since this law on rescuing and closing banks in the EU is a key point. The problem is to know who is going to decide what will happen to a failing bank and who will pay for (...)


The Making of Tax Hell… And The Escape of Entrepreneurship

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 they are living (...)


7.5%: Portugal’s New Corporate Tax

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 of a country relies on its private sector, not on the Government. Portuguese Prime Minister Pedro (...)


Objectives, Instruments and Problems of Macroprudential Supervision

Since events related to financial, banking, and debt crises regularly make it into the news, a term that seemingly originated from the Bank for International Settlements (BIS) in the late 1970s has become more popular: macroprudential supervision. Whereas microprudential supervision relates to the oversight of individual market participants (e.g. banks), macroprudential policy relates to the (...)


The Risky Business of Protectionism For Global Value Chains

Globalization is often associated with delocalization and unfair competition with emergent countries that are flooding us with cheap goods and services regardless of good environmental practices or social benefits these populations should enjoy, like in rich countries. Beyond this spurious assessment hinge the even more fallacious concept of reciprocity that justifies a new form of (...)


American States Are Tax Decrease Laboratories

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 jobs.


The Crisis is An Opportunity To Grow A Business

“A recession can be a good time to grow a business”. Thus is the opinion of Lord Young, a British cabinet minister under late Prime Minister Margaret Thatcher and still having his own office in Downing Street. Lord Young’s comments are stated in a report to be published this week and addressed to Prime Minister David Cameron. It is obvious that Lord Young stands for a “creative destruction” and (...)


School Choice Success in the US

The Friedman Foundation has published a report about the 22 American States that enforce school choice thanks to vouchers. Children’s work is better, teaching’s quality has improved and the overall cost of the school system is cheaper which is a benefit to low-income families.


The European Quagmire

The European Commission’s forecasts are gloomy: a 0.1% decrease of European GDP in 2013 as a 0.4% decrease for the Eurozone. It seems that, one after the other, all the member states are collapsing and get trapped into economical disarray. The European Commission gives more time for France and Netherlands to reduce their deficits, but Slovenia is on the edge of explosion while Cyprus, Spain (...)


European Banking (Dis)Union

Germany and Finance Minister Wolfgand Schäuble do not press for setting up a banking union and rejects a centralized authority whereas France and Finance Minister Pierre Moscovici are urging to set up the banking union through centralization. The latter position is also the Commission’s. The Eurozone financial convergence will prove to be complex: European negotiations are at a crossroad not (...)


United Kingdom: 2.8 jobs created in the private sector for 1 public job lost

These figures, calculated by the IREF, point out what is happening in the United Kingdom governed by Premier David Cameron. Since the Tories arrived in power in 2010, between 500.000 and 600.000 public jobs disappeared while the private sector (...)


Going Back to Basics: The Promotion of Free Trade

Big Governments usually do not trust people or companies to improve living conditions. That is why notions of “social justice”, “solidarity”, “equality” and above all “sharing” were hijacked by Governments and turned into an economic principle: redistribution. Since it is believed the Government is the only organization that can be fair and would share wealth without any interests of its own, (...)


The Knowledge Economy Enters GDP

Knowledge has now become a capital investment and no longer a cost of producing goods. This change has been announced by Brent Moulton, head of national accounts at the Bureau of Economic Analysis (BEA), on April 22nd, 2013. This will change the way gross domestic products are calculated. It will lead to an immediate 3% growth in the United States’ (...)


Effects of taxation on European multi-nationals’ financing and profits

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 investments and development are penalized. This paper, however, concentrates on how companies react (...)


The Receipt for Government Services for 2013

Richard Durana, Ph.D, director of Institute of Economic and Social Studies (INESS) has annouced that INESS released the Receipt for Government Services for 2013. The annual price of the state for Slovakia increased by EUR 322 (7.3%) and reached EUR 4,704 per citizen.


The Public Spending Trend Hampers The Economy

France is the best example of this economic truth. The French public sector is undermining the economy. It must be pointed out that in Spain and Ireland the crisis was due to a real-estate bubble. In France, the crisis is worsened by an obese bureaucracy. The trend is striking: the French public sector is growing faster than the private sector since (...)


Less Taxes and More Pragmatism Against Tax Havens

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 agreement within a short delay and be adjusted at a standard cost of 50% of the total incomes (interests, (...)


The Iron Lady: A Transformational Premiership

“She did not just lead our country; she saved our country” said British Conservative Prime Minister David Cameron as a tribute Margaret Thatcher who died at 87, on April 8th, 2013. Tony Blair, former British Labor Prime Minister, declared: “Very few leaders get to change not only the political landscape of their country but of the world. Margaret was such a leader. And some of the changes she (...)


Small Governemnt vs Corruption

Corruption! A word that is destroying the base of the Government action. Above the “Cahuzac Case”, it is the whole public power that is stained with doubt and distrust. The clear and present danger is the rise of uncontrolled populisms seeking the collapse of a corrupt Government. But this would lead nowhere. The real solution lies in setting up a Small Government and the implementation of the (...)


A Green Economy or An Economy Painted in Green

What if the « green economy » was just a joke? It has become trendy to label every activity as green. Thus environmentalism seems to be at the heart of the economy. Lucas Léger, IREF researcher, analyzed the Happy Planet Index and reveals the trick.


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